We are collaborating with Gobi Partners on launching a small and medium-sized enterprise green fund in Egypt. Gobi Partners is an investment company that has been operating in the Far East for 20 years. They specialize in fintechs and tech in general. The $100-million fund will target the transition of small and medium-sized enterprises in mainly green and sustainable operations. We also launched the Africa Green Finance Centre, which is a collaboration between the association, Financial Sector Deepening Africa and other international green finance institutions. The center will serve the Middle East region. Our main goal is to mobilize the banking industry in the Middle East to adopt green finance practices and accelerate green investments in climate adaptation and mitigation through capacity building and partnerships. The center will act as a regional thinktank in producing knowledge and research in green finance, assist governments in policymaking, support quasi-state organizations and build the capacity of financial institutions to adopt environmental, social and corporate governance standards.

The African FinTech Network is present in 34 African markets. When we have meetings, we have 34 voices that are speaking and telling us the same story and message. Africa is a continent that is made up of 54 countries. Despite the number of countries, the challenges faced in the financial industry are similar across the board. Regardless of the differences in markets, economic structures and foundations, the needs of Africans are the same. It is possible to expand into 10 other markets without much amendment to business models. Challenges lie in the fragmented regulatory and licensing landscapes across the continent.

To solve this, we are working with the Cambridge Centre for Alternative Finance on a passporting initiative for fintechs around Africa, which will enable startups who get licensed in one African market to operate in others without needing a new one. We have started with Egypt, Kenya, Nigeria and South Africa. We will expand our prospecting efforts in regulatory reforms as markets mature.

The intention and political will exists. Egypt is well poised for the following reasons. First, there are over a million people in the country; the number of opportunities here is huge. Egypt’s population is young, tech savvy and ready to embrace digital offerings. Our technology workforce is considered one of the best in the region with competitive salaries. Second, we have accelerated regulatory reform since 2017. The third reason has to do with our infrastructure. Egypt has a well-established telecommunication sector, meaning that data is available. While the telecommunication sector still needs to improve, it is faring better than other countries in the region. Egypt is a huge market that is not scarce in resources.

This growth is for three reasons. The first reason is the regulatory reforms that have happened in the past five years in the fintech landscape, whether in the payment scene or fintech regulation issued by the central bank and the Financial Regulatory Authority. It is important to remember that technology accelerates at a faster rate than regulatory and social change. Things are moving but not at the pace at which the fintech industry is evolving. The second trigger was an ecosystem developed by early believers in fintech’s potential to drive equitable growth and inclusivity in the financial industry. Incubators and accelerators sponsored by the government, institutional investors, angel investors and early-stage venture capitalists have all added to the ecosystem. The last key driver was the impact of the COVID-19 pandemic on consumer behavior. The crisis greatly accelerated the adoption of online transactions and digital payments. With regulations in place and a shift in consumer behavior, investment has been flowing into the country and the local fintech sector.

Banks can break into fintech in the following ways. Banks can either partner with fintechs as a service for the backend while fintechs focus on what they do best such as customer acquisition, product design and market fit. Banks can also choose to build their own fintechs as an internal innovation project, which can result in a spinoff or standalone fintech company. Additionally, they can choose to invest in fintechs to gain the technical knowhow if they do not have the internal capacity to create their own.

Many big banks such as JP Morgan and Deutsche Bank are all leveraging fintech in some form. Egyptian banks are not amongst the first movers, which can be attributed to the heavily regulated nature of the financial services industry in Egypt. While a heavily regulated industry can be a positive thing, it also has its downsides such as impeding innovation and agility to adopt new ideas and methods. With legal remedy and compliance limitations, the financial services sector in Egypt is not the most innovative industry in terms of implementing cultural changes in the medium term. Banks in Egypt chose to opt for the final investment in fintech approach because it is challenging to partner with fintechs or build a spinoff internally.

When considering such decisions multiple factors come to play. It is not just the readiness of the bank, the technology or the culture, but rather the maturity of the involved startups. The number of fintechs that have achieved scale and maturity is still relatively small. Egypt’s fintech ecosystem is young compared to mature markets and only started developing less than seven years ago. Places like the EU have managed to build their own policies, procedures and reliable infrastructure to support growth in scale. These meet the needs of banks partnering with fintechs or using them as a distribution partner given the reputation and risk of the startup. Choosing to invest in a startup in the early stage and build a pipeline – which is what we are seeing – is the smartest decision.

Fintechs are not just one-off companies; they are disruptors and the future of the financial industry. Incumbents in the financial services industry are facing a challenge to either evolve or die. Adopting technology enables a more customer-centric approach. Adopting efficiency and innovation is no longer a choice but a mandate. All revolutions start in stages. In the case of fintech, the rise of startups was a catalyst. This has formed the two following evolutionary routes: one is that fintech startups will evolve into banks and the second is that banks will evolve into fintechs.

At the beginning of the journey small fintechs are mainly technology based and focused on providing one service. In later stages, these entities grow and expand into other services. They join forces with other fintech startups through mergers to provide a wider range of financial services. Eventually, they become digital banks. Likewise, banks that have already started to build their digital infrastructure will evolve into fintechs to acquire the right talent to be able to serve the unserved markets. We will begin to see a symbiosis form between the two going forward. In the end, both entities are going to have the same nature and way of doing things; both will reach the same destination.

