Digital Transformation of Financial Services in Egypt
Abdullah, young man from the Menoufia governorate, joined Suez University. He used to face a problem whenever his family sent his monthly expenses. The problem was that the money had to be sent through the mail or bank, which has specific working hours that collide with university hours in addition to the tedious waiting lines and the time loss. Later, E-wallet applications appeared from the telecom companies that are easy to use and under the supervision of the Central Bank. Vodafone Cash and Etisalat Cash are some examples of these e-wallet apps. Abdulrahman said, "I opened a Vodafone Cash wallet, and the problem of the internal transfer got solved as I can receive it at any time and from any place supporting the service or ATM. I do not deny that there is difficulty in the beginning at money receiving outlets until applications such as Fawry, Aman, Masary, etc." These apps spread throughout the Republic in retail stores, service stores, direct sales stores, etc., and the situation became easier and better.
Abdullah adds, "after the spread of the Fawry application in all stores and stalls, it provided more features by which anyone can pay all their bills, such as electricity, water, and gas bills. It also enables them to charge calling balance and internal money transfer with a visa card to any bank account, which facilitated safe transfer and guaranteed payment operations." The service repayment shops are small projects in which many young people work. From another angle, after the success of these applications, this led to the spread of various applications to compete and provide financial technology to all people. Awareness increase of this technology led to growth in the solutions provided via applications.
Considering the importance of financial digital transformation, it prevents corruption and prohibited financial transactions and reduces the value of inflation by making it easier for the government to preserve the Egyptian economy and record all payment data in various parts of the Republic. It also contributes to facing financial challenges for individuals and companies. After the advancement of these financial e-apps and their fame among the Egyptian people, Egyptian and foreign banks found a fertile environment for digital transformation and financial technology. Consequently, all banks tended to reform and develop their own financial technology and mobile applications helping them and their clients and ensuring a wider spread.
Banks have contributed significantly to financial technology where bank branches rose to 2995 branches, including 1130 branches for public banks and 1617 for private banks, in addition to the Agricultural Sector Bank, to reach 4424 branches. Besides, the number of credit cards grew from 1.7 million cards in 2010 to 17.8 million in 2020. Likewise, prepaid cards increased rapidly from 8.3 million to 18.3 million during the year 2020, after the pandemic spread. The number of ATMs also multiplied from 4,507 to 14,125 during the same period. The level of financial technology has reached its highest level as the value of investments in emerging companies in the field of financial technology, financial digital transformation, and prepaid systems has increased significantly. Currently, there are about 108 startups in this field whose financing is estimated as $600 million. This indeed allows financial institutions to innovate new services to its clients and facilitate financial technology to all citizens. Thus, Egypt has now become the fourth largest country in Africa in terms of financial technology investments and the second largest Arab country.
The most famous social financial applications are ElGameya (money pools) app and Money Fellows app. They organize a social financial deal widespread in Egypt called ElGameya, which is well-known among the middle and poor classes in which a number of people collect money as each person monthly pays a certain amount, and a person benefits from this amount every month where he/she can buy something, begin his own project, or build a house. For instance, each member of a 10-person group pays 1,000 EGP a month for a period of 10 months, which means that each individual will get 10,000 pounds whenever their turn comes. This deal has been organized easily and smoothly through these applications. Therefore, the applications gather some individuals, provide online payment, order recipients, and deliver the money to them via transfer or deposit in the account in exchange for 5% fees. This led to a massive spread and establishment of trust between the dealers as it copes with an organized company, not a person. Demand for it has increased to improve income, considering it a loan without interest and under the umbrella of the Central Bank.
