CBE Rules for Digital Bank Licensing & Supervision 2023
The Central Bank of Egypt issued, on Wednesday, the rules for the licenses, and registering, supervising, and supervising digital banks, which represents an important step in keeping pace with global developments in the financial technology industry and meeting the needs of customers in the Egyptian market.
According to a statement by the Central Bank, the licenses requirements for digital banks include that the issued and paid-up capital not be less than two billion pounds if all bank business is practiced except for financing large companies, with the possibility of financing these companies, provided that the capital is increased to 4 billion pounds, as well as that the largest shareholder is an institution. A financial institution with a previous business in similar activities at a rate of not less than 30% of the total capital value.
The statement added that among the requirements for obtaining the license mentioned is the submission of a detailed feasibility study that includes identifying the target segments and products that are planned to be made available, as well as information technology plans, and cyber security plans and strategies, noting that digital banks are subject to the same rules and controls for oversight and supervision applied to banks operating in the Arab Republic of Egypt. And the same laws and controls for combating money laundering and terrorist financing, in addition to some other requirements consistent with the nature of its work.
What are digital banks & Licensing?
According to the definition of the Central Bank and Banking System Law No. 194, issued on September 15, 2020. Digital banks are banks that provide banking services through digital channels or platforms using modern technological technologies.
Earlier, 6 banks operating in the Egyptian market applied to obtain a license to establish a digital bank, including two government banks, namely the National Bank of Egypt, Banque Misr, 3 Gulf banks, Qatar National Bank of Egypt (QNB), Arab Banking Corporation ABC, Emirates NBD, and Faisal Islamic Bank of Egypt.
Digital Banking Services
Digital banks, which are located on the information network, provide all their services via the Internet only and include some of the transaction functions of the basic banking system provided by all traditional banks, such as opening current and saving accounts, as well as offering long and short-term savings pools, personal loans, in addition to cash withdrawal, money transfer, Managing accounts, paying bills, and financing small, medium and micro enterprises, as well as financing institutions and factories, in addition to other productive sectors.
Digital banks, which are located on the information network, provide all their services via the Internet only and include some of the transaction functions of the basic banking system provided by all traditional banks, such as opening current and saving accounts, as well as offering long and short-term savings pools, personal loans, in addition to cash withdrawal, money transfer, Managing accounts, paying bills, and financing small, medium and micro enterprises, as well as financing institutions and factories, in addition to other productive sectors.
Advantages of digital banks
The Union of Arab Banks identified the advantages of the digital banks, the most important of which are:
- Easy access and new clients.
- Lower operational cost, IT cost, etc.
- Ease of use by customers with those banks.
- The digital bank provide services to their customers without the need to go to branches and overcrowding.
- It provides a range of new services, “issuing real-time spending notifications, 24/7 in-app support, free payments when you travel, regular spending reports, spending forecasts, partnerships with other financial applications and services, life insurance.”