Telecommunications Companies: From an Investment Opportunity to Reshaping the Banking Sector

Noaman Yousif Mohammed
In Sudan, the question is no longer whether we need digital banks. The need is clear, and people’s daily experience with applications and electronic transfers confirms that digital financial services are no longer a technological luxury. The more pressing question, therefore, is: who has the capacity to build a sustainable Sudanese digital bank, and can telecommunications companies become partners in this process?
This issue arises at a sensitive juncture, following Central Bank of Sudan Circular No. 4/2026 on the minimum paid-up capital of banks, which raised capital requirements for commercial and digital banks to SDG 140 billion while giving existing banks the option to regularise their position through capital increases or mergers. Consequently, the entry of telecommunications companies into banking should not be viewed merely as a new technology project, but as one option for rebuilding the financial sector.
What Is a Digital Bank?
A digital bank is a licensed bank that provides its banking services primarily through mobile phones and the internet, including account opening, savings, transfers, payments and financing, without relying on an extensive network of traditional branches. It differs from a traditional bank that simply adds an electronic application to its services, and it also differs from an electronic wallet, which is generally limited to payment and electronic-money services, depending on the applicable licence and legislation.
Capital Alone Does Not Make a Bank
It is important here to distinguish between paid-up capital and capital adequacy. The minimum amount stipulated in the circular is a legal capitalisation requirement, but it is not, on its own, sufficient to determine whether a bank can remain viable. A bank with substantial paid-up capital may still suffer from accumulated losses, impaired assets, weak liquidity or an inability to finance its operations. Therefore, any new digital banking project must be based on a financial, operational and regulatory feasibility study, rather than merely on the availability of an electronic application or a large customer base.
This is where telecommunications companies become important. They possess some of the capabilities required by a digital bank, but they do not automatically possess a banking licence or comprehensive expertise in managing banking risks.
Why Telecommunications Companies?
Telecommunications companies typically have extensive customer networks, experience in managing digital accounts, collecting payments, providing customer services and operating systems around the clock. The widespread use of mobile phones also enables them to reach groups that do not regularly use bank branches, including small business owners and workers in the informal sector.
These advantages, however, do not mean that a telecommunications company can turn an electronic wallet into a bank simply by changing its name. A bank must manage deposits, financing, liquidity, risk and compliance, all of which require a specialised regulatory framework.
The Saudi experience illustrates this clearly: stc pay transformed from an electronic wallet into STC Bank after obtaining a digital banking licence from the Saudi Central Bank, while the entity continued to operate under banking supervision.
Saudi Arabia: When a Telecommunications Company Becomes a Digital Bank
Saudi Arabia offers an important experience in this field, not because it is closest to Sudan in every respect, but because it demonstrates how a telecommunications company with a broad customer base can enter banking through institutional transformation and licensing.
STC Bank began as an electronic wallet before transforming into a licensed digital bank. Today, it provides account, transfer, savings, card and business banking services through digital platforms.
By contrast, D360 represents another model: a digital bank established by investors and supported by the Public Investment Fund and Derayah Financial, which began banking operations in December 2024 after obtaining no-objection approval from the Saudi Central Bank.
These two experiences demonstrate that a digital bank can emerge in two different ways: by transforming an existing digital financial entity into a bank, or by establishing a new bank from the outset. The common denominator, however, is that licensing, governance, capital and risk management remain essential requirements, whether the founder is a telecommunications company or a financial investor.
Kenya: Mobile Phones Open the Door to Financial Inclusion
Kenya presents a different model. The expansion of digital finance there has been closely associated with mobile-phone and agent-based services, particularly M-Pesa, which enabled deposits, withdrawals, transfers and payments through an extensive network of service points.
The Kenyan experience shows that digital transformation begins with customer needs, not the institution’s form. A customer may need to make a small transfer, deposit money daily, pay for a purchase or withdraw cash from a nearby agent. If the financial system can meet these needs securely and at an appropriate cost, it can expand financial inclusion even before a fully fledged digital bank is established.
Sudan: Where Does the Opportunity Lie?
Sudan has a base of existing banks, telecommunications companies, electronic payment networks, and experience with digital applications and wallets. However, this infrastructure still faces challenges related to network continuity, cash liquidity, internet reliance, cybersecurity, and customer confidence.
Consequently, telecommunications companies should address these challenges first, rather than simply adding another application to the market.
Opportunity One: Customer Reach
Telecommunications companies can provide extensive access channels through mobile phones, enabling digital banks to serve customers in urban and rural areas while reducing reliance on branches.
