2019: Expected Trends in the Egyptian Banking Market

Sherif Soliman Egypt Hapi IV

2019 Expected Trends in the Egyptian Banking Market

  • Smartphones are the cornerstone of digital transformation. 
  • Mobile payments using QR codes
  • Crucial services that should be offered on mobile include digital onboarding, account opening, payments, voice-assisted services  and ATM access
  • Customers will no longer visit the branch, banks must reach out and offer services to customers
  • Digital Banking services have become the top priorities on the banks agenda of the last two years
  • Banks spending on digital channels reduces costs and contributes to maximizing profitability
  • The Central Bank's directions are pushing strongly towards cash-less society and digital banking. 
  • Changing the pattern of banking branches in the future and relying on artificial intelligence and robots

 Sherif Soliman, Regional Director of CR2, is specialized in the field of digital banking technology and services, in an interview with the Hapi newspaper, Sherif discusses the latest financial services that will be launched in the Egyptian banking market during the coming period using mobile, including the digital transformation of banking services and the push towards a society less dependent on cash and more dependent on digital product and services.

Soliman commented that there are four products that should appear in the local market in the near future- including mobile payment through rapid acceptance of QR Codes used at point of sale terminals, which banks have already started to apply to obtain their licenses for from the Central Bank, as well as allowing funds to be withdrawn through ATMs by mobile phones.

He said that the year 2019 will be the year that will see the widespread availability of mobile electronic payments and the implementation by the Central Bank to install machines for the service.

He said that the last ten years have seen a major development in the field of digital transformation, most services and products are now digitally obtained through Mobile such as browsing newspapers, access to shopping and banking transactions.

He pointed out that digital transformation does not concern banks alone, but they must keep abreast of the development in societies and provide digital products and services in line with these developments. He pointed out that banks in general have a special nature and are classified as conservative institutions due to the sensitivity of the sector. They have been operating in a certain style based on providing services through branches and dealing directly with customers.

Soliman explained that the digital transformation in the world of banks is a major change and difficult to achieve overnight.  It needs an appropriate period of time to accommodate and keep pace with the technological development of the provision of services and must have greater focus in the coming period.

Noting that in the past, a customer would visit the physical branch for banking services, now they must be able to transact digitally.  It is important for banks in Egypt to keep pace with the rest of the world and embrace and implement digital technology for financial transactions.

The regional director of CR2 said that digital banking is a major challenge for the banks, but changing the system in turn helps banks in Egypt to engage with it, pointing out that the general direction of the Egyptian government is strengthening the electronic payment system as well as the central bank's attention and interest in increasing the channels of digital services strongly support the banks in the process of digital transformation.

Soliman said that smartphones are the cornerstone of the digital transformation process at present, which provides a computer accessible to everyone, through which the transaction is easy and simple. Banks that have made significant progress in the field of digital services are interested in providing and supporting digital services by providing new services.

He said that the delay of some Egyptian banks in the joining with the world of digital banking services is normal at the current stage and they are expected to join the arena soon to maintain their position and place in the market as well as encourage their customers to become digital leaders, explaining that in each community or sector there must be leaders of the market bearing the flag, so that they encourage and support the rest.

With regard to modern services that can be offered in the Egyptian market in the field of mobile financial technology services over the next period, Soliman said that the digital product such as the opening of a customer account via mobile is one of the most important products that can be provided and supports the shift towards the use of technology in banking transactions.

The customer will not go to the bank and take the trouble of opening the account, technology can help the bank reach customers and serves the principle of going to customers and providing the delivery of service to them wherever they are.

He added that the launch of these services needs the approval of the Central Bank which he believes that the Central Bank will approve, considering the development of the level of financial services technology in Egypt and the interest of the Central Bank in this regard, stressing that these services make it easier for banks to reach customers and include more segments in the banking system.

On the subject of electronic payments, Soliman said that mobile payment through the QR code of services is expected to be a success and be of great interest to banks during 2019, especially as the central bank attaches great importance to it and has a plan to implement its own machines, He pointed out that the widespread acceptance of mobile payment machines by large retailers and shops in the coming period is encouraging and forces all banks to expand their offering and make them available to customers. It also encourages people to use them more for their unprecedented speed and ease of payment.

