When the Salary Runs Out Before Payday: Can Banks Help Families Through a “Digital Finance” Product?

Noaman Yousif Mohamed
People on low incomes, particularly those earning monthly salaries in both the public and private sectors, are facing a widening gap between their earnings and the cost of living. Their salaries may run out before the middle of the month, while school fees, medicines, medical tests and transport costs remain obligations that cannot be postponed.
The problem here is not always the absence of income, but rather its inadequacy and the timing of its receipt. A family may face an emergency before payday, even with a regular income. This gap highlights banks’ responsibility to develop innovative digital financial products that help customers meet urgent needs without pushing them toward unregulated borrowing.
Short-term digital finance products could provide a practical starting point, provided they are designed on sound banking principles, link financing to the borrower’s actual ability to repay, and account for the needs of people on low incomes without imposing additional burdens.
On the International Day for the Eradication of Poverty: What Can Banks Do?
The International Day for the Eradication of Poverty, observed on 17 October, provides an opportunity to review the tools available to tackle poverty, moving beyond direct assistance towards financial solutions more closely aligned with families’ everyday needs. In Sudan, where households face severe cost-of-living pressures, financial services can help people manage limited resources, cope with emergencies, and reduce the need to sell assets or resort to high-cost borrowing.
Banks cannot tackle poverty on their own. That requires increased production, higher incomes, more employment opportunities and price stability. However, they can help alleviate one aspect: temporary cash poverty, which leaves families unable to meet essential obligations despite having a regular income. This role can align with a bank’s financial sustainability, provided the product is based on reliable data, clear credit controls, and manageable operating costs.
Short-Term Digital Finance: From Concept to Banking Product
The idea is to provide limited, rapid financing to customers facing urgent needs, based on their regular income, financial behaviour, existing commitments and actual ability to repay.
Telecommunications companies’ experience offering subscribers airtime advances provides a practical, familiar example of how a small, urgent need can be met by mobile phone, with the amount subsequently recovered when the customer tops up their credit. Digital banks, particularly those owned by or affiliated with telecommunications companies, could draw on this experience to develop short-term financing products. The fundamental difference, however, is that bank financing must comply with credit, Sharia and legal requirements, and must be linked to the borrower’s actual ability to repay.
This does not mean transferring the airtime-advance model into banking unchanged. Rather, it means adopting its operational strengths, such as rapid response, ease of access, small financing amounts and the use of usage data, and developing them within a responsible banking framework. Regional experiences such as Tabby and Tamara also offer important lessons in designing fast, accessible digital services based on instalment payments or deferred payment arrangements within clearly defined limits, with terms and costs disclosed to customers before they complete a transaction.
The product would allow customers to submit applications digitally, check eligibility, review costs, terms, and the repayment schedule, and receive financing once they meet the approved criteria, without complicated procedures or repeated visits to bank branches.
The bank should set financing limits based on the salary paid into the account, existing commitments, credit history, and ability to repay, while establishing safeguards to prevent deductions from exceeding a safe proportion of salary or available cash flow. Financing could also be directed towards specific needs, such as school fees, medicines, medical tests, essential home repairs and urgent family obligations, with direct payment to the service provider wherever possible. These limits would initially be design parameters to be tested and adjusted; they should not be treated as an automatic entitlement for customers or as a substitute for credit assessment and regulatory approval.
From the Mobile Phone to the School, Pharmacy and Doctor’s Surgery
Measure the product’s value by its ability to meet genuine needs, not by the number of accounts opened or the volume of financing provided. To reduce the risk of inappropriate use, direct payment to the beneficiary could be adopted: school fees would be transferred to the educational institution. At the same time, medical expenses would be paid to the healthcare provider or approved pharmacy, wherever this is possible.
Technically, the service could be offered through a dedicated application, the bank’s own app, an electronic wallet or other electronic payment channels. This would enable customers to submit applications, check eligibility, review costs, terms, and repayment schedules, and receive a prompt decision without repeatedly visiting branches or submitting paper documents when their information has already been verified.
The Tabby and Tamara models demonstrate the importance of linking financing or deferred payment arrangements to points of sale and service providers. This way, customers can move from their mobile phones to schools, pharmacies, or clinics through an integrated digital experience, while the bank remains responsible for verifying eligibility, setting limits, and protecting customers against excessive use.
However, digitalisation is not an end in itself. Its value lies in reducing time and costs, widening access and turning technology into a direct benefit in customers’ lives.
Why Might This Product Also Make Sense for Banks?
Small loans may appear to carry high risks and operating costs relative to their returns. This is a legitimate concern, but banks can address it by designing a model based on automation, data, and risk management, rather than rejecting the idea outright. If the product targets customers with regular salaries paid into the bank or verifiable cash flows, and its procedures are automated with close repayment monitoring, it may become feasible to offer small, recurring amounts of financing within carefully managed limits. Repayment data can also help improve risk assessments, alongside income information, existing commitments and credit history. This does not mean that a regular income guarantees repayment or eliminates the risk of default; rather, it provides additional information to support the assessment process.
