Analysis by Ahmed Kamel
There’s a need to upgrade Egypt’s policies to create suitable environment for digitisation of the financial sector. Digital technologies are increasingly integrated in the economy and are making a significant impact in the financial services industry by introducing new products, services, distribution models and providers.
Digital developments and the availability of data provide opportunities for policymakers to improve disclosure approaches based on a better understanding of consumer decision-making, and to explore alternatives which may prove more effective, a World Bank study said.
“New types of disclosure challenges emerge in the digital finance context, associated with such aspects as the use of agents, complex interfaces, limited space in digital devices or opaque terms, conditions and fees, especially regarding complex digital products,” the World Bank study stated.
The study outlined a policy framework for boosting the financial sector as digitization has been on the rise. The framework includes: the legal, regulatory and supervisory framework underpinning financial consumer protection.
CBE boosts financial protection
In a bid to boost the nation’s financial inclusion, a specialised unit for consumer rights protection has been set up within the Central Bank of Egypt. The new entity is designed to protect individuals with bank accounts. The unit is expected enhance and facilitate all banking services for individuals and protect their rights on the backdrop of growing cashless transactions.
The CBE is escalating efforts to boost e-payment solutions on the market. E-payment includes mobile transfers, electronic funds, debit, credit and prepaid cards, smart cards, e-money and e-wallets.
The unit is also designed to boost the nation’s financial inclusion, which in turn will enhances the sustainability of the economy and boosts the transfer of money in the economic system. The financial inclusion also shores up merger of the informal economy into the national economic system.
However, a cashless economy will require a high level of awareness and education in this country. A sophisticated Internet service and a state-of-the-art telecommunication network are a must for a cashless society.
Given the increasingly digital environment for financial products and services and the potential for digitisation to support greater financial inclusion and inclusive growth, the need for effective financial consumer protection is more important than ever.
The World Bank stresses the importance of the policies and approaches developed and adopted by financial consumer protection authorities need to evolve and adapt in line with the environment.
Policy scope
The financial policies should cope with market changes and technological developments to ensure that the financial sector is up-to-date with the latest world advancements. As technological developments usher in a range of challenges and opportunities for domestic public authorities responsible for the oversight of financial consumer protection, an intrinsic policy upgrading system is a must.
Moreover, the World Bank stresses that disclosure and transparency, i.e. developing proportionate service provider requirements for digital financial services relating to disclosure and transparency of the key elements of the product or service, should assist consumer understanding and enforcement of rights.
