One-on-one with COO Mohamed Sultan: How CIB looks at Egypt’s fintech startups and laws

The perks of fintech startups is to come up with ideas that the bank cannot create or think of, says Mohamed Sultan (Photo courtesy of Narrative PR Summit)

The Commercial International Bank (CIB), recently named the World’s Best Emerging Markets Bank 2018 by Global Finance for the second year in a row, is known for its high return on assets and on capital, earning the label of “top-performing” bank in Egypt for years now.

What it is less known for is its efforts to integrate local fintech startups into its services and joining the Dow Jones Sustainability Index at the same time. Being one of the biggest players in the market, the bank is a partner of the American University in Cairo’s (AUC) Venture Lab, supporting its fintech cycles year over year.

Business Forward sat down with the CIB’s chief operating officer Mohamed Sultan during the Narrative PR Summit to talk about the bank’s progress in setting up the proper infrastructure to integrate fintech services, the role of startups in the finance sector, the changes that the regulatory framework needs to go through and how the bank plans to make it to the Dow Jones Sustainability Index.

What role do fintech startups play in the sector?
Globally, fintech startups give people the services that banks cannot provide. Here in Egypt, this is an area that remains unclear. An example, however, is that of the fintech startup called El Gam3eya. It was founded by an Egyptian who lived in London and we sat down with him many times, trying to cooperate with them. [El Gam3eya is a money-circling app customized to the Egyptian market.]

The perks of fintech startups is to come up with these kinds of ideas that the bank cannot create or think of. Given that these startups are actually closer to our existing and potential customers and segments than we are, they can innovate and create untraditional setups to develop a better offering than us. This is what is expected from fintech startups – to come up with and offer untraditional services that we as a banking sector are unable to offer. From our side, we are exposing their application programming interface (APIs), which are integrated into our system, to our customers to use. That is how we should be complementing each other. It does not make sense for us to compete, as some people think.

Is the infrastructure ready to integrate these startups into your banking services?
In order to do that, the proper infrastructure needs to be in place first, namely the APIs. It has to be easy for them to get integrated into our operations. We have started developing this infrastructure and there already is a setup that can serve for the time-being. If we really want to talk about a different infrastructure that is agile enough to serve financial inclusion and the untapped segments, we are already establishing it in the form of a wallet. We are planning to expand the services on this wallet in a way that it can someday become the future digital bank.

However, we are not only focusing on the bankable population. A big chunk of our focus is going towards the untapped segments. The difference between both is that the unbanked are people who are not qualified to become bank customers, while the untapped or underbanked are the unknown segments that are qualified but not yet part of our network. Our approach is to enroll the untapped segment into a certain form of agile setup and then filter it in a way that whoever wants to become a normal, bankable customer can be moved to the normal channels that serve the bankable customers. Our first phase will be May or June 2019 at the maximum and by the end of next year, I am expecting to have a very strong setup with a very strong go-to-market strategy in place. That is when the fintech startups can fully offer their services.

Our laws today are not up-to-date

What else is needed to make this integration possible?
The regulatory framework that we are creating – does it support digital as off today? No. Does it need to change? Yes. Is the government aware of this and willing to work on it? Yes. The governmental officials are talking the same language as we are now, which is very good. The main pillars that need to be changed are the digital identity, digital signature, the simplification of the KYC and the acceptance of digital copies. Our laws today are not up-to-date. I think [the government] is already working on it and it is a matter of six to nine months, in my understanding.

How are you engaging fintech startups across the country?
We have started getting engaged in different alliances, such as our partnership with the AUC Venture Lab. We have similar partnerships with Orange and Dell EMC in terms of developing the technologies that can be used for this. We also signed memoranda of understanding (MoUs) with state universities to continuously conduct awareness sessions.

Tell us a bit more about the Sustainability Department you established six years ago.
When we started our Sustainability Department, people thought that it is all about energy efficiency. But we tackled sustainability by identifying two main pillars: the first one was the application of the Equator Principles, a risk management framework, adopted by financial institutions, for determining, assessing and managing environmental and social risk in project finance. It intends to provide a minimum standard for due diligence to support responsible risk decision-making. We applied those across all our credit and risk policies and came up with tailored products for individuals and companies.

We are trying to get listed in the Dow Jones Sustainability Index

The second pillar was to adapt different initiatives internally related to energy, water, paper and anything related to our consumption. One of the systems we introduced was the paper management system, which decreased our paper consumption by 30 percent in the first year. We also conducted major changes across all our branches and premises by adapting different principles and setups that enabled us to reduce our energy usage by 40 percent. Hence, when electricity prices increased a couple of years back, we were not that heavily affected because we managed it from a different perspective. From an investment perspective, these initiatives were great. In terms of water consumption, we added water restrictors onto our faucets, which pumps the water through ions, so a small amount of water comes out of the faucet in a very fast manner. After a while, we also measured the carbon footprint on our premises and determined what the areas in which we could create a change and make it better.

Externally, we also offered loans for people who wanted to install solar panels in their homes and we focused on project financing and renewable energy. We are trying to get listed in the Dow Jones Sustainability Index and our ranking enhances every year. Maybe in a year or two, we shall be part of the index.

How did people react?
At the beginning, many were sarcastic about the matter. But gradually, people hopped on-board and became more open to the initiatives. We started competitions measuring the consumption of paper, for instance, across our branches and management offices. We also made an orientation to assess whether our teams were more comfortable while being more energy-efficient at the same time.

In the end, we are keeping ourselves ready and updated about everything. We are ready to move forward once the new regulatory framework is set, and already have a plan in place for when it happens to step into the future.

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