The Financial Regulatory Authority (FRA) is adopting an expansionary strategy to develop non-bank financial activities, by setting the necessary controls and legislation to keep pace with digital transformation processes, in line with global markets.
Daily News Egypt interviewed Hesham Ramadan, Assistant Chairperson of the Financial Supervisory Authority, to learn about the authority’s future projects, especially in fintech and digital transformation.
What are the new projects that the authority is working on in the current period?
The FRA is developing a credit rating system that will allow the unbanked to access credit. Ratings will be assessed based on consumer behavior and non-financial data.
The project is being worked on in cooperation with a data solutions provider to help sort out non-banking financial activities, by providing a classification for unbanked categories.
Have you received requests to establish credit rating companies?
After the procedural amendment that allowed companies to be established with no need for a foreign institution in the ownership structure, a local company seriously seeks now to establish a company in this field, but I will not reveal its name.
What about other applications for establishing fintech companies?
The FRA received several requests for establishing financial technology platforms: two companies want to establish digital insurance platforms, two companies want to launch digital insurance brokerage platforms, and one company seeks to get a licence of two consumer financing platforms and a robo-advisor for capital market activity.
The FRA agreed last week to set rules and regulations for establishing companies wishing to engage in non-banking financial activities through the use of financial technology.
When will the establishment and licensing controls be issued for these companies?
It is scheduled to announce the incorporation controls for this type of companies this week, followed by the announcement of licensing controls, pointing out that one of the most prominent requirements that have been set by the FRA is the digital identity, whether for the company or the customer. EKYC service must be provided.
We made a technological infrastructure, and special systems of cybersecurity to secure customer data, and the functional requirements available in line with the nature of these platforms as a data security official, responsible for auditing and monitoring information technology systems.
It was agreed that technological platforms wishing to establish will commit to the same amount of capital according to the activity they seek to engage in, taking into account the technological requirements.
The start-ups with innovative ideas will have their capital determined in a different way.
What about the latest developments in the future rights securitization law?
The future rights securitization law is subject to the capital market law and works to accelerate the capital cycle. The door is open for companies and bodies to apply for issuance.
The law is in the interest of infrastructure companies with fixed periodic receipts such as gas and electricity, in addition to water and telecommunications companies, which provides financial resources at a lower cost than bank borrowing.
As for green bonds, the supply side does not keep pace with the large increase in the demand side due to the scarcity of green projects.
When will the Unified Insurance Law be issued?
The unified insurance law is expected to be issued before the legislative term next June. The general reading of the articles of the law has been completed, and it is being approved by the Senate, provided that it will be presented in the House sessions later.
Are there cooperation protocols to be signed during the coming period?
The FRA has signed three cooperation protocols with the Ministry of Higher Education and Scientific Research and the Ministry of Education, with the aim of cooperating with the two ministries to include financial culture within educational curricula, and to integrate financial education skills into curricula, whether in university or pre-university education.
A cooperation protocol has been signed with the Ministry of Youth and Sports, with the aim of training trainers within the Ministry of Youth and Sports to raise awareness of financial culture, to train others, to reach the largest possible number of the target group.
The National Strategy for Awareness of Financial Awareness 2023-2026 targets all segments of society, especially young people. Raising awareness of non-banking financial activities is the main objective of the strategy.