Time for digital revolution in Egyptian banking system
The emergence of the novel coronavirus (COVID-19) has prompted the Central Bank of Egypt (CBE) and banks operating in the local market to rapidly move towards digitising their transactions.
The crisis caused by the coronavirus has also prompted banks to change the way they provide services to customers. It has motivated Egypt’s banks to use technological and digital services to decrease the use of hard cash and move instead to e-banking methods.
The banks’ strategies have also changed in relation to geographical expansion, as the focus has shifted away from the traditional and towards electronic branches.
Electronic banking has proven their importance in terms of citizens being able to complete transactions remotely instead of being at branches in person.
Digital services have become a safety net for banks and their customers, in the wake of the pandemic.
The CBE has launched several initiatives urging banks to move towards these services, especially with regard to electronic payments. Banks have also moved aggressively to support those initiatives and steps taken by the CBE in this regard.
Immediately after the state announced the emergence of the coronavirus, the CBE took several measures to direct citizens towards using technology for banking transactions instead of attending branches.
This includes their abolishing fees and commissions applied to using electronic points of sale (POS), as well as on withdrawals from ATMs and electronic wallets for a period of six months.
The CBE has also decided to amend the maximum limits for mobile wallets and prepaid cards. Local transfers in the Egyptian pound have additionally been exempted from all commissions and related expenses.
The move was taken to reduce cash transactions, and direct banks to develop their infrastructure to cope with the digital revolution. This aims to avoid delays in the implementation of local transfers and allows implementation of customer requests on same day.
The CBE measures to support technological transactions in banks also included requiring banks to issue electronic wallets and prepaid cards for free for six months.
Whilst progress is being made, the CBE has also indicated that there remain some challenges in increasing acceptance of electronic banking in Egypt. This includes the need to raise the numbers and geographical distribution of POS available to customers, and to increase the reliance on using Quick Response Codes (QR Codes).
It also includes the need for developing more programmes to educate citizens and companies on the importance of electronic collection methods.
In May 2020, the CBE launched an initiative to activate electronic payment, as part of the precautionary measures it took to confront the coronavirus. With that, it aimed to maximise the banking sector’s contribution to the state’s plan to deal with the repercussions of the virus.
The CBE stressed that launching this initiative stems from its belief in the importance of providing all financial services to citizens in a fair and manner, whilst increasing use of these services at an affordable cost.
This initiative included the CBE financing the deployment of 100,000 new electronic POS across Egypt, which will take place until the end of December 2020.
It takes into account several determinants, including the geographical distribution of new merchants nationwide, and giving priority to vital or relevant sectors with intensive cash transactions.
This includes gas stations, supermarkets and pharmacies, adhering to the minimum specifications for POS and Mini POS.
The CBE has also required banks that have obtained a licence to accept Acquirer Banks to launch a unified advertising awareness campaign on the advantages of electronic payment, and using POS and QR codes. The campaign aims to incentivise payment tool users and merchants to pay and collect online.
The Federation of Egyptian Banks (FEB) will coordinate with banks to design, implement and launch the campaign.
The CBE is also obliging all banks that export electronic payment tools, whether payment cards or mobile wallets, to prepare incentive programmes for their customers. The programmes would aim to increase the issuance and use of these tools in electronic payments.
The CBE also launched a further initiative installing 6,500 ATMs nationwide, as a first stage, bringing the total number of ATMs in Egypt to 20,000 machines distributed across the country.
It anticipated this by devoting an entire chapter in Egypt’s new banking law on payment systems and services and financial technology, recently approved by Parliament. The law aims to give the CBE the proper legal cover to control all bodies managing payment systems and services in the country.
The law also aims to set controls and supervisory procedures for payment service providers of various forms, to regulate the use of financial technology in banking activities. This would come in addition to supporting work in the field of modern financial technology.
According to the CBE, the payment systems and IT sector has recently achieved much progress. The most important of these is the launch of the national payment system “Meeza”, and the issuance of the non-cash payment law. A financial technology regulatory laboratory has also recently been established, alongside a project developing the automation of government collections.
The CBE’s financial ongoing technology strategy, announced in March 2019, is based on the integration between Egypt’s Vision 2030 and the CBE’s vision to meet the needs and aspirations of the local market.
This strategy addresses several basic pathways, the most important of which is meeting the demand for financial technology services and developing and exploiting innovative talents capabilities.
The strategy has also addressed the targeting of increased monetary support for financial technology projects, strengthening the supervisory and regulatory rules that encourage the financial technology industry, and regulating governance rules for financial technology.
The CBE has also established a Fintech Center to enhance and progress the Egyptian market’s financial technology ecosystem.
The centre aims to bring partners together under the umbrella of fintech, drawing in emerging fintech companies, regulatory and supervisory bodies, and financial institutions. It will also seek to bring in business accelerators and incubators, global technology companies, and fintech sector investors.
