Introducing Egypt’s digital banking landscape: With new regulations in place, acquiring a digital bank license in Egypt requires a significant investment of $64 million. Alongside the financial commitment, there are several other essential requirements to fulfill. Here’s a concise checklist of what you need to consider when aiming to obtain a digital bank license in Egypt.
| Requirement | Description |
|---|---|
| Capital Requirements | – Issued and paid-up capital: – EGP 2 billion ($64M) for digital banks, except when financing large companies. – EGP 4 billion ($129.6M) for digital banks involved in financing large companies. |
| Shareholder Composition and Ownership Structure | – The largest shareholder should be a financial institution. – The financial institution should own a minimum of 30% of the total capital. – The financial institution should have previous experience in similar activities. |
| Shareholders’ Information | – Essential information about shareholders: – Names – Nationalities – Addresses – Capital shares – Copies of articles of association for legal entity founders. |
| Founder Shareholding and Sanctions | – Disclose the shareholding percentage of each founder. – Check for associations with other financial institutions. – Ensure founders, main shareholders, final beneficiaries, and board members are not included in any domestic or international sanctions lists. |
| Bank Information | – Detailed information about the establishment, services, and target market. – Business plan covering at least a five-year period. – Market studies demonstrating the ability to mobilize and utilize savings. – Estimated budgets and plans for business expansion. – Policies on credit, investment, anti-fraud, anti-money laundering, and combating terrorist financing. |
| IT Infrastructure and Cybersecurity | – Information technology and cybersecurity strategic plan: – Organizational structure for information technology. – Qualified personnel and governance mechanisms. Risk management strategies and policies. – Controls against cyber threats and fraud. – Address data confidentiality, integrity, availability, and compliance with cybersecurity frameworks. |
| Outsourcing and Security Controls | – Comprehensive outsourcing plan: – List of service providers and their roles. – Use of cloud computing technology and types of cloud services utilized (e.g., SaaS, PaaS, IaaS). – Applications hosted in the cloud and data associated with those applications. – Locations where data will be stored and processed. – Governance mechanisms and risk management protocols. – Measures to ensure data confidentiality, integrity, and non-interruption of services. |
| Cybersecurity Measures | – Roles and responsibilities of employees responsible for cybersecurity. – Security controls to control authorized access to the bank’s systems. – Comprehensive cybersecurity management plan: – Risk levels and vulnerability testing. Incident monitoring and response procedures. Mechanisms for continuous improvement. – Training programs for employees and customer awareness initiatives. |
| Digital Channels and Payment Tools | Clear overview of the digital channels and banking services offered: – Traditional and interactive ATMs. Internet and mobile banking services. – Interactive voice call centers and other digital platforms. Electronic payment tools such as prepaid cards, credit cards, direct debit cards, electronic wallets. Acceptance of transactions through electronic points of sale or digital payment portals. Outline customer identification and verification procedures. |
| Internal Control and Governance | – Effective internal control mechanisms and risk management strategies. – Appropriate work systems and clear governance structure. – Plans for sustainable financing and strategies/policies for managing bank operations. – Business continuity plan to ensure uninterrupted service provision. |
| Foreign Bank Branch (if applicable) | – Approval from the foreign bank’s main center to establish a branch in Egypt. – Compliance with Egyptian laws, regulations, and instructions issued by the Central Bank. – Financial statements, auditors’ reports, and certified copy of the main center’s articles of association. – Detail services, applications, and systems related to compliance with local and international regulations. – The main center of the foreign bank should have a specified nationality and be subject to supervision by the corresponding supervisory authority in its home country. – The foreign bank’s allocated capital for the digital bank branch in Egypt should be at least $60 million or its equivalent in free currencies. – The corresponding supervisory authority should apply combined supervision and express no objection to joint supervision with the Central Bank of Egypt. – The main center of the foreign bank should have policies to combat corruption, bribery, fraud, money laundering, and terrorist financing. – If applicable, evidence of a credit rating from international credit rating agencies such as S&P, Fitch Ratings, or Moody’s should be submitted by the foreign bank or financial institution. |
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Charles Rapulu Udoh
Charles Rapulu Udoh is a Lagos-based lawyer, who has several years of experience working in Africa’s burgeoning tech startup industry. He has closed multi-million dollar deals bordering on venture capital, private equity, intellectual property (trademark, patent or design, etc.), mergers and acquisitions, in countries such as in the Delaware, New York, UK, Singapore, British Virgin Islands, South Africa, Nigeria etc. He’s also a corporate governance and cross-border data privacy and tax expert.
As an award-winning writer and researcher, he is passionate about telling the African startup story, and is one of the continent’s pioneers in this regard