CAIRO: As early as 2000, a handful of local and international banks launched electronic banking services to give clients access to cash and allow them to conduct necessary financial transactions around the clock.
According to observers, online banking services have not taken off in Egypt because of low rates of computer literacy and internet penetration.
According to estimates provided by the Ministry of Communication and Information Technology (MCIT), the number of computer users in Egypt was only 6.78 million in May 2007.
But with over 30 million mobile users, though, it’s likely that more Egyptians will jump on the mobile banking wagon.
The latest trend in the world of banking has been operating in Japan and much of Europe for more than two years, but has not been attracting much attention, particularly in the United States. According to a survey conducted by IBM’s retail banking consulting firm, 89 percent of consumers in the United States do not use their cell phones in financial transactions.
“Unlike Westerners, whose mobile usage is limited to necessities, Egyptians use mobile phones excessively, said Ayman Sabry, business development manager at Middle East Network Solutions (MNS).
However, he said, the high level of penetration can be misleading because not all mobile users can benefit from mobile banking services in Egypt. “It is important to categorize mobile users because not all of them are bank accounts holders, he added.
While the older segment of the population prefers traditional banking methods, the younger generation is eager to use new banking services because of their low-cost and efficiency.
Mobile banking involves performing balance checks, account transactions and payments using mobile phones, and it is usually performed via applications downloaded to the mobile device.
The Arab Bank is one of the pioneers of mobile banking in Egypt, launching the service in 2001. With its Porta Bank service, the National Société Générale Bank (NSGB) was another pioneer, and the hype surrounding the new service has seen more banks elbowing their way in.
“We have provided mobile banking solutions to six banks in Egypt: Al-Ahly Bank, Banque Misr, National Société Générale Bank (NSGB), Crédit Agricole Egypt Bank, National Bank of Egypt and Piraeus Bank, said Sabry.
Misr International Bank (MIBank) and Commercial International Bank (CIB) also offer mobile banking services.
According to recent reports, Orascom Telecom is planning to launch a new company that will be offering mobile banking services to its millions of customers.
Despite the enthusiasm surrounding the mobile banking trend, security concerns are the main obstacle with banks as well as customers treading cautiously.
At one point, mobile banking in Egypt was confined to balance inquiries and obtaining currency and stock prices. However, with the increasing security measures, it has become possible for account holders to use their cell phones to conduct financial transactions.
“There is a huge development in the field of securing the information exchanged via mobile phones, namely the introduction of new encryption systems that are impossible to hack, explained Sabry.
The dependency on one mobile network operator was a problem, but Sabry argues that this is not the case anymore. “All banks have arrangement with the three mobile operators in order to fulfill the needs of all their customers, he explained.
In May 2008, a mobile banking conference was held in Egypt, attracting over 400 senior executives from financial services institutions, mobile network operators, development organizations, solutions vendors and policymakers.
The two-day-conference discussed success stories as well as challenges and next steps.
Financial analysts believe that electronic banking, in general, and mobile banking, in particular, will give e-commerce a boost and help bring more people into the formal economy. Some people even talk about economic empowerment through mobile banking, given its affordable cost compared to traditional banking.
The success of mobile banking in countries like South Africa, Kenya, and Botswana might be an indication that Egypt’s low-income segment will benefit more from the new service than the technology-savvy elite.
To read the other stories in our monthly special focus on Egypt s banking sector, click here:
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