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Dominican Republic Takes Step Towards Financial Inclusion
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By: Enmanuel Cedeño Brea, Regulation Deputy Manager, and Xiomy Ramírez Nin, Head of the Financial Inclusion Division, Dominican Republic’s Superintendency of Banks.
The Dominican Republic is making significant strides towards financial inclusion with a focus on banking access points. The country’s Superintendency of Banks (SB) has shifted its attention from traditional bank branches to alternative outlets such as convenience stores and pharmacies that can offer limited banking services acting as agents for financial service providers.
Rethinking Banking Access Points
Traditionally, the data on these alternative outlets focused only on registered agents, but this analysis did not reflect their operational reality. The SB has now started tracking operational agents, which are those who have actually carried out transactions with the public over a 12-month period. This new approach prioritizes effectiveness over sheer quantity.
SABs: A Growing Network
By the end of 2021, there were 2,016 operational SABs in the Dominican Republic, close to 40% of registered SABs. The number of operational SABs peaked in 2017 with 2,915 establishments and shows a steady decline from 2018 to 2021.
Key Statistics
- Number of operational SABs: 2,016 (as of 2021)
- Registered SABs: around 5,000
- Peak number of operational SABs: 2,915 (in 2017)
Convenience Stores Lead the Way
Convenience stores, or colmados, remain the commercial category with the most outlets, reaching a 32% share in 2021. Pharmacies and supermarkets follow closely, with a 25 and nine percent share, respectively.
Breakdown of SABs by Commercial Category
- Convenience Stores: 32%
- Pharmacies: 25%
- Supermarkets: 9%
SABs Perform a Variety of Financial Services
Operational SABs can perform different types of financial services including balance history review, deposits, limited withdrawals, payments, remittance cash-outs, prepaid cards transactions and electronic transfers.
Most Common Transactions
- Cash Deposits: 57%
- Payments: 22%
- Checks: 12%
SAB Administrators: A New Type of Non-Bank License
The SB has implemented policy initiatives to promote having multiple contracts with different financial service providers, including the creation of a new type of non-bank license called SAB network administrators. These entities onboard different SABs, offering them technological platforms and carrying out their due diligence on behalf of the financial service providers.
A Strategic Approach Towards Financial Inclusion
The SB’s new strategic approach with SABs and SAB administrators leverages these institutions to achieve greater financial inclusion and tackle banking deserts. By providing access to a plethora of establishments at once, financial service providers can reduce transaction and search costs, while also benefiting from economies of scale and scope.
Conclusion
The Dominican Republic is taking significant steps towards financial inclusion with its focus on alternative banking access points. The SB’s new strategic approach with SABs and SAB administrators has the potential to achieve greater financial inclusion and tackle banking deserts, ultimately benefiting both banks and users.