By Professor Hassan Bashir Muhammad Nour
Introduction:
Updating customers data and verifying their identities is a fundamental requirement for sound banking operations, ensuring compliance with Know Your Customer (KYC) principles, anti-money laundering, counter-terrorist financing, and financial crime prevention. From this perspective, the principle of updating data does not, in itself, pose a problem from a banking or regulatory standpoint ,Rather, it represents a necessary practice to protect the banking system, customers, and the national economy.
However, the problem begins when the matter shifts from the necessity of updating data to the method of implementation، especially if this results in widespread disruption or restriction of customer accounts, or the halt of a significant portion of electronic banking transactions via the Bankak application, without granting customers sufficient time to adjust their status or providing practical alternatives to ensure their continued access to funds and essential transactions.
Hence arises the importance of distinguishing between the right goal and the right approach. While the security and banking objective may be legitimate and necessary, the manner in which it is executed can produce economic, banking, and social impacts that partially conflict with the very goal the decision seeks to achieve.
In this article, we address several aspects regarding the principle’s legitimacy and the negative impacts of the implementation method:
First: The Legitimacy of Data Updates and the Problem of Implementation Method:
Updating customer data, identity verification, and applying KYC principles are essential components of modern banking supervision. Moreover, combating money laundering, terrorist financing, fraud, and the use of shell accounts requires banks to continuously know their customers and monitor their transaction patterns.
Accordingly, the economic and professional question should not be: Should customer data be updated? The answer to that is clear: yes.
The more critical question is: How should this update be executed without harming the continuity of banking services, public trust, and the flow of money in the economy? If the measure temporarily deprives a large number of customers of using their money or disrupts daily transfers, the economic and social cost may far outweigh the short-term regulatory benefit, especially in an economy operating under extraordinary conditions, characterized by high reliance on electronic transactions.
Second: Bankak and Its Role in the Flow of Money:
The sensitivity of this issue stems particularly from the prominent position the Bankak app occupies in the Sudanese banking system. The application is not merely an additional technical tool; it has become a primary channel for accessing accounts and conducting transfers and payments, including account-to-account transfers and digital payments.
Thus, Bankak has become part of the core infrastructure for monetary flow in the Sudanese economy. Therefore, widespread disruption of its use should not be viewed merely as a technical or administrative issue concerning the bank’s relationship with its clients. Instead, it could transform into a shock to the payment system if the number of affected customers is large and the disruption period prolonged.
In modern economies, the efficiency of payment methods and the speed of money transfers among individuals, enterprises, and institutions constitute key components of economic efficiency itself.
Third: Impact on Deposits and Banking Liquidity:
It is essential to distinguish between an accounting decline in deposits and a reduction in customers’ ability to use their deposits. From an accounting perspective, the outage of the Bankak app does not necessarily mean a decrease in bank deposits; the deposit remains a liability on the bank even if the customer cannot access it electronically.
However, the real danger lies in depositors’ behavior and shifting preferences. When a customer feels that access to their money is no longer guaranteed or is tied to procedures that are difficult to complete, they may reconsider keeping their funds within the banking system, preferring to hold a larger portion in cash outside of banks.
Here, a cascade of economic effects can begin, including:
* Increased demand for cash withdrawals
* Higher cash holdings outside the banking system
* Reduced use of deposits in daily transactions
* Lower velocity of money circulation within the banking system
* Heightened pressure on cash liquidity at branches and ATMs
In the medium term, the persistence of this phenomenon could weaken banks’ ability to recycle deposits into financing for economic activity.
Thus, the greater risk lies not only in actual deposit withdrawals, but in the shift in public preference from bank money to currency held outside the banking system.
Fourth: Impact on Monetary Movement in the Sudanese Economy:
This issue gains heightened significance given the extraordinary economic and banking conditions Sudan is experiencing due to the war, resulting in infrastructure destruction, disrupted economic activity, declining trust in institutions, and difficult access to banking services across many regions.
Under such conditions, electronic payment and transfer apps become vital economic infrastructure rather than mere technological conveniences. When a significant percentage of electronic transactions is disrupted, the likely results include a decrease in the velocity of bank money, increased demand for physical cash, a rise in off-banking transactions, reduced payment system efficiency, and higher transaction costs.
This can occur even without a reduction in the nominal money supply; funds may remain in bank accounts, but their ability to move and circulate diminishes due to operational constraints. This demonstrates that the velocity and efficiency of monetary movement between economic units are no less important than the volume of money itself.
