DRC - The advantages of digitalization

With the cost of processing a banking transaction via mobile being 10 times lower than that via an ATM and 50 times lower than that via a branch, 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 65%, which reflects the low coverage of financial institutions present in the DRC. Faced with this real problem, only digitalization, within the 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 today’s changing consumption habits following the advent of digital technology;
– A channel that is gaining more and more importance 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 address these changes, the sector's key players are digitizing their services and reorganizing their operations. This includes 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 their everyday transactions via QR code, and partnerships with Fintechs and telecoms.

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However, telecom operators, which are eating into the banking market by taking on some of the financial transactions, are not subject to the same prudential regulations as commercial banks, a difficult situation for players in the sector because it affects their profitability and inevitably reduces, all other things being equal, their equity, at a time when they should be strengthening it. This is an inevitable development, which will also play a major role in the development and growth of the banking rate, but one that must be kept in mind since it is the commercial banks 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 Directors encouraged the authorities to strengthen the monetary and exchange rate policy frameworks to support price stability and external sustainability. They supported the authorities' consideration of tightening monetary policy in light of rising inflation. They noted that continued reserve building and strengthening the role of the exchange rate in shock absorption are essential to strengthen external resilience. They emphasized the need for continued efforts to strengthen central bank independence, governance, and safeguards, as well as for reforms to improve the regulatory, supervisory, and resolution frameworks to address banking sector vulnerabilities.