DRC - The advantages of digitalization

Since the cost of processing a banking transaction via mobile is 10 times lower than that via an ATM and 50 times lower than via an agency, digitalization definitely appears to be the solution to boost financial inclusion in the DRC.

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The percentage of the Congolese population living in rural areas is 651,300, which reflects the limited coverage of financial institutions in the DRC. Faced with this significant problem, only digitalization within existing financial institutions has the potential to significantly increase the efficient penetration of the banking system, given the size of the DRC.

It thus represents:
– An imperative for financial institutions considering the consumption habits that have changed today following the advent of digital technology; ;
– A channel that is becoming increasingly important compared to traditional channels such as branches and distributors for many retail banks; ;
– An essential element likely to increase customer acquisition and satisfaction, but also to reduce the costs of banking institutions; ;

The rise of Fintechs has profoundly transformed the Congolese banking sector. To cope with these changes, the main players in the sector are digitizing their services and reorganizing their operations. This has resulted in a slowdown in the expansion of the number of branches, the development of Agency Banking (bank agents), the creation of an electronic wallet allowing users to pay for everyday transactions via QR code, and partnerships with Fintechs and telecom companies.

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However, telecom operators, who are eroding the banking market share by handling some financial transactions, are not subject to the same prudential rules as commercial banks. This is a difficult situation for industry players because it affects their profitability and inevitably reduces their equity capital, all other things being equal, at a time when they should be strengthening it. This is an unavoidable development, and one that will play a major role in the growth and increase of banking penetration rates, but it is a development that requires careful attention since commercial banks are the ones that finance the country's economy, the real economy.

In June 2022, the Executive Board of the International Monetary Fund (IMF) concluded its 2022 consultations. IMF Executive Board members encouraged authorities to strengthen monetary and exchange rate policy frameworks to support price stability and external sustainability. They supported authorities considering a tightening of monetary policy in light of rising inflation. They noted that continued reserve building and strengthening the role of the exchange rate in absorbing shocks are essential for strengthening external resilience. They emphasized the need to continue efforts to strengthen central bank independence, governance, and safeguards, as well as to undertake reforms to improve banking regulation, supervision, and resolution frameworks to address vulnerabilities in the banking sector.