The CBE has also launched the Financial Technology Platform, the electronic portal for Egypt’s financial technology system. The platform aims to facilitate the process of linking the parties to the fintech system, whether locally or globally.
The banks’ strategies have also changed in relation to geographical expansion, as the focus has shifted away from the traditional and towards electronic branches.
Electronic banking has proven their importance in terms of citizens being able to complete transactions remotely instead of being at branches in person.
Digital services have become a safety net for banks and their customers, in the wake of the pandemic.
The CBE has launched several initiatives urging banks to move towards these services, especially with regard to electronic payments. Banks have also moved aggressively to support those initiatives and steps taken by the CBE in this regard.
Immediately after the state announced the emergence of the coronavirus, the CBE took several measures to direct citizens towards using technology for banking transactions instead of attending branches.
This includes their abolishing fees and commissions applied to using electronic points of sale (POS), as well as on withdrawals from ATMs and electronic wallets for a period of six months.
The CBE has also decided to amend the maximum limits for mobile wallets and prepaid cards. Local transfers in the Egyptian pound have additionally been exempted from all commissions and related expenses.
The move was taken to reduce cash transactions, and direct banks to develop their infrastructure to cope with the digital revolution. This aims to avoid delays in the implementation of local transfers and allows implementation of customer requests on same day.
The CBE measures to support technological transactions in banks also included requiring banks to issue electronic wallets and prepaid cards for free for six months.
Whilst progress is being made, the CBE has also indicated that there remain some challenges in increasing acceptance of electronic banking in Egypt. This includes the need to raise the numbers and geographical distribution of POS available to customers, and to increase the reliance on using Quick Response Codes (QR Codes).
It also includes the need for developing more programmes to educate citizens and companies on the importance of electronic collection methods.
In May 2020, the CBE launched an initiative to activate electronic payment, as part of the precautionary measures it took to confront the coronavirus. With that, it aimed to maximise the banking sector’s contribution to the state’s plan to deal with the repercussions of the virus.
The CBE stressed that launching this initiative stems from its belief in the importance of providing all financial services to citizens in a fair and manner, whilst increasing use of these services at an affordable cost.
This initiative included the CBE financing the deployment of 100,000 new electronic POS across Egypt, which will take place until the end of December 2020.
It takes into account several determinants, including the geographical distribution of new merchants nationwide, and giving priority to vital or relevant sectors with intensive cash transactions.
This includes gas stations, supermarkets and pharmacies, adhering to the minimum specifications for POS and Mini POS.
The CBE has also required banks that have obtained a licence to accept Acquirer Banks to launch a unified advertising awareness campaign on the advantages of electronic payment, and using POS and QR codes. The campaign aims to incentivise payment tool users and merchants to pay and collect online.
The Federation of Egyptian Banks (FEB) will coordinate with banks to design, implement and launch the campaign.
The CBE is also obliging all banks that export electronic payment tools, whether payment cards or mobile wallets, to prepare incentive programmes for their customers. The programmes would aim to increase the issuance and use of these tools in electronic payments.
The CBE also launched a further initiative installing 6,500 ATMs nationwide, as a first stage, bringing the total number of ATMs in Egypt to 20,000 machines distributed across the country.
It anticipated this by devoting an entire chapter in Egypt’s new banking law on payment systems and services and financial technology, recently approved by Parliament. The law aims to give the CBE the proper legal cover to control all bodies managing payment systems and services in the country.
The law also aims to set controls and supervisory procedures for payment service providers of various forms, to regulate the use of financial technology in banking activities. This would come in addition to supporting work in the field of modern financial technology.
According to the CBE, the payment systems and IT sector has recently achieved much progress. The most important of these is the launch of the national payment system “Meeza”, and the issuance of the non-cash payment law. A financial technology regulatory laboratory has also recently been established, alongside a project developing the automation of government collections.
The CBE’s financial ongoing technology strategy, announced in March 2019, is based on the integration between Egypt’s Vision 2030 and the CBE’s vision to meet the needs and aspirations of the local market.
This strategy addresses several basic pathways, the most important of which is meeting the demand for financial technology services and developing and exploiting innovative talents capabilities.
The strategy has also addressed the targeting of increased monetary support for financial technology projects, strengthening the supervisory and regulatory rules that encourage the financial technology industry, and regulating governance rules for financial technology.
The CBE has also established a Fintech Center to enhance and progress the Egyptian market’s financial technology ecosystem.
The centre aims to bring partners together under the umbrella of fintech, drawing in emerging fintech companies, regulatory and supervisory bodies, and financial institutions. It will also seek to bring in business accelerators and incubators, global technology companies, and fintech sector investors.
The CBE has also launched the Financial Technology Platform, the electronic portal for Egypt’s financial technology system. The platform aims to facilitate the process of linking the parties to the fintech system, whether locally or globally.
