Egypt to launch first digital bank by Q4 2024 following CBE’s approval

PHOTO

The Information and Decision Support Center (IDSC) of the Egyptian Cabinet has announced that Egypt is set to launch its first digital bank in the fourth quarter of 2024. This follows the initial approval granted by the Central Bank of Egypt (CBE) to Egypt Digital Innovation Company, a subsidiary of Banque Misr. The final launch is anticipated once the second phase of the licensing process is completed.

This information was revealed in an IDSC report titled “Neo Banks: The Path to Enhancing Financial Inclusion,” which provides an overview of digital banks, Egypt’s progress in establishing these institutions, and the prospects for neo banks.

The report highlights that Egypt has prioritized financial inclusion over the past years, experiencing significant growth driven by supportive government policies. These efforts are part of the Financial Inclusion Strategy (2022-2025) launched by the CBE, aimed at economically empowering all segments of society through an inclusive formal financial system that offers quality services at affordable costs, contributing to sustainable growth. Financial inclusion is also a key component of Egypt’s Vision 2030, particularly in creating a competitive and diversified economy.

Egypt’s Vision 2030 focuses on expanding access to financial services, promoting financial literacy, and developing innovative financial products to meet citizens’ needs. The report notes that Egypt has been moving towards financial inclusion at an accelerated pace, achieving one of the highest growth rates in financial inclusion among peer countries in recent years. The percentage of financial inclusion, representing citizens aged 16 and above who own and use financial transaction accounts, surged from 27.4% in 2016 to 70.7% in 2023, marking a growth rate of 174%.

In support of Egypt’s digital transformation and innovation to boost the economy, the CBE issued “Licensing and Registration Rules for Digital Banks and their Supervision,” which came into effect on July 12, 2023. These new rules enable the effective establishment and operation of digital banks in Egypt.

The report explains that digital banks are a type of fintech institution offering many of the same services as traditional banks, with the key difference being that digital banks operate without physical branches. All transactions, from opening accounts to transferring money and paying bills, are conducted online or via mobile apps.

Furthermore, the report points out that there is some overlap in functions between digital and traditional banks, as both seek to attract individual savings and invest them. However, some differences may influence customers’ decisions to choose between the two, such as account opening processes, credit scoring, accessibility, ATM networks, costs, and customer service.