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Episode 2: The Current & Future state of FinTech during COVID-19

Episode 2: The Current & Future state of FinTech during COVID-19

In its second episode, FinTech Egypt Dialogue tackled the impact of COVID-19 and its influence on economies, people, and FinTech as an industry, with the presence of three distinct guests that brought thought diversity to the conversation; Dr. Rasha Negm, Head of FinTech & innovation at the Central Bank of Egypt (CBE), Ramy Taha, Head of Digital Banking and Marketing at Alex Bank, and Stephen Deng, Co-founder and Partner at DFS Lab, a FinTech and digital commerce investor and advisory firm that’s primarily focused on Africa and early-stage startups.

Podcast host Hossam Mahmoud, advisor at GIZ Egypt, greeted the 3 guests as they gave a brief introduction about themselves. Dr. Rasha Negm kicked off the session as she was asked about the ripple effect of the FinTech landscape happening today since the launch of the CBE’s FinTech arm, and what her ambitions and expectations are for the future of FinTech in Egypt. Dr. Rasha explained that the FinTech Ecosystem witnessed great progress since the CBE launched the national strategy for FinTech innovation in Q1 2019, a pre-pandemic time when just 17 FinTech startups were in the visible scope, as opposed to today reaching more than 50 FinTech startups as per the figures reported by GIZ Egypt in 2020, bringing a diverse collective offering as these young companies cover many FinTech areas that are in need of attention in 2021. She also stated that the focus was previously on mostly digital payments, however now these rising startups are venturing into lending, market places, RegTech, and more areas that contribute to the success of the very promising FinTech ecosystem in Egypt. On the investment side, she said that FinTech is reported to be in the top 3 industries in terms of investment opportunities and startup funding efforts today in Egypt, as the country is also reported to be one of the fastest growing FinTech ecosystems in the MENA region, with a few others having a nationwide FinTech innovation strategy that acts as a cornerstone of the ongoing digital transformation happening across the country. Moreover, she said that Egypt is currently in the top 5 interesting African FinTech ecosystems to watch listed among the world’s top “Ecosystems to watch” in 2020, which makes for a very optimistic future for the Egyptian digital economy.

Hossam then moved on to ask Ramy Taha about what “digital” means to him in general and how its popularity has altered the strategies and priorities of Alex Bank as a prominent financial institution in the digital field. Ramy started off by saying that for them, it’s all about providing a comprehensive ecosystem that is based on customer data and the deep analytics that provide valuable insights into their clients’ post-pandemic behavior and digital preferences, and this is achieved by having a perfect blend between how they optimize their existing customer data and how they develop and deliver their digital platforms to make the best use of their existing data. He mentioned that at the beginning of 2020 when the Coronavirus was just starting to make an impact on the real world, people referred to digital in terms of just mobile banking solutions, but for digital professionals such as himself, it means so much more than that, in terms of analyzing data and significant investments in digital infrastructure. He said that organizations that have not defined their digital strategy or invested in their digital infrastructure as of yet, are at risk of becoming obsolete in terms of their offering and market reach at this point, emphasizing the need for digital awareness to stay afloat in these highly digitized times. Ultimately, Ramy said, it’s about how Alex Bank enhances and optimizes the customer experience, and FinTech startups will have a critical role in supporting digital banking initiatives, which is why the best thing established financial institutions like Alex Bank can do for emerging FinTech companies is to provide them with mentorship and advisory services for the benefit of all parties involved.

Hossam went on to address Stephen Deng and inquired about his keen interest in Egypt and what has attracted him to it today as opposed to other countries in Africa, a place in which he has worked in for a long time. Stephen Deng was joining in from California and was passionate to share his view of the country’s rising potential and promising outlook. He said that COVID-19 contributed greatly to the adoption of digital products due to its radical implications and universal shift in trends across the continent. He mentioned that he’s excited to work with CBE and Egyptian entrepreneurs to elevate the FinTech ecosystem to new heights, and that Egypt’s tremendous growth in terms of venture capital and the number of startups, especially replacing South Africa’s 3rd spot in the continent, is a clear indicator of what’s to come and what to expect.

He also said that the diversification of the current FinTech arena in Egypt is also placing the nation in a competitive position with other international markets and global FinTech ecosystems. He mentioned that, although COVID-19 has greatly accelerated the rate of digital adoption, Egypt already had a jumpstart on other fellow countries in Africa pre-pandemic in terms of the amount and quality of digital offerings, further emphasizing the fact that the nation is rapidly and successfully achieving its ongoing digital transformation.

Going back to Dr. Rasha, she elaborated on how she sees FinTech startups can help banks to grow and scale into the digital sphere, saying that collaboration is key between these new and traditional entities to produce viable solutions that address specific problem statements that need to be solved in the Egyptian market, such as only having 33% financial inclusion across the nation, for instance. She stated that the nation’s aim is to eventually become a less cash society, enabled by FinTechs and further propelled by the “new norm” and highly digitized behavior imposed by COVID-19 that consumers are experiencing, making digital no longer an option in these times.

“This can only happen when everyone is going to collaborate; the banks and incumbents collaborating with FinTech solutions that have ready-made, easier, quicker, cheaper, frictionless solutions that can actually help us go through the new changes and the new norms of the consumer behavior.”

She said that this not only pertains to the financial institutions and banks on the private level, but also extends to regulators; CBE (Central Bank of Egypt) and the FRA (Financial Regulatory Authority) where the regulators collaborate with each other to find comprehensive solutions that satisfy all parties. Dr. Negm emphasized that the new law issued by the CBE that focuses on FinTech adoption and provides a regulatory framework is for them to endorse more FinTech companies and digital finance solutions across the market, and this makes for fertile ground to address the issues raised by the ongoing COVVID-19 pandemic and cater to the digital consumer.

Hossam went on to ask Stephen about the COVID-19 Innovation Sprint program and what it aims to achieve. Stephen stated that the Sprint program – hosted by the Central Bank of Egypt in collaboration with Financial Regulatory Authority, and organized by DFS Lab and FSD Africa – is a matchmaking initative between banks and startups with a 3-day sprint in which startups can apply for, and their selection will allow them to work on prototype solutions that address actual problem statements found in Egypt. Banks and non-bank FIs were invited to join as collaborators in the process to keep a high level of engagement from these Egyptian financial entities with the aim of putting their difference with startups aside for the duration of that program, and actually come together to tackle the real problems that Egyptian consumers are facing today, in hopes of coming with collaborative solutions to solve these issues. Stephen also mentioned that there will be a demo day at the end of the program, where candidates can showcase their prototype to many banks and other participants. He said that the COVID-19 Innovation Sprint is a callout to all local, regional and global startups as he considers it to be a great opportunity for FinTech startups to gain exposure, meet and work with collaborators, helping themselves define their own future and work towards a more inclusive process to grant the best possible outcomes for them, while benefitting from experienced collaborators to bring the best solutions to the rising digital finance ecosystem.

The COVID-19 Innovation Sprint’s main objective is to unearth, develop, and refine existing FinTech solutions that directly address the COVID-19 pandemic-related problem statements in the banking and the financial sectors.

Watch the full session of FinTech Egypt Dialogue’s second episode here: https://fintech-egypt.com/webinar/ 


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