Open banking in The DRC – Open Banking Nigeria

The Democratic Republic of Congo

The DRC’s Financial Sector

The Democratic Republic of Congo has a complex financial landscape. Compared to its global counterparts, the country is marked by significant challenges such as underdeveloped infrastructure, limited digitization, and low financial inclusion.
The DRC has the third-largest population in Africa, with over 100 million people. While it’s rich natural resources often dominate headlines, its economic potential is hindered by inadequate infrastructure and a highly informal economy. These conditions form a unique backdrop for the financial sector. Low banking penetration, limited financial infrastructure, and a predominantly cash-based economy create a landscape ripe for disruption but fraught with systemic risks.

Opportunities and Constraints

The DRC’s banking sector is relatively small compared to its population size and economic potential. As of recent years, the sector comprises around 18 licensed commercial banks. Despite the presence of these banks, the sector remains heavily underbanked. In 2021, less than 18% of the adult population held a bank account, according to the World Bank. This low penetration is due to several factors, including limited branch networks, high service costs, and a general mistrust of formal financial institutions stemming from years of political and economic instability. Efforts to promote digital financial services are gaining momentum, particularly with the rise of mobile money services like Airtel Money and M-Pesa. These services are popular as they offer an alternative to traditional banking in a country where infrastructure is limited.

The Central Bank

The Central Bank of Congo (Banque Centrale du Congo, BCC) is the primary regulator of the financial sector. In recent years, the BCC has introduced reforms to enhance financial stability, encourage digital payment adoption, and promote financial inclusion. Key initiatives include:

Licensing guidelines for mobile money operators.
Promoting interoperability among payment systems.
Establishing consumer protection frameworks for digital financial services.

Despite these efforts, the DRC lacks comprehensive data protection laws and a clear regulatory framework for open banking. The absence of these foundational policies is a significant barrier to implementing open banking initiatives in the near term.

Opportunities for Open Banking:

While the concept of open banking is relatively new in the DRC, it presents significant opportunities:

Integration of mobile money services: With the current success of mobile money operations, open banking could connect various platforms using APIs, providing seamless financial services and reducing fragmentation in the digital financial landscape.
Innovative financial products: Open banking could enable tailored services which could cater to underserved populations such as real-time payments, alternative credit scoring models, and personalized financial advice.
Financial inclusion: By leveraging open banking, financial service providers could expand access to financial services for unbanked individuals, driving inclusion in a country where traditional banking struggles to reach remote and rural areas.

Potential Challenges for Open Banking:

Regulatory barriers: The absence of comprehensive data protection laws and the lack of a clear regulatory framework for fintech services pose significant barriers to implementing open banking in the DRC in the near future.
Infrastructure limitations: Poor internet penetration and low levels of smartphone usage hinder the adoption of digital banking solutions, limiting the feasibility of open banking initiatives
Trust and security concerns: Given the low financial literacy and high levels of cyber insecurity, gaining consumer trust for sharing financial data is a major hurdle. Education and strong consumer protection measures would be necessary to build confidence.

Comparative Insights

Compared to Kenya and Nigeria, which are leaders in open banking in Africa, the DRC lags behind due to limited digital infrastructure and regulatory preparedness. However, lessons from these countries, such as fostering mobile payments integration and establishing data-sharing standards, could be adapted to create a tailored open banking model for the DRC.

As developments unfold, we will continue to monitor the progress of open banking in the DRC and provide updates on new initiatives and regulatory advancements.

Important links