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Case
| HBS Case Collection
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May 2020
Trust Merchant Bank
by
Ramon Casadesus-Masanell, Pippa Tubman Armerding, Dilyana Karadzhova Botha and Salim Dewji
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Abstract
Trust Merchant Bank, a leading bank in the Democratic Republic of Congo, needs to decide whether to enter the soon-to-be-liberalized insurance industry. Since its founding in 2004, TMB has played a pivotal role in reshaping the DRC banking landscape. In TMB’s early years, existing banks in the DRC were almost exclusively focused on corporate clients in the major cities. In contrast, TMB targeted underserved towns and focused on retail clients across all income levels, offering them no fees for deposits or withdrawals. These services distinguished TMB from competitors and enabled its rapid growth to become one of the largest banks in the DRC. More recently, TMB’s launch of the mobile banking platform Pepele Mobile, the first of its kind in the country, strengthened TMB’s mission of inclusive finance by providing access to a broader population.
In 2018, the Congolese government decided to open up the insurance industry, formerly a monopoly of the state-owned and acutely mismanaged Société National d’Assurances (SONAS). TMB is considering applying for the newly available insurance licenses as the bank is well-positioned to capitalize on its existing banking infrastructure to begin selling insurance. On the one hand, if TMB enters insurance, there is no guarantee that the Congolese people will react favorably to the bank’s new offering. Furthermore, TMB will need significant resources and internal capabilities to successfully navigate this uncharted territory. On the other hand, perhaps growth potential for TMB in banking will become increasingly limited as its competitors also focus on financial inclusion. In this new context, perhaps it is time to try something new. The benefits of TMB’s focus on customer service and financial inclusion could carry over to the insurance sector.
Keywords: retail banking;
financial services;
Financial inclusion;
turnaround;
fintech;
Banks and Banking;
Financial Condition;
Insurance;
Corporate Strategy;
Expansion;
Business Model;
Family Business;
Entrepreneurship;
Technology;
Monopoly;
Banking Industry;
Insurance Industry;
Africa;
Congo, Democratic Republic of the;
