By 
Egypt is embracing digital transformation and innovation to strengthen its economy, with a particular focus on digitalizing its banking system. The Central Bank of Egypt (CBE) has recently issued rules for the licensing, registration, monitoring, and supervision of digital banks, paving the way for the emergence of virtual financial institutions.
Digital banks, distinct from online banking, primarily deliver banking services through electronic channels instead of physical branches. The COVID-19 pandemic has accelerated the adoption of digital banking worldwide, as customers seek convenient and contactless solutions.
To foster this trend, the CBE introduced the new banking law in September 2020 and revealed a set of requirements for institutions and banks seeking a digital banking license in Egypt on July 12th. The requirements include minimum capital, governance, and risk management standards, as well as ensuring the majority shareholder has previous experience in similar activities.
Several companies have already expressed interest in obtaining a digital banking license, with a significant focus on local Egyptian institutions. However, there is a need to attract international collaboration to further boost the sector. Investors will be keen to assess the market’s competitiveness and evaluate the CBE’s control and infrastructure.
Digital banking offers vast opportunities in Egypt, especially considering that a substantial portion of the population remains unbanked. Nearly 40% of the eligible age group still lacks banking access, presenting an attractive market for foreign investors.
Nonetheless, digital banking also poses challenges, notably related to infrastructure and cybersecurity. Egypt has been making progress in improving internet speed and digital infrastructure, but further enhancements are required to support seamless digital banking services.
The country must also strengthen its data ecosystem to enable accurate credit ratings and AI-based assessments of loan eligibility. Additionally, robust plans for payment systems, information technology, and cybersecurity are essential to ensure the success and security of digital banking in Egypt.
Overall, the licensing of digital banks in Egypt is a crucial step towards advancing financial inclusion and driving the nation towards a cashless economy. With innovative services and increased accessibility, digital banks are set to empower various customers, including the unbanked and underbanked segments, while contributing to the nation’s economic growth.
Comments