Around 80% of Egypt’s 100 million population is still unbanked according to the World Bank. There is a long road ahead in terms of banking and financial inclusions in Egypt.
Egypt in recent years has devalued their country’s currency up to 48% against US dollars as the country’s response to the brink of economic collapse it has been facing. This lead to a bailout from the International Monetary Fund.
Egypt is primarily a cash-based society where people still follow traditional methods of organised communal savings to rotate and borrow their finance.
Many small business and individuals borrow money from communal savings instead of banks as the rate of interest is lower. Individuals save their wages through communal savings run by family, friends or local communities despite having very less security for their money.
People are deterred from going to formal banking institutions to avoid tedious paperwork and a higher rate of interest.
Around 65% of Egypt is below 35 years so therefore the government is targeting the young with digitalisation in the banking sector.
The Government of Egypt has decided to make use of digital technology in order to streamline financial systems conducive to improving its tax collection. For this reason, The Central Bank of Egypt has issued 5 million ATM cards to all government employees. This has lead to an overall reduction in costs of paying salaries and further keeps the money within the financial system.
However, non-government organisations and small business still pay cash in hand. With widespread awareness, financial inclusion is more likely to take place. Apart from opening bank accounts and providing ATM cards with the government of Egypt is adopting digitalisation in order to create a cashless economy.
Digitalisation in banking is predominantly split into mobile wallets and e-commerce solutions. With the new age agile banking systems, more people are being lured into going digital with respect to banking.
Around 65% of Egypt is below 35 years so therefore the government is targeting the young with digitalisation in the banking sector. They are creating awareness programs in order to teach people how to use digital platforms and thereby creating trust which would lead to consumer acquisition.
The National Payment Council is making it mandatory for all government service providers to provide a digital payments method to help customers pay receipts and fees online.
Many digital financial service providers such as Dopay and Payfort look at Egypt as one of the topmost emerging markets for online payments due to the inclusion of new users. Numerous mobile payment services and e-wallet are cashing in on services to the unbanked segment, as it is much easier to open an e-wallet which requires only a valid ID and registered phone number, rather than the long banking procedure.
Banks in Egypt have been bureaucratic and conservative. The fast-growing e-wallet wave has created a requirement for banks to make room for more innovation and become more accessible to people.
Banks have now partnered with agents in supermarkets and public kiosks to open bank accounts easily. The banks upon receiving the application forms then perform verifications. The government has established a National payment Council, a regulatory body to attract more cash into formal banking sectors by revolutionising electronic payments.
The National Payment Council is making it mandatory for all government service providers to provide a digital payments method to help customers pay receipts and fees online.
The Egyptian government is looking at minimising cash circulation and even though financial technology companies eat into the bank’s digital opportunities, it helps in money moving to the formal economy. Financial inclusion along with digital transformation is the key to achieving a cashless economy.
In the recently hosted Banking Tech, North Africa Week on 28th and 29th January 2019 emphasis were given to demonstrate innovative and cost-effective digital banking services which help not only in upgrading and retaining consumers but also expanding to include access to the unbanked and underserved consumers.
With Egypt’s proactive outlook and rising young population, digital banking will further help to modernise its economy. However, there are challenges such as cybersecurity, improving legal frameworks and conceptualising future scalability requires more attention. However global collaboration and knowledge sharing are likely to bridge gaps in the challenges.
