Legal Framework of Digital Banking in Egypt


Survey started through the ( Covid 19 ) pandemic until the end of 2021 found that 72& of Egyptians are shopping more online since the onset of the pandemic, and 57% have started using banking online.

E-Commerce growth has shown the globe the online market stability, and the Digital Bank will offer customers access to banking services via cell phones, desktops, and all other internet-enabled devices.

Demanding more efficient ways to access banking records and complete financial transactions at home or work is one of the main reasons for increasing consumer’s demand for digital banking services and this has given rise to numerous technological advancement within the financial institutions that are using artificial intelligence ( AI ) .

Consumer preferences are changing, all started when there has been a competition from FinTech start-ups, and regulations like the European Union’s revision of the Payment Services Directive ( PSD2 ) ” ( a piece of legislation designed to force provider of payment services to improve customer authentication processes and to also bring in new regulation around third-party involvement. ) ” that forced banks in Europe , the Middle East, and Africa ( EMEA ) to evolve their digital capabilities.

Egypt’s companies such as Misr Digital Innovation ( MDI ) ” ( established in 2020 to launch the first digital bank in Egypt in line with the Central Bank of Egypt (CBE) rules and regulations ) ” having a partnership with one of the global technology leaders ( Mastercard ) to start providing the state with an easy, smooth, and secure banking experience as part of Egypt’s digital transformation journey. 

What is digital banking & digital banking services?

Digital banking is the digitization of each and every level of banking relying on artificial intelligence to automate back-end operations.

Administrative tasks and data processing that puts pressure on employees to complete its day-to-day tasks will be solved by the Digital Bank artificial intelligence and also allowing users to make account deposits and transfer amounts remotely. Nonetheless, it makes it easier to apply for loans and access personalized money management services. 

Digital banks are different from online banking which is often used to refer to a service provided by traditional banking institutions that can only allow their customers to conduct financial transactions over the internet. However, digital banks in Egypt can still conduct the same type of business the other traditional banks provide, the difference is that the digital banks work up to deliver their services through the internet primarily, as they heavily rely on digital technology, network connectivity and advanced data capabilities. 

Why is Egypt aiming to digitize banking operations ?

President of the Arab Republic of Egypt Abdel-Fattah El-Sisi adopted the National Strategy for Payments which digital banking is part of.

The Central Bank of Egypt ( CBE ) is planning to expand the establishment of digital banks to make all digital services available 24/7 to improve the banking and financial services in the country.

Financial technology helped banks to implement more than one billion digital transactions worth approximately 2.8 trillion EGP, which led the  CBE to direct all banks to expand their digital services, a fund worth 1.3 billion EGP to support innovation has already been launched, with contribution of commercial banks ( Banque Misr , Banque du Caire and National Bank of Egypt ).

Goals of the National Payments Council ( NPC ), which is chaired by President El-Sisi, teaming up with CBE to digitize all financial services as technology has become a major part of citizens daily life and the banking sector must be well aware of its importance to assist in achieving a quantum leap in financial services and to reduce reliance on banknotes.

What are the characteristics of the new banking Law?

Abolishing Law 88 of 2003, President El-Sisi ratified the new banking Law 194 of 2020 and was published in the Official Gazette on September 15/2020 and became effective as of September 16/2020.

The new Law aims to stabilize the banking and monetary sectors and to improve the performance of the banking sector. However, it still keeps the best practices, international customs and legal framework of corresponding foreign supervisory authorities.

The Central Bank of Egypt has the absolute powers and authorities to supervise and regulate the banking sector in the state and this won’t be reached without ensuring the independence of the CBE.  

The new banking Law 194 of 2020 allows the CBE further powers than the abolished Law 88 of 2003 and adding powers which are ” protection of client’s rights and settling related disputes, Settlement of status for distressed banks, and the protection and consolidation of competition and prohibition of monopolistic practices ” as per the Article 7, of the Law 194 of 2020.

The Governor of the CBE enjoys a term of 4 years and can only be renewed once, all the main executives ( Chairman of the board, board members, and executive managers ) in the country’s banks must be approved by the Governor of the CBE as provided by Article 120, of the new banking Law. Nonetheless, managers of foreign bank branches and their deputies also must receive an approval from the Governor. Article 68, of the Law 194 of 2020.

General assemblies of banks may not convene without the CBE comments on the auditor’s report, and the authority to order measures such as a capital increase or increasing relevant reserves prior to dividends distribution.

Minimum paid-up capital for local banks increased to 5 billion EGP and 150 million USD or equivalent in any other foreign currency for branches of foreign banks.

Bankruptcy Law 11 for 2018 is no longer active and the banking Law 194 of 2020 introduced a chapter that regulates banks in financial distress which authorizes the CBE to declare a bank to be in financial distress by a decree valid for one year from it publishing date or the notification date of relevant parties, which can be renewed for two more similar period that will make it a maximum of three years from the issuance date of the decree.


The issuance of the new Banking Law had a positive reaction in the market. The developing and supporting competitive capabilities and the aim to raise the level of the Egyptian banking sector’s performance to qualify it for global competition. Further, the International Monetary Fund ( IMF ) viewed the new Banking Law as a step towards strengthening the legal framework for the banking sector in Egypt and the CBE.

Individuals could be asking why should we lose that personal touch, that rapport that humanizes banking and brings clarity to one’s financial decisions. However, the technology development doesn’t look like it’s going to stop soon and the reality is that we have already made that transition from the traditional to Digital banking without even realizing it.

Digital Banking is the financial sector’s future while the business outlook is E-Commerce. In that case, digitalizing both the banking and business sector is crucial because if we take a closer look we’ll see that they’re both connected. We can’t purchase something whether online or in stores without using digital banking using the E-Signature. In addition, where are we going to use digital banking if E-Commerce doesn’t exist? That’s why developing both sectors is highly important in the new technological era. In order to follow these new developments, we mustn’t forget the importance of also developing our laws in lieu of these developments in order to protect our consumers’ privacy and money against any sort of hacking, scamming, and fraud transactions. According to the traditions of our ancestors, any transaction goes both ways, consumers use our services while we provide them with comfort and protection of their rights. 

Due to the need of the market in Egypt for Digital Banking, the CBE has already started moving towards improving this sector and pushing all the banks to start developing their infrastructure.

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