The Egyptian government and along with banks operating in the local market are taking serious steps to promote payroll and develop banks’ technological infrastructure to deliver advanced banking services.
According to Mustafa Ghali, Assistant Minister of Planning and International Cooperation, the government is currently working to achieve financial inclusion, adding that the Central Bank of Egypt (CBE) is searching for the best methods to achieve that goal, in coordination with banks and their retail sectors.
Ghali pointed out that the payroll system enhances sustainable economic development, signalling that coordination between state entities and institutions to link different services to national IDs is the most prominent challenge that Egypt needs to address currently.
He added that Egypt implemented the electronic payment of taxes and customs in cooperation with e-Finance company. The state also began implementing the payroll of state employees’ salaries, which proves that Egypt has opportunities and challenges in the financial sector, he said.
“The government has become more flexible in dealing with the many creative technological solutions to keep up with global changes, through legislation that make it easier for those working in that field to achieve financial inclusion. The government also collaborated with the private sector through launching the ‘My Government’ initiative, which confirms that Egypt is not far from achieving financial inclusion,” Ghali said.
He further highlighted the importance of the payroll system for the gross domestic product (GDP), as well as its impact on the Egyptian economy in the current stage.
He explained that the Ministry of Planning intends to expand the payroll system in the government within its future strategic plan, notably in the management of public hospitals.
Mona El-Baradei, Executive Director of the Egyptian Banking Institute (EBI), said Egypt requires new and creative ideas, especially in retail banking services, to ensure achieving the financial and attract more customers to banks.
El-Baradei explained that only 14% of the population have bank accounts in 2015, while 67% of Egypt’s population are over 18 years, which means that Egypt has the opportunity to attract more customers through providing new services, such as payments via mobile.
She added that the quick spread of mobiles in Egypt creates a great opportunity to spread innovative ideas, and that the transition to e-banking greatly benefits the public.
According to El-Baradei, Egypt has the legislation that allows for achieving financial inclusion, and that the government prioritises this aspect.
She pointed out that EBI is making great efforts to achieve financial inclusion, whereby it recently signed a protocol of cooperation with Visa to spread banking awareness among state employees within the payroll project.
According to Yehia El-Agamy, head of the retail department in Banque Misr, the Egyptian government has taken serious steps to achieve financial inclusion, and the state targeted five million mobile users 15 years ago. In 2015, there are 90 million mobile users, which means there is more than one phone per individual on average.
He affirmed that the spread of technology and mobile access make it easier for banks and other parties to achieve financial inclusion.
El-Agamy pointed out that the Egyptian banking sector has attracted about 10 million customers so far. “The question here is to what extent is banks’ desire to increase this figure to reach financial inclusion,” he said.
Egypt currently has five million people who transfer money through mobile, and the state has great opportunity to spread financial awareness, which helps banks expand the use of technology and innovation in financial services, he added.
According to El-Agamy, there are sophisticated payment methods in Egyptian banks, such as mobile payments and e-wallets, but the challenge here is how to link those services to achieve financial benefit for individuals, and create confidence in the use of those services.
He explained that there are about 15m credit and debit cards in Egypt, as well as thousands of ATMs, and the banks succeeded in supporting this base through cooperation with their partners in development, such as Visa and MasterCard.
El-Agamy highlighted the need for linking the government’s payroll cards to points-of-sales (POS) in stores.
“Banks should be able to obtain data to confirm that the society is turning into a cashless one,” El-Agamy said, noting that banks have started this process in cooperation with the Egyptian Financial Institute.
He added that banks have been focused on raising customers’ awareness to address concerns about using cards.
He said retail banking is one of the most prominent banking sectors working to achieve financial inclusion.
He explained that many banking products and services produced through the sector’s modern technology help with the financial inclusion of more people.
“Banking services are now available online, and banks aim to acquire more customers, including those who have accounts but never visit banks, as well as those who do not deal with banks,” he added.
El-Agamy expects cards to see a development soon, provided that banks open new channels of communication with customers, and provide alternative solutions so that each customer can find the best solutions.
Senior Account Manager at Intercom for Financial Services Solutions, Ahmed Megahed, said banks should increase their allocations for developing infrastructure and adding new products, and improve their current offerings, in order to satisfy their customers and increase their competitiveness.
He explained that developing technological frameworks in banks speeds up the transactions offered, and limits potential security risks.
Aaron Phethean, MarketPlace Director and a representative of Temenos for banking software, said there are many indicators for banks performance.
He explained that the size of their expenditures on developing infrastructure is one of the most prominent of those indicators, as well as offering new services and products. He noted that research shows that 73% of banks expenditures are directed towards maintaining their existing tools, whilst there are programmes and solutions that companies can offer to reduce these allocations.
He added that automation ratios also indicate banks’ performance, as it helps banks to offer quick solutions to their customers.
“Banks should utilise the information they have on their customers better, as the more information they have, the better products they can offer,” said Phethean.
He added that another indication of banks’ performance is their ability to develop their existing systems.
According to Phethean, banks’ current infrastructure is not suitable to meet upcoming challenges in the banking sector.
Phethean explained that banks spend about double of what other sectors spend on information technology, as they face more risks.