He explained that this service makes great use for both banks and customers as it provides a more convenient payment method for customers without the need of using plastic cards of all kinds, and it provides the bank cost savings of issuing cards. He pointed out that the services of personal voice assistant will be services that have a great future in the world of technology. As the world is moving strongly towards it, raising the level of ease of conducting financial transactions depending on the services of voice assistants such as Alexa and Siri.

He added that there are other services that can be added and put in the Egyptian market during the coming period, including cash withdrawals from ATM machines using mobile rather than using plastic cards, the same idea of withdrawal through POS machines and electronic acceptance, but used to withdraw money.

Soliman said that these are the latest services in the field of financial technology and digital banking solutions that we can see in the Egyptian market in the coming period and helps significantly in the transformation of dealing with a society that is less dependent on cash money. Achieving this requires integrated and coordinated collaboration among the various stakeholders besides banks and financial institutions, stressing that enhancing the use of electronic payment eliminates many of the current problems, makes transacting easier and faster, with less efforts and above all is it much safer.  People no longer have to travel to the banks to carry out financial transactions or withdraw money to pay for other services they have received, the transaction can be completed entirely through mobile phone applications without having to bear all this effort.

Soliman said that the central bank's directions are pushing strongly towards a digital banking society based on the use and circulation of cash and is in favour of the digital transformation system.

About the banks' spending plans on the technological infrastructure to keep pace with the digital development in the banking world, the regional Director of CR2 confirmed that the shift to digital services has significant benefits for banks in many ways, including services that are available 24 hours a day to customers, in addition to the fact that digital services contribute mainly to increase profitability and reduce costs, noting that maximizing profitability is one of the main results of Digital transformation.

He added that banks can rely on their digital services in marketing their products and availing the services for their customers 24 hours a day. Furthermore, the expansion of banks via the opening of branches to reach new customers is very expensive in comparison to the easy access to services and products through mobile applications.

Soliman said the shape and nature of bank branches' work will change in the future and will depend on technology more. He pointed out that banks will rely in the future on artificial intelligence in branches of banks, which is already applied in some financial institutions globally, including the use of robots to provide assistance and support to customers. 

Soliman pointed out the importance of providing each bank with the suitable digital solution in terms of pricing and product specifications to suit the different needs of banks of various sizes and encourage them to spend on the technological infrastructure and digital transformation and this is what we do at CR2.

He explained that the size of the banks' operations and the number of their customers affect the expenditure plans that they can spend to purchase digital software solution. The companies should offer a variety of products to suit the circumstances and nature of each bank

Mr. Soliman said that there has been a remarkable increase in the use of digital services in recent years such as E-commerce and electronic shopping, he noted that the fears and hesitation of individuals in the use of cards and bank accounts has declined significantly with the development of new services on an ongoing basis, for example years ago there were concerns about using debit and credit cards while traveling and online due to some security threats, Now customers have the ability to stop or activate the card through the mobile application by themselves. 

The regional director of CR2 pointed out that banks have started paying attention in the last two years to provide digital banking services through mobile and internet banking, which has become one of the main topics on the agenda of the banking sector.

He added that the success and development of digital services depends on a complete system starting from the central bank and its role as a regulator as well as banks, digital banking solution providers and major international payment companies such as Visa and Mastercard with the rest of the other stakeholders. He also pointed out to the fact that the significant development in this area is led by the Central Bank, who is putting on his shoulder the responsibility of transforming the Egyptian society into the world of cashless and digital services and direct banks to adopt plans to achieve this. 

Mr. Soliman said that banks should continue to raise awareness of the digital services and products and encourage customer to try it, this will make a big difference in the adoption of these services and provide reassurance to customers where needed. The experience of using digital financial transactions via the mobile app will be sufficient to convince the customer to rely on it more. The convenience, availability, reliability and saving of time and efforts are what the customers going to experience.

Soliman stressed the need to give greater attention to providing opportunities to customers to experience the service because they have an effective and rapid impact on customer satisfaction, noting that awareness of the tools and services available alone is not enough to convince all segments of society and that the service trial increase acceptance and adoption of these services.