Fifth: Impacts on the Commercial Sector:
The effects of disrupting electronic services are not limited to personal account holders; they extend directly to the commercial sector. A merchant who relies on electronic transfers or digital payment methods to collect sales revenue may find themselves facing difficulty in collecting income and settling transactions.
This can lead to the postponement of buying and selling operations, a return to cash transactions, increased risks of carrying money, higher costs for cash transport and security, difficulties in settling accounts between traders, disruption of supply chains, and elevated commercial transaction costs.
Furthermore, the breakdown of official banking channels may push certain economic activities toward informal alternatives, producing a result partially counter to the core objective of strengthening banking supervision. A policy aimed at increasing financial transparency should not unintentionally drive economic activity outside formal financial channels.
Sixth: Impact on the Banking Public:
A bank customer does not view their account merely as an accounting entry, but as a right to access their money whenever needed. When transactions stop abruptly due to data updates, customers face difficulties meeting daily needs and financial obligations، including basic expenses, family remittances, business settlements, rent, educational, and medical costs.
Additionally, customers incur extra costs to reach physical branches, including transport fees, waiting time, and lost work hours. These burdens fall hardest on the elderly, the sick, those living far from branches, and customers prevented by war, displacement, or overseas residence from easily accessing traditional banking services. Therefore, the cost of the decision is not borne by banks alone, but largely by the public and the private sector.
Seventh: Banking Trust as an Economic Asset:
Trust is perhaps the single most vital intangible asset in a banking system. A customer deposits money in a bank assuming it is secure and accessible when needed. If instances of lost access or failed transfers recur, the public may begin re-evaluating their trust in bank deposits and electronic channels.
This process can follow a negative feedback loop:
This spiral can prove far more dangerous long-term than the immediate harm caused by app downtime. Therefore, trust in the banking system must be treated as an economic asset to be protected, not merely a passive byproduct of banking soundness.
Eighth: Banking Security vs. Economic Security:
It is critical to distinguish between banking security and economic security.
The security goal of data updates, curbing money laundering, terrorism financing, fraud, war funding, shell accounts, and financial crimes, is legitimate and necessary to protect the financial system. However, if a security measure causes widespread banking disruption, it creates a different type of risk: damage to economic security.
Economic security requires not only fighting financial crime, but also maintaining banking stability, uninterrupted monetary flow, access to savings, regular payments, business continuity, institutional trust, and the banking sector’s capacity to finance production. Thus, banking security must not, through poor design or execution, become a source of economic insecurity.
Ninth: Unintended Economic Consequences:
This situation provides a clear example of what public policy analysis terms “Unintended Economic Consequences.”
Regulators may target specific non-compliant or outdated accounts, but using a blanket approach to suspension affects a far larger number of compliant customers.
From both efficiency and security perspectives, a better approach relies on risk-based customer segmentation, targeted individual intervention, advance notice, a suitable compliance window, and alternative channels for essential services، achieving security goals without shocking the banking system.
Tenth: Impact on Liquidity Management:
A significant banking paradox arises here: if Bankak stops working while customers need funds, many will attempt to withdraw cash from branches or ATMs, driving a sudden spike in cash demand.
While this is not inherently a solvency problem, it can escalate into a liquidity management crisis during mass or simultaneous withdrawals. Conversely, if customers cannot withdraw or transfer funds, “Frozen Transactional Liquidity” occurs, where liquidity exists on paper, but its circulation in daily transactions is severely restricted by operational constraints.
This highlights that banking system efficiency depends not just on balance sizes, but on customers’ ability to utilize and transfer those balances in a timely manner.
Eleventh: Pushing the Economy Toward Informality:
One of the most dangerous repercussions of disrupting official banking channels is driving transactions out of the formal banking sector. As formal channels become harder to navigate, paper cash, informal financial intermediaries, peer-to-peer transfers, non-bank networks, corruption, and off-the-books trade become increasingly attractive.
This outcome directly undermines the original intent of updating customer data. If the goal is transparency and control over financial flows, reducing formal banking usage unintentionally makes financial activity less transparent, not more.
Twelfth: Impact on Financial Inclusion and Digital Transformation:
At this stage, Sudan needs to expand financial inclusion and advance digital transformation, not push the public back to full cash reliance. The Bankak application serves as a key tool for expanding digital banking access, particularly in an environment with sparse branch coverage and war-related access challenges.
