Egypt's banking sector prime for adopting electronic and Internet banking

Major initiatives such as the floating of the national currency in January 2003, the five-year plan to boost liberalization and privatization and the launch of innovative IT projects are forcing Egypt's banking sector to come out of the shadows and join the global trend towards electronic banking and Web-based transactions.

The encouraging signs are expected to significantly change the opinions towards banking in Egypt. Research has shown that approximately 10 per cent of Egyptians have bank accounts. Majority of banks do not even have a website, although 65 per cent of them have reserved domain names, according to the findings of the Dubai-based Madar Research Group.

"Though Egypt has been gaining prominence in terms of telecom infrastructure, e-government and multi-sector development, its banking sector has not kept pace with changes" said Diyaa Zebian, Regional Manager, Middle East & Egypt, eSolutions BEA. "However, the scenario appears set for a dramatic change as several recent developments have shown."

With the government leading the movement towards leveraging the tools of the Knowledge Economy, the banking sector has begun to embrace technology for delivering services to consumers. Internet banking has thus far been limited to a handful of banks, predominantly foreign, putting the 42 national banks at a major disadvantage. In recent months, three local banks have taken the first steps to offering a combination of Internet and PC banking, while several others are planning to offer Internet banking during this year.

The biggest drive for Internet banking is led by four state-owned commercial banks, which collectively control 60 per cent of all banking assets in Egypt, including two that are leading the way with a combined investment of US$ 10 million deals to upgrade IT capabilities.

"Egypt holds immense potential for leading edge banking solutions once the population's mindset has changed," added Zebian. "Egypt is home to one quarter of the entire Arab population with more than a 20 million workforce, making it the largest retail market in the region in terms of numbers. The fierce competition that is visible among banks is a sign that Egypt is set to join the modern banking mainstream."

"As a leading global application infrastructure software company, with a strong presence in the Middle East, BEA is set to play a major role in this technology upgrade exercise in Egypt's banking sector. BEA has provided its tailored WebLogic solutions for several banks in the Gulf region, including Saudi American Bank, Arab National Bank, Emirates Bank, National Bank of Abu Dhabi, Egypt American Bank, Arab Bank and Audi Bank," said Zebian. "Our solutions are designed to ensure that the banks make a smooth transition to modern banking, thereby integrating with the Knowledge Economy."

The new developments are set to gradually change the Egyptian skepticism about banking. Banking penetration has been particularly slow in the past because the prevailing norm was either to keep savings at home or to join a gamiyah, a self-help financial group formed by close relatives, friends or co-workers for interest-free loans.