Embedded finance is essentially embedding financial services across the customer journey. For example, if a customer is looking for a car online and decides to purchase, at this point car financing, insurance or leasing value propositions should appear as an option. This can be applied to housing, household appliances and equipment, retail, healthcare and education. In the future, if an app does not streamline financial services into its offerings, customers will not download or use the app. At one point every financial service is going to be embedded in digital service provisioning across all industries and meet environmental, social and corporate governance standards. Embedded finance is the future of the financial industry.

We launched a green tech venture builder on the side of COP27 activities for this reason. The green tech venture builder is focused on building green ventures in fintech. We will onboard industry leaders from across 12 different verticals as well as research institutes and universities. The goal is to have all partners interact to build the venture of the future, which must be digital, green, accessible, customer centric and inclusive. Financial services 3.0 will no longer be offered as a stand-alone service. It will be part of the day-to-day lives and activities of the end users. This was the failing point for banks and insurance companies. We have 370 million African citizens who are unbanked and excluded.

Fintech and payment regulations have been driven by this council from the central bank and the financial regulatory authority side all the way to the National Communications Regulatory Authority, which governs telecommunications companies operating in the country. The National Communications Regulatory Authority plays an important role when it comes to facilitating and pushing for financial inclusion.

One of our key successes is that we have integrated three regulators. They now have a platform to create, organize and co-ordinate efforts. In this way initiatives are not fragmented and avoid potential conflicts. It was a very impactful move by President El-Sisi. The fact that the council is continuing today means we will continue to see new developments.

However, regulatory reform is simply the foundation. Change is sparked by the private sector such as fintechs, startups and incumbents. The members of the association are the leading banks in the country and the largest fintechs. The mindset, effort and collaboration that takes place on the ground between all parties has made it feasible to put Egypt’s fintech scene on the map.

There is a movement on the ground to facilitate co-operation between these entities. The Egyptian FinTech Association signed an agreement with Nile University, which is the country's leading technological university, to offer authentic education to students. They are going to develop an undergrad and postgrad program as well. Additionally, we are developing an agreement with the Knowledge Hub Universities in Cairo, which is a hub of international universities operating in the new administrative capital of Egypt. The deal brings together international universities from the UK and Portugal to support the transfer of knowledge between advanced markets and the Egyptian and African markets.

We are also working with them to develop other forms of fintech education. They support our green tech venture builder initiative in supporting entrepreneurs in building and launching businesses and bringing professors and international mentors to local Egyptian and African startups. The green tech venture builder focuses on commercializing research from academia by bringing industry leaders, venture builders and academics in one place.

Education is key; it is where it all starts. Luckily, education is accessible. It is no longer the way it was in the past when you required a degree to be knowledgeable in a certain field. Now, one must only take ownership of one’s career and future. Knowledge is everywhere. With the growth of tech platforms and technology providers in education it is less of a challenge. All one must do is to decide what to learn and dedicate time and effort. Larger universities have begun offering digital programs and online digital courses. One does not need to physically be in the US, for example, to get the education you want.

As far as regional governments are concerned, they must choose between the two following things: either they invest in education and invest in skilling the population, or they prepare themselves to pay a universal income across the board. In a few years, 60% of the population is going to become jobless. Jobs will be taken over by automation and algorithms. That is a fact, and it has already started. We are not talking about 50 years down the road, we are talking about five to 10 years from now. We should focus on upskilling properly from an early age to fit the demands of the market. Education cannot afford to continue to be disconnected from the changes in the demands of industry and the world.

All our efforts serve one overall objective, which is social and financial inclusivity powered by sustainable operations. One cannot build an inclusive, social business without putting it under a gender lens. It has taken time for women to have a voice. When we do we use it to serve other women who were never given the opportunity to have a voice. We need to change the narrative when discussing challenges faced by women in Africa and around the world. Initiatives to improve access to equal opportunities in education, in climbing up the corporate ladder and in raising funding for businesses should never be labeled as support. It is doing what is right to correct decades of social and economic injustice due to embedded gender biases and systemic failures.

Inclusion of women-led businesses is a mandate for economic growth and is supported by a strong business case. Worldwide, women are accumulating wealth at more accelerated rates than men. Industry leaders in the investment industry have already started to change strategies to accommodate the needs of the affluent female segment. This was achieved by developing a solid business case and seizing market opportunities. If we look at women in the banking sector in Africa, there is a $42 billion funding gap, which is pressing. Developing financial services to fulfil needs should not be driven by a cause, it should be a business decision built on reliable business intelligence. I invite fellow bankers to collect and analyze data available about women and women-led businesses in their data pools. We should develop new segments for women-led businesses and affluent women, not to support women but to support growth, sustainability and real opportunity.

Women entrepreneurs face challenges in raising funding, whether it be debt or equity, even though it is proven by researchers and organizations such as International Finance Corporation that the return of investments made into businesses that have one female founder are higher than the return one would get on a similar investment on an all-male founded company. It is import to look into analytics and see patterns, build business cases and correct the decision making processes.