Widespread service disruptions threaten temporary setbacks for financial inclusion, driving customers back to traditional cash transactions. This represents more than a technological setback; it increases transaction costs, reduces financial transparency, and weakens the financial system’s capacity to mobilize savings for economic growth.
Thirteenth: Cybersecurity and Banking Supervision:
Addressing security risks must extend beyond restricting accounts or updating records. Protecting a digital banking system requires a comprehensive ecosystem, including cybersecurity, fraud detection, anomaly monitoring, multi-factor authentication, digital infrastructure protection, app security, and data privacy.
Consequently, updating customer data should form part of a broader banking risk management framework, rather than serving as a substitute for app security, infrastructure hardening, and early fraud detection systems.
Fourteenth: How Should Data Updates Be Executed?:
The solution is not to cancel data update requirements, but to refine their execution by adopting a Risk-Based Approach that avoids uniform treatment of all accounts.
This approach should be built on key principles:
* Providing advance notice and a reasonable timeframe for completion.
* Enabling digital data updates without requiring branch visits except when necessary.
* Avoiding sudden, severe disruptions to core services (such as the current branch overcrowding).
* Applying gradual restrictions scaled to risk level and non-compliance severity.
* Establishing an expedited appeals mechanism to restore service upon compliance.
* Maintaining minimum essential services during the update process through accessible means.
* Offering clear, continuous digital communication channels to guide customers.
* Conducting prior economic impact assessments before implementing broad decisions.
Fifteenth: Key Performance Indicators for Economic Impact:
To objectively evaluate this decision, assessment must look beyond the number of updated accounts and track key economic indicators:
(Indicator Category) (Specific Metric )
Account & Deposit Scope
• Number of affected accounts
• Total value of tied-up deposits
(Transaction Activity) • Volume/value of halted electronic transactions
• Shift in electronic transfer and digital payment usage.
Cash & Liquidity Shifts • Changes in cash withdrawal volumes
• Fluctuations in currency circulating outside the banking system (Customer Experience)
• Customer complaint rates
• Average time required to restore service
• Public trust levels in digital banking services.
These metrics provide a quantitative foundation to measure true economic costs, enabling monetary authorities to adjust policies if unintended consequences emerge.
Sixteenth: Final Evaluation:
The issue can be summarized in a simple framework:
However, sudden and widespread execution without access or alternatives carries high economic, social, and banking costs. Evaluating this decision requires asking broader policy questions beyond basic legal authority:
* Is the execution method proportional to the risk level?
* Were customers given adequate advance notice and time given current circumstances?
* Is the grace period sufficient?
* Is there an easy, secure digital channel for updating data?
* Can customers access a portion of their funds during the update process?
* Is there a fast-track appeals mechanism to restore service?
* How many accounts and deposits are temporarily frozen?
* How far did electronic transactions drop, and did cash withdrawals spike?
These objective questions and indicators measure the real economic cost of the decision, moving beyond simple administrative or security compliance.
Conclusion:
In principle, updating Bank of Khartoum customer data is a legitimate measure to protect the banking system, enhance KYC compliance, and combat financial crime. However, a legitimate goal does not automatically guarantee sound execution.
If updates trigger widespread disruptions to Bankak, the impacts extend far beyond individual inconvenience to macro-level banking and economic risks, weakening trust, boosting cash hoarding, straining liquidity, slowing money velocity, disrupting trade payments, raising transaction costs, driving informal activity, and undermining financial inclusion.
Burdening the public and businesses with the direct costs of a broad regulatory action can backfire, driving clients away from the banking system precisely when Sudan needs deeper institutional trust, higher deposits, expanded financial inclusion, and broader digital payment adoption.
Sound banking policy does not force a choice between security and economic continuity; it designs procedures that achieve both. The right goal is protecting the banking system from financial crimes and war funding; the right approach relies on gradation, proportionality, risk classification, advance notice, digital accessibility, alternatives, and basic service continuity.
This balance achieves a more efficient banking control framework, stronger financial security, higher public trust, and uninterrupted economic activity. Economic security requires not only preventing illicit account use, but safeguarding financial system continuity, public trust, savings access, and the banking sector’s core function of financing the economy.
The central message is clear: the goal of updating data is correct, but success depends on using the right method at the right time, achieving security objectives without generating economic and social disruption.
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