Opportunity Two: Technical Infrastructure
Telecommunications companies have experience in managing large-scale systems, providing continuous service, monitoring faults and operating call centres. Banking systems, however, require additional safeguards, particularly concerning the integrity of financial records, risk management and the protection of customer data.
Opportunity Three: Payments and Commerce
A digital bank linked to a telecommunications company could offer merchants services such as payment acceptance, electronic collection, and business account management. This could help expand the customer base and improve the circulation of money within the economy.
Opportunity Four: Savings and Financing
Companies could develop simple digital savings products, followed by financing services based on transaction data, while observing credit controls and customer protection requirements. However, data available to telecommunications companies must not replace credit assessment and banking supervision.
Should Telecommunications Companies Establish New Banks or Enter into Partnerships?
There are three possible models:
Model One: An Independent Digital Bank
A telecommunications company establishes a licensed digital bank with independent capital, a board of directors, an executive management team, and a comprehensive regulatory system.
Model Two: A Partnership Between a Telecommunications Company and an Existing Bank
The bank undertakes banking activities, licensing, and compliance, while the telecommunications company provides digital channels, technical infrastructure, and customer access.
Model Three: A Merger or Restructuring
Telecommunications companies could join an investment consortium to recapitalise an existing bank or establish a new banking entity after addressing its legal and financial position.
No model is universally preferable. The choice depends on available capital, the bank’s condition, licensing requirements, and the partners’ capacity to manage risks.
What Should the Central Bank of Sudan Do?
The success of any digital banking project requires a clear regulatory framework defining the relationship between banks and telecommunications companies.
Key requirements include:
Defining the conditions governing telecommunications companies’ participation in banks.
Establishing rules on ownership, management and conflicts of interest.
Regulating the use of outsourced technical service providers.
Defining the bank’s responsibility for customer funds.
Establishing clear rules on data and privacy.
Regulating agent services and cash points.
Establishing cybersecurity and business continuity requirements.
Defining mechanisms for customer protection and complaint resolution.
Regulating the transition from electronic wallets to bank accounts.
Linking every digital banking project to capital, capital adequacy and liquidity requirements.
These are not conditions intended to obstruct innovation. They are safeguards to prevent digital expansion from becoming a new source of risk.
Risks That Must Remain at the Forefront
Establishing a digital bank may seem less costly than establishing a traditional bank, but that does not mean its risks are lower. Technical risks may cause service interruptions or erode confidence, while cybersecurity risks may lead to financial losses and data breaches. Weak liquidity among agents may also disrupt withdrawals and deposits.
This issue is particularly important in Sudan, where a technical study published in June 2026 identified security vulnerabilities in Sudanese banking applications, with varying levels of risk among the applications. These findings relate to a specific study and do not constitute a comprehensive judgement on all applications or banks.
Any digital bank should therefore be built on the principle of security by design, rather than treating security as an issue to address after the service has launched.
What About Existing Banks?
Establishing digital banks should not become a way to bypass the problems facing existing banks subject to the requirements of Circular No. 4/2026. Digital transformation does not exempt a bank from addressing accumulated losses, meeting the required capital threshold or regularising its legal position.
However, digital transformation can form part of a restructuring plan, provided that a clear financial and operational diagnosis precedes it, its feasibility is established, and the capacity to finance and implement it is available.
The entry of telecommunications companies into banking may also open opportunities for mergers or partnerships, but it does not make mergers or liquidation automatic outcomes.
The Practical Way Forward
Sudan does not need to replicate the Saudi or Kenyan experience. It needs to develop a model suited to its own circumstances.
This could begin with a limited pilot project focusing on digital savings accounts, transfers and payments, commercial services, agents, USSD, customer protection, service continuity testing, transaction-cost measurement, cybersecurity assessment and expansion after the successful completion of the first phase.
The next step could then be digital financing and integrated banking services, depending on operational results and regulatory requirements.
Conclusion
Telecommunications companies in Sudan have a real opportunity to help establish digital banks, but they cannot do so alone. The project requires bankers, technologists, investors, strong supervision and reliable infrastructure.
The Saudi experience demonstrates that a telecommunications company can transform into a licensed digital bank. In contrast, the Kenyan experience shows that mobile phones and agents can greatly expand access to financial services.
For Sudan, success will depend on combining these lessons with the requirements of the capital circular and the restructuring process.
The digital bank we need is not merely a bank without branches. It is a bank without barriers for the customer, without ambiguity over responsibility, and without compromising the security of funds, confidence or supervision.
Former Banker – Institutional Development Consultant

Shortlink: https://sudanhorizon.com/?p=18121