FinTechs Resolve Banking Barriers, Empower Egypt’s Unbanked With Mobile Technology

Until recently, it could take up to three days to transfer funds between accounts in Egypt, but the introduction of instant banking payments has completely changed the country’s payments landscape, Frans van Eersel, the CEO of Middle East and North Africa (MENA)-focused FinTech startup dopay, told PYMNTS in a previous interview.

Read more: UK-based dopay Makes Payroll Cashless for Workers in Egypt

Other factors have also contributed to the evolution of Egypt’s payment landscape in recent years, including a young and tech-savvy population and growing internet and mobile penetration. This has led to a major leapfrog in recent years, he added, creating wider opportunities for businesses to scale.

However, the high proportion of cash-heavy, unbanked populations — the world’s third-highest percentage behind Morocco (71%) and Vietnam (69%) — in the North African country still limits financial inclusion and opportunities for locals to better their lives.

For example, most local workers are paid in cash, and companies must manage the operational struggles and security risks associated with carrying and transporting physical money. For employers that attempt to make the transition to digital payments, it can take up to a month to open an account for their workers, Van Eersel explained, all the while navigating the heavy-handed bureaucracy that is all too common in the country.

It’s a problem dopay is tackling head-on, he said, having secured a banking agent license to launch a next-generation virtual banking platform that drastically cuts the time it takes for unbanked workers to get access to a bank account.

“It essentially means that we can onboard employees literally in seconds,” something that could take up to 30 days to do previously, he told PYMNTS, adding that companies can now open accounts for their employees and their beneficiaries and pay them in realtime, including during weekends and holidays.

Another local firm, Thndr, is also working to accelerate financial inclusion and democratize access to investments for MENA’s underbanked population.

Founded in 2020, the digital investment platform gives unbanked individuals in Egypt and the broader MENA region an opportunity to invest in a range of stocks, bonds and funds via a mobile application.

Read Seif Amr’s interview: Democratizing Investment Opportunities For MENA’s Underbanked Populations

“The issue is that people in the MENA region are not investing,” Seif Amr, the company’s co-founder and chief operating officer, told PYMNTS, adding that “this kind of cascades into more problems. Most of the product offerings are not relevant and are still very much analog.”

He explained that for most traditional investment products in the region, individuals must physically go to a bank branch to open and manage their investment accounts, which can be a major deterrent in a situation whereby individual investments are not widely used across the region.

Navigating the complex regulatory landscape is another key issue for startups in the country, van Ersel pointed out: “It took us two years to get to where we are and to get through all the hoops for the regulator to get the approval [for the license].”

But significant progress has been made over the years to support local tech firms, which indicates a promising future ahead for startups like dopay and Thndr looking to drive financial inclusion in the country.

For example, Thndr was recently awarded a full broker license, which according to Amr is “the first license to be issued in the country in the last 12 years.”

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