The Impact of Real-Time Payments on Banking and Consumer Behavior in Angola

Discussing how real-time payment systems are reshaping customer expectations and financial services.

On Informal Market and its limitations

Angola is one of Africa's top economies, and according to the Angolan national institute for statistics, INE, in 2022 Angola's informal economy employs about 85% of the entire workforce. The informal sector has always played a critical role in the domestic economy, with its impact being widely felt. However, the lack of formal recognition from the banking sector remains one of the biggest hurdles to achieving a more inclusive and dynamic future, especially in terms of adopting new technologies, particularly those focused on real-time payments. Recently, there has been significant growth in the digital wallet space, which represents a major step forward in the open finance landscape. Services like PayPay, Kamba, E-kwanza, and Multicaixa Express have greatly boosted the flow of money by moving it into the digital realm.

While digital wallet adoption has been substantial and provides real-time value, these networks still operate within closed systems. Both the sender and recipient need to register on the platform to make a transfer, and often, a preloaded balance is required. Unlike digital wallets, Real-Time Payments (RTP) is not an external system to banks that requires preloaded funds. Instead, it is a protocol that banks implement, allowing instant debits and credits between accounts at participating banks. This removes the need for preloading funds and directly integrates payment flows into the banking system, offering greater speed and convenience for both users and financial institutions

Impacts on the life of the ordinary citizen.

The Angolan market, as underdeveloped as it is, still relies primarily on cash as the main medium of exchange, which brings several disadvantages, especially concerning physical limitations, such as:

• Security Risks: Cash transactions are vulnerable to theft, loss, or fraud. Carrying large amounts of cash makes both consumers and businesses targets for robberies or scams.
• Lack of Transaction Transparency: Cash transactions are often untraceable, making it difficult to track spending patterns or conduct audits. This can lead to accounting and tax reporting issues since cash transactions aren't easily documented.
• Impact on Customer Experience: Long wait times due to handling cash can lead to a poor customer experience. Consumers often prefer the speed and convenience of digital payments, potentially causing businesses that heavily rely on cash to lose customers.
• Logistical Challenges: Due to its physical nature, cash takes up space, making transporting large amounts a complex logistical task. Additionally, handling and storing large sums of cash requires special care and proper infrastructure, increasing operational costs for businesses.

The adoption of a real-time payment (RTP) network could eliminate all these issues, providing a stronger incentive for moving funds. In the past, insecurity in cash transactions created fear. The implementation of RTP would not only reduce these risks but also encourage greater market participation, facilitate exchanges, and contribute to a more dynamic and integrated economy.

Key Areas Where Real-Time Payment (RTP) Systems Are Reshaping Financial Services

Speed and Convenience: RTP systems offer immediate fund transfers, setting a new standard for speed in the financial sector. This shift is especially transformative in areas like e-commerce, peer-to-peer transfers, and bill payments, where real-time settlement improves efficiency and customer satisfaction.

Operational Efficiency: The ability to transfer funds instantly enhances cash flow management for both individuals and businesses. For example, small and medium-sized enterprises benefit from receiving payments immediately, allowing for better liquidity and financial planning. This agility reduces reliance on credit and enables quicker decision-making in response to dynamic market conditions.

Increased Innovation: With the adoption of RTP systems, financial institutions are encouraged to develop innovative services around real-time transactions. This has led to new products, such as real-time fraud detection, instant loan disbursement, and integrated payment systems for the gig economy. Banks and fintechs are exploring how to leverage real-time data to create personalized financial solutions.

Greater Competition and Collaboration: The rise of RTP systems has intensified competition in the financial sector, as traditional banks face challenges from non-banking entities like fintechs and large tech companies. These new entrants often offer innovative payment solutions with lower fees, better user experiences, and more flexible services. In response, many financial institutions have formed partnerships with fintechs or are adopting open banking frameworks to stay competitive and offer more value-added services.

Global Financial Inclusion: RTP systems are also promoting financial inclusion by offering faster and more accessible payment methods for underserved populations. In many developing regions, real-time payments provide a way for individuals and businesses to participate in the formal economy without needing a traditional bank account. Digital wallets and other payment solutions using RTP can empower people in rural or remote areas, giving them access to essential financial services.

Conclusion.

Real-time payment (RTP) systems are not only reshaping customer expectations; they are also fundamentally transforming the infrastructure of financial services. Banks and financial institutions are investing in modernizing their systems to support RTP, with many adopting open banking frameworks that allow for greater interoperability between systems.

Furthermore, the adoption of real-time payments is driving regulatory changes, as central banks and governments establish guidelines for managing operational risk, combating fraud, and protecting consumers in an increasingly real-time environment.

RTP systems are promoting a shift in financial services toward faster, more convenient, and transparent operations, reshaping how customers interact with their finances and how institutions compete. The continued expansion of real-time payments is likely to further drive innovation in digital banking, enhance financial inclusion, and raise service standards across the sector.