Startups Use Tech Innovation to Move the Needle on Financial Exclusion in Egypt

Financial exclusion is a broad category that can range from an inability to access banking services to cultural, economic, and infrastructural barriers to the adoption of electronic payment methods.

A good measure of how countries compare in terms of their relative financial inclusion is the World Bank’s Global Findex database which tracks metrics such as bank account ownership, and usage rates of key financial services.

That database reveals that in 2021, 73% of Egypt’s population were unbanked, which translates into having 4% of the world’s unbanked population residing in the North African country.

Of course, bank account ownership isn’t the only measure of financial inclusion.

Another key driver in the project of expanding access to financial services is the adoption of non-cash payment methods. Yet once again, compared to other countries, Egypt performs poorly in this respect.

The World Bank reports that even among account owners, about 70% of Egyptians have never used a payment card, mobile phone, or the internet to make a digital payment. It also has the highest rate of cash payment for utility bills of any nation in the world.

As Egypt lags behind other countries on the world stage, a number of FinTechs are seeking to address the situation and increase access to key financial services in the country.

For example, digital investment platform Thndr is positioning itself as a mobile-first investment solution, not just for Egypt, but for the whole of the Middle East and North Africa (MENA region).

Read more: Democratizing Investment Opportunities For MENA’s Underbanked Populations

According to the startup’s co-founder and COO, Seif Amr, “the issue is that people in the MENA region are not investing,” which cascades into more problems because “most of the product offerings are not really relevant and are still very much analog.”

As a result, Thndr is looking to shake up the way Egyptians access investment products, by making investing easier and promoting financial literacy through its mobile app with the aim to open up investment opportunities to otherwise excluded sectors of Egyptian society.

“We start off with education and then we provide this platform where you can learn,” Amr told PYMNTS in an interview, adding that “you can connect with other peers and then actually invest in relevant offerings in the market.”

Prepaid Cards Reduce Reliance on Cash

As helpful as a digital investment platform can be to drive financial inclusion, it is of little to no use without access to digital payment methods. Yet in Egypt, many workers are paid in cash.

It’s a problem that MENA-focused FinTech dopay is trying to solve for unbanked workers in Egypt, the company’s CEO and Co-founder Frans van Eersel told PYMNTS, significantly smoothing the transition from cash-based to digital wages.

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

For those workers, dopay can be used to issue prepaid debit cards and all companies need to do is upload an ID and the relevant employee details to the platform to receive a prepaid Mastercard which employers can top up whenever payroll is due.

Lucky, a cash-back service that connects users to a network of more than 30,000 merchants, is also using prepaid cards to increase the range of spending options available to Egyptian consumers.

Related: Cash-Back Credit Cards Increase Financial Flexibility, Spending Power of MENA Consumers

As Lucky Co-founder and CEO Momtaz Moussa told PYMNTS, one of the reasons for Egypt’s low credit card usage is that the legacy banking system doesn’t have the ability to extend credit at lower risk due to a lack of infrastructure and data.

Moussa said that Lucky has gained “an unparalleled access to data” that has enabled them to work hand in hand with banking partners to boost consumers’ creditworthiness and bring more Egyptians into the digital economy.

And while the scope of financial services companies like dopay and Lucky offer may not completely displace the role of banks, for people without a bank account it can nevertheless significantly increase their access to a wider range of credit and payment options.

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