FIGI Symposium 2019 How Egypt plans to build trust in digital financial services

“Through Vision 2030 and its comprehensive programme of economic reform, Egypt is looking to be a pioneer in the region in terms of digital payments by launching a new phase of digital financial inclusion for citizens,” says Eng. Mustafa Abdul Wahed, Acting Executive President of Egypt’s National Telecommunication Regulatory Authority.

Wahed was speaking at the opening ceremony of the second symposium of the Financial Inclusion Global Initiative (FIGI) in Cairo, Egypt.

FIGI is a three-year programme of collective action led by ITU, the World Bank Group and the Committee on Payments and Market Infrastructures (CPMI) of the Bank for International Settlements, with support from the Bill & Melinda Gates Foundation. The initiative is designed to advance research in digital finance and accelerate digital financial inclusion in developing countries.

The first day of the FIGI symposium has shone a spotlight on Egypt’s actions to reduce citizens’ dependence on cash.

There are 20 million active mobile payment accounts in Egypt and the country’s Central Bank has highlighted its ambition to increase this figure to 40 million over the coming two years.

“The percentage of people with bank accounts in Egypt is 33 percent,” says Wahed. “FIGI is a good opportunity to test Egypt’s preparedness for digital financial services.”

Sharing Egypt’s experience with the FIGI community

Egypt is one of three countries, alongside China and Mexico, receiving technical assistance from the FIGI community in promoting digital financial inclusion.

The experiences of China, Egypt and Mexico as part of this FIGI ‘operational work stream’ are expected to form case studies of great value to other countries around the world.

“The success of this [digital financial inclusion] in Egypt should render Egypt a model to follow for other African and Arab countries,” says Wahed.

An estimated 1.7 billion adults worldwide are still without bank accounts, but among them, 1.1 billion have a mobile phone.

Digital channels have great potential to extend the reach of the financial system. But in digital financial services, the ICT and financial services industries are moving into new shared space. This has resulted in an associated convergence of the responsibilities of financial and ICT regulators.

“To bridge the financial inclusion gap, we need a collaborative effort,” highlights Amr Moussa, Advisor to Egypt’s Minister of Communications and Information Technology. “There is a societal task to be done; a monetary task to be done; a financial task to be done; and a variety of technology efforts and tasks to be done.”

Mapping out the socio-economic status of Egypt’s citizens was the essential first step towards greater financial inclusion, explains Moussa.

“We are concentrating on the very poor – that’s how we aim to bridge the gap,” says Moussa.

Developing a profile for each Egyptian citizen, says Moussa, “is crucial for the financial sector to provide savings and credit packages tailored to the bottom two layers [the poorest segments of Egypt’s population].”

Trusted infrastructure, trusted institutions

A recurring theme in the debates of this first day of the FIGI symposium has been the need to build trust in digital financial services, both in terms of citizens’ trust in digital services and the institutions offering these services.

Moussa highlighted the importance of trusted, cyber-resilient ICT infrastructure.

“If we are to transform the lives of Egyptians on a digital platform, this platform must be robust and secure … and it must be always-available.”

Building trust was a key motivation behind the choice of Egypt Post as the ‘service delivery platform’ for digital financial services.

“We have a family relationship with our customers,” says Egypt Post’s Chairman, Essam El Saghir.

14 million Egyptians visit Egypt Post branches each month. “Our staff and customers know each other by name, our staff speak the same language as their clients – we are at an advantage when it comes to building trust,” says El Saghir.

Connecting all 4000 of Egypt Post’s branches and digitizing and automating their services called for an infrastructure investment of 2 billion Egyptian pounds. “This was challenging, but we achieved it, and now the services available at branches in rural areas are the same as those in a branch in the capital,” says El Saghir.

Egypt Post’s branches will enroll Egyptian citizens in Egypt’s digital ID programme. “Biometrics are the way forward for digital ID for our customers,” says El Saghir.

Egypt aims to bring digital financial services to the country’s poorest people. The choice of biometrics for digital ID was motivated not just by a need for data security; it is essential to financial inclusion in areas with low literacy rates.

The essence of the debate was distilled well by Gamal Khalifa, Head of Microfinance at Egypt’s Financial Regulatory Authority.

“The main challenge is the customer,” says Khalifa. “There is a lack of trust, they resist change.”

But this does not deter optimism.

“As soon as people start to use digital financial services and see the benefits, things will change a lot,” says Khalifa. “They will find these services to be secure and easy to use. They will be able to receive and make payments, receive loans, and save money on transport costs. We will see a change of attitude and perspective on digital tools from people not currently familiar with these tools.”

Learn more about the structure and strategy of FIGI and the motivations for its establishment in an interview with Bilel Jamoussi, Chief of the Study Groups Department, ITU Standardization Bureau.