Currency Replacement: Banking Apps as the Winning Horse

The Central Bank of Sudan has linked the replacement of currency and the acceptance of new bills of the denominations of (1000 and 500) pounds to the deposit of funds in customers’ bank accounts. Alongside this, there has been public awareness of the importance of opening bank accounts to replace currency and benefit from banking services.

The clear objective seems to be reducing the cash supply and transitioning to electronic money and bank accounts, with an explicit call for increased use of banking apps to reduce the circulation of paper money.

Economic expert Dr. Yasser Jamal emphasized that with the preparations for the currency replacement process, there must be readiness to develop banking applications to ensure that the largest amount of currency flows into the banks. He linked this to the development of apps similar to “Bankak”, and the enhancement of services like “Fawri”, “Okash”, and “Sahl”. He stressed in the Economic Forum group on WhatsApp that the way out of this crisis can only be through banking apps, urging the banking sector to work diligently in implementing this matter.

However, economic expert Dr. Yasser Al-Hussein questioned whether the monopoly of the “Bankak” app for electronic transactions is related to the banks themselves or to the country’s electronic banking system, wondering if the Central Bank of Sudan has a role in this regard.

Dr. Yasser Jamal believed that, in his personal opinion, there is no monopoly by any specific bank on the apps, whether it is Bank of Khartoum or Faisal Islamic Bank. He warned of the dangers of depending solely on the “Bankak” app, explaining that if the app were to stop functioning, it would pose a risk to internal market transactions. He considered this a vulnerability that needs to be addressed swiftly, pointing out that “Bankak” handles more than 70% of financial transactions compared to other apps.

Yasser Al-Hussein justified his question by saying he heard of a central “link” step that the state must take, which would allow all banks to provide a service similar to “Bankak”.

On his part, economic expert Dr. Omar Mahjoub explained that “payment systems are an integrated set of systems and programs provided by the banking and financial sector to facilitate secure electronic payment transactions. It refers to any system or arrangement for settling or transferring money (between banks and financial institutions)”. He added that these systems operate under a set of rules and laws that ensure confidentiality, security, and protection of purchasing processes and service delivery.

As for electronic banking services (apps and similar services), these are offered by banks to their clients according to the capabilities and development of each bank’s system. This digital development allows customers to use banking services easily via the internet using online banking or mobile apps.

Dr. Mahjoub noted that “Bankak” was not a monopoly for the service but was the first bank to provide services via its app after the war, adding that now other banks, such as Faisal Bank and Omdurman National Bank, have activated their apps to offer similar services.

In this context, banking expert Walid Daleel explained that due to the war, the servers for apps and other banking technologies were shut down due to the failure to implement disaster recovery protocols and business continuity measures. He pointed out that the cost might have prevented the establishment of disaster recovery facilities in Sudan, as the state lacked a plan on how to handle disasters and business continuity. He noted that although these measures are costly and require funds, their benefits are immense. A clear example is the loss of data in Sudanese state institutions.

Economic analyst Abdul Wahab Jumaa opined that Bank of Khartoum was ahead of other banks by treating the opening of accounts as a “marketing” strategy rather than a “luxury”. He explained that by expanding account openings and establishing branches in remote areas away from large markets, the bank introduced the “Bankak” app. He added that when the war broke out, “Bankak” became like a magic carpet for transferring money, whether for trade or family remittances. He attributed this forward-looking vision to the bank’s new management, which included foreign nationals.

Economic observer Mohamed Madthar noted that some other banks mocked Bank of Khartoum, saying it opened accounts for anyone. However, Madthar believed that, in the end, it became clear that Bank of Khartoum’s management had a sound strategic vision, “capturing the market” in business management terms.

Economic expert Al-Khidr Al-Amin stated that the bank’s financial capabilities and its ability to capitalize on opportunities, due to its large capital base, have helped it succeed. He also mentioned that in terms of digital transformation, the bank benefited from having a transaction converter, a feature that other banks lacked. When the regulator tried to unify the national transaction converter, only a few banks were granted a license to own a converter, while others were reliant on EBS.

Dr. Yasser Jamal highlighted one of the major weaknesses in the banking sector: reliance on a single app, “Bankak”, pointing out that this app’s failure could disrupt many internal market transactions. He viewed it as a vulnerability that should be swiftly addressed. He added that a positive sign is that other banks are now working together to create an app that can serve all banks.

In response, Al-Khidr pointed out that the success and sustainability of electronic payment depend on:

1. A comprehensive and transparent policy framework, particularly in competition.

2. A disciplined financial and administrative framework.

3. A high-quality technical and insurance framework.

Policy-wise, electronic payment intersects with:

1. Monetary policy (Central Bank).

2. Telecommunications policy (Telecommunications Authority).

3. Financial policy (Ministry of Finance).

The integration of these three sectors creates an environment conducive to financial inclusion. Until 2020, Sudan was one of the few countries that had not yet published a financial inclusion strategy. Efforts in this area were mostly driven by personal initiatives.

Banks, financial institutions, telecom companies, fintech companies, and associations are the tools for implementing these policies.

Yasser Al-Hussein questioned whether the success of “Bankak” was partly due to Bank of Khartoum having a large foreign partner, which enabled it to open up to the international space and bypass sanctions and restrictions on Sudan, particularly in using bank cards internationally through the SWIFT system. He mentioned that the use of payment cards internationally, such as Visa, Mastercard, American Express, and UnionPay, is a major part of global payment systems.

Al-Khidr highlighted that one of the main reasons for “Bankak” success was the bank’s early acquisition of the converter license. Subsequent regulatory measures harmed other banks, as the regulator attempted to unify payment gateways, causing a dispute between Bank of Khartoum and regulatory authorities. Additionally, the bank, through its diversified capital, benefited from resources such as small financing from the Islamic Development Bank in Jeddah. The bank was a pioneer in launching a company for micro-financing, while other banks remained focused on corporate finance. The large customer base of the bank also helped its success.

Currently, given the prevailing conditions and accumulated policies, no other bank can compete with Bank of Khartoum, which remains the largest service provider despite this contradicting the principles of competition.