06 December 2018

Digital banking gains momentum in Egypt

In the embrace of new technology, every step counts in Egypt’s digital transformation, writes Jacques-Emmanuel Blanchet CEO, HSBC Egypt

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Egypt’s banking architecture is getting a digital upgrade. Efficiency and personalisation are at the top of the list of preferences as one of the world’s oldest civilizations undergoes a very modern disruption.

Progress and change

Two of Egypt’s national goals, to modernise its economy and to support a rapidly growing population, are being carried out within a positive economic outlook. GDP in the fiscal year 2018 is expected to rise by 5.8%. Egypt’s proactive attitude is driving digital growth in the country’s banking sector and is filtering down to the consumer too. This is largely down to the government, the Central Bank of Egypt (CBE) and with the support of the local banking community.

A progressive tone from the top is matched by an enthusiastic response from the banks and the public. This banking ‘marriage’ is bearing fruit.

Seamless customer experience

From the top down, the National Payments Council is putting in a general framework to shift to a less cash-based society and to create a national system of payment and cards. Meanwhile the CBE is investing heavily in developing a ‘seamless’ customer experience that is more efficient and easy to use.

Both aim to safeguard the value of human interaction i.e. deepening the level of trust and loyalty in the customer-bank relationship. The country’s approach includes the promotion of innovative technologies in the design and delivery of financial services. This includes the review of digital banking regulations and the launch of a fund for innovation and talent investment worth EGP 1 billion ($558 million).

Digital maturation

From the bottom up, Egypt’s banking community – banks and customers alike – is keen to embrace change. Nearly all respondents (90.57%) to a HSBC digital survey carried out in Cairo expect ‘the internet of things’ (the trend towards more devices being online) to have a major impact on their existing business model. Leveraging this appetite for digital maturation is key.

The same applies to tailoring services for different socioeconomic and digitally-able customers. Clear communication to improve understanding within the banking community is vital to build trust and adoption of digital banking tools. Patience is also essential; it will take time to shift the national psyche towards digital banking.

It’s about family

Egypt’s tightknit family and social networks must be addressed in banks’ marketing and communication programs for ‘word-of-mouth’ recommendations carry significant weight when it comes to building reputations and communicating change. The influence of informal knowledge sharing in Egypt will only intensify as the world’s most populated Arab nation gets busier. The United Nations (UN) expects Egypt’s 97 million population today to rise to 120 million by 2030 – 23% growth in less than twelve years.

As one of the largest multinational banks in Egypt, and with a presence since 1982, HSBC’s unwavering dedication to build its digital knowledge will continue. The bank has been a leading and respected voice on digital advancements for more than three decades. Plans to spend $15 billion - $17 billion on technology worldwide up to 2020 are underway, in addition to $6 billion in recent years. Such efforts will undoubtedly enhance Egypt’s digital journey, be it through talent creation, research and development or tech deployment.

Digital toolbox

There are many new digital methods that Egypt’s banking community can use. These include the next generation virtual accounts, enhanced liquidity management and more streamlined mobile collections and payments. HSBC is always working on how to design and deploy new technologies, including machine learning, artificial intelligence (AI), biometrics and blockchain.

HSBC completed its inaugural blockchain transaction for trade finance this year. This is highly relevant for a growing banking community as each transactional step is entirely transparent and accountable. It is also attractive for Egypt’s growing trade finance market as the country’s gas exports, for example, are likely to rise significantly.

More than half (56.6%) of survey respondents to our digital research agreed that international trade has become more difficult over the last three years. This means that making cross-border trade easier by using digital tools is even more critical to sustaining Egypt’s global competitiveness.

Challenges to overcome

As with any market in development, some areas need more attention. These include improving cybersecurity, legal frameworks and scalability. Therein lies the value of collaboration and knowledge sharing; something that HSBC is able to facilitate.

To take an example – globally, banks’ ties with Fintechs are thriving. HSBC’s data showed that approximately $31 billion was invested in Fintechs around the world last year. Collaboration agreements and sandbox environments, both promoted by regulators, can help test the relevance of new technologies in Egypt’s banking community.

We must not fear the unknown. Egypt must keep its best foot forward, for every digital step counts.

Jacques-Emmanuel Blanchet is Deputy Chairman and CEO, HSBC Egypt

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