Egypt - The Financial Regulatory Authority (FRA) has issued three executive decisions to enable the digital transformation of the non-banking financial sector.

The decisions cover the requirements for equipment, technological infrastructure, information systems, security and insurance, digital identity, digital contracts and records, and outsourcing service providers.

The FRA Chairperson, Mohamed Farid, said that the decisions aim to implement Law No. 5 of 2022, which regulates the use of financial technology and leverages its potential to enhance the capabilities of the non-banking financial sector and support Egypt’s vision of financial inclusion and digital transformation.

According to regulatory sources, several non-banking financial activity companies are planning to apply for a license from the FRA to provide their services through technological platforms. The sources added that some of these platforms, especially those related to Islamic finance, are expected to be approved soon.

Sherif Samy, President of the Egyptian FinTech Association, welcomed the FRA’s decisions and said that they will accelerate the issuance of financial technology platforms, especially in light of the growing demand for digital transformation in non-banking financial activities. He also noted that the decisions coincide with the launch of legislation related to digital banks and that they are timely and necessary for the sector.

Ahmed Hamouda, the founder of Thndr Securities Brokerage, described the new decisions by the FRA as “historic”. He explained that the previous procedures for opening an account were time-consuming and inconvenient for customers, who had to visit a branch in Cairo or Alexandria. He said that this was a major obstacle to financial inclusion, especially for customers in other governorates and cities.

He said that the FRA’s decision to allow the use of technological innovations is in line with international standards and that Thndr will apply for the required licenses this week. He added that Thndr had participated in a previous dialogue with the FRA regarding the best practices for digital transformation in non-banking financial activities.

Hamouda praised the FRA’s decisions for covering all aspects of digital transformation, such as infrastructure and governance. He said that technology is essential for achieving financial inclusion in Egypt.

The non-banking finance sector in Egypt is undergoing a digital transformation, according to Mostafa Khater, founder and CEO of QBit Code. He said that the new decisions by the FRA will regulate the use of financial technology in the sector and encourage the establishment of technological companies and platforms.

Khater added that the Egyptian economy is witnessing rapid developments in the technology and innovation sector, and there is a strong demand for digital transformation. He also said that the financial inclusion strategy launched by the Central Bank of Egypt (CBE) aims to improve financial services and access and that the new decisions are in line with this strategy.

However, Khater stressed that the adoption of digital transformation by Egyptian society depends on raising awareness and education about the benefits of financial technology and non-banking financing. He said that if the community is well-informed and guided, it will reap great benefits from it.

He also pointed out that the new legislation will allow new companies to operate in the non-banking finance sector using financial technology, which will enhance competition and contribute to the growth of the Egyptian economy. Moreover, it will increase savings rates and provide financial services to wider segments of society, which will support economic growth and sustainable development.

Some companies have already started to implement financial technology in their services. For example, Azimut Egypt, a company that specializes in asset management, has developed an electronic application that allows customers to open accounts, deposit and withdraw funds, invest in various investment funds issued by Azimut, and view their financial status. Ahmed Abo El-Saad, Managing Director of Azimut Egypt, said that the company is ready to submit a complete file to FRA to obtain its approval for activating the full technological use of its application.

Another company that has obtained FRA’s approval to launch a financial technology service is Web Advisors, which is a subsidiary of Mubasher. Ehab Rashad, Vice Chairperson of Mubasher, said that Web Advisors specializes in asset management and is awaiting the final touches to be available to the public.

Moataz Ashmawy, Managing Director of Arabeya Online, said that the recent decisions aim to facilitate and develop the process of financial inclusion in non-banking services. He added that the legislation facilitates investment through technological services, which positively affects investment volumes. He also said that FRA seeks to overcome any obstacles that may face the sector and support investment operations through non-banking services.

The issuance of financial technology legislation is expected to have a significant impact on improving economic conditions and providing new investment opportunities in various fields.

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