The product’s success could also help attract financially sound customers from among service providers, including hospitals, doctors’ surgeries, diagnostic centres, pharmacies and schools. This could strengthen customers’ relationship with the bank, expand its customer base, increase deposits, support financial inclusion and pave the way for more suitable savings and financing services. In this way, commercial interests can coincide with social responsibility without compromising the soundness of banking operations.
Financing That Protects Customers, Rather Than Deepening Their Hardship
The product could become a financial burden if it is designed without proper regard for customers’ ability to repay. A family experiencing a cash shortage should not be faced with instalments that drain its next salary or force it to take out another loan to repay an earlier one. The product should therefore be based on the following safeguards:
Ability to repay comes first: The customer’s capacity to repay must be verified without compromising their essential needs.
Full transparency: The financing amount, total cost, fees, repayment dates and consequences of late payment must be clearly explained before the customer agrees to proceed.
Protecting the customer’s income: Instalments must be proportionate to the salary and cash flow, and customers must not be saddled with commitments beyond their means.
Preventing a cycle of indebtedness: New financing should not automatically be used to cover previous financing, and limits must be linked to income and existing commitments.
Compliance with Sharia and legal requirements: The product must be structured in accordance with the principles governing banking and Islamic finance, including muqawala (contracting) and qard hasan (benevolent loans), as well as regulatory requirements. It should not be assumed that every financing structure automatically meets these standards.
Protecting data and digital rights: Customer information must remain confidential, mechanisms must be available for complaints and appeals, and automated decisions must be reviewed where data errors are identified.
The objective is not to increase the indebtedness of poor people, but to provide a regulated instrument that helps them overcome an emergency – a period of temporary financial hardship – and protects them from more costly alternatives.
How Do We Begin? A Limited Pilot Before Wider Roll-out
Banks could begin with a limited pilot targeting employees whose salaries are paid into their accounts, in coordination with selected employers. Participation could then be gradually extended to other customers who meet the eligibility criteria. The first phase would test the digital application platform, eligibility assessment, disbursement and repayment processes, integration with payroll systems and electronic wallets, as well as operating costs and rates of timely repayment and default.
Evaluation should not be limited to the number or value of financing transactions. It should also include social impact indicators: customers’ ability to meet education and healthcare obligations, reduced reliance on high-cost borrowing, and regular repayment without additional financial pressure. Banks could also work with employers, social organisations and healthcare and educational service providers to reduce costs and widen access, without exposing the bank to unassessed liabilities or compromising customers’ rights.
Once the results have been analysed, the terms and limits could be adjusted and the product gradually expanded in line with its financial viability and social impact. The product could take more than one form, depending on the nature of the customers, the sources of funding, and the risk-management arrangements.
One option would be to establish an electronically managed solidarity fund offering financing in the form of qard hasan. Its resources could come from the savings of the fund’s participants, alongside contributions from the bank’s corporate social responsibility funds, state social support funds and other sources. Nominal transaction fees could cover part of the operating costs without becoming a burden on beneficiaries.
Another option would be to establish a financing portfolio offering funds through muqawala arrangements, secured by salary transfers and the pledging of savings. Its resources would come from allocating a specified amount from the bank’s overall financing ceiling. This model would make it possible to control the volume of financing and link it to available cash flows and guarantees, subject to the approved credit assessment, Sharia and regulatory requirements.
Having several possible structures does not mean adopting all of them at once. Instead, each model could be tested on a limited scale, with its social impact, costs and risks measured before selecting the arrangement most suitable for customers, the bank and the regulatory environment.
From Fighting Poverty to Building the Capacity to Cope with It
Digital financing will not eradicate poverty, nor can it replace employment opportunities, higher incomes, price stability and the provision of essential services. But that does not prevent institutions from developing practical, workable solutions.
An employee who cannot pay their child’s school fees may need a modest amount at the right time. A family whose salary has run out may need short-term financing to buy medicines, which it can then repay from its next income without incurring additional burdens. In such circumstances, short-term digital financing can support cash-flow gaps and link finance to financial responsibility, rather than being presented as a comprehensive solution to poverty.
On the International Day for the Eradication of Poverty, sympathy and general calls to support poor people are not enough. What matters more is identifying what each institution can do with the tools at its disposal. Banks can move beyond their traditional role of receiving and disbursing salaries and develop services that help people manage the pressures of everyday life. When a salary cannot cover a family’s needs, the only options should not be burdensome borrowing, postponing medical treatment or depriving children of education.
Responsible banking innovation could offer a more disciplined alternative: limited financing, manageable repayments, full transparency and dignity preserved.
Short-term digital financing could become a practical pilot, bringing technology closer to people and making financial inclusion a means of improving lives, rather than merely a set of figures in banks’ reports.

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