Retail Payment Systems
In the OIC Member Countries
45
but recently banks have been investing heavily in technology to maintain competitive
advantage (Kamel and Hassan, 2003).
The banking sector in Egypt is one of the largest and oldest in the region. The National Bank of
Egypt (NBE) was the first bank to begin operations in the country, in 1898. At that time, central
bank functions were partially performed by the NBE, which was the only institution licensed to
issue Egyptian bank notes. The size of the banking sector grew rapidly during the first half of
the 20th century. In 1956, a total of 32 banks (26 commercial banks, 4 mortgage banks, 1
agricultural bank, 1 industrial bank) were operating in Egypt—all of them were foreign owned
except the NBE and Bank Misr (Huband, 1999).
During the period 1957-1974, nationalisation had a profound impact on the Egyptian financial
system. The confiscation of all foreign banks turned the financial sector into a stagnant, non-
competitive sector. Only fully-owned Egyptian banks were permitted to operate. In February
1960, the NBE was nationalised, and in 1961 the Central Bank of Egypt (CBE) was established
to perform its responsibilities as the unique entity charged with setting banking system
regulations. As an autonomous regulatory body, CBE inherit the powers and authorities by
Law No. 88 for 2003 and the Presidential Decree No. 65 for 2004.
From the mid-1970s onwards, the banking sector expanded remarkably with the open door
policy aiming at outward-looking growth and an active role of the private sector to promote
economic wellbeing. In 1975, a new banking law was enacted to define the nature and mode of
operations for all banks operating in Egypt. In 2000, Egypt had a total of 62 banks as well as 28
representative offices of foreign banks and 3 unregistered banks which do not report to the
CBE (CBE, 2001).
Retail banking plays an important role in Egypt’s economic growth as it involves more
diversified products and services across a mass market. They provide reliable low-cost sources
of funds for asset management and retail securities placement as well as fund management.
They also invest much money in expanding the number of branches, enlarge staff size, and
expand the ATM network, along with establishing various delivery channels.
In 2000, the number of individual bank customers reached 9 million and since then a wide
variety of retail products have been offered by a large number of banks, including payroll
accounts, car financing, mutual funds, credit cards, and personal loans. Banks are also
competing in expanding their branch networks, diversifying their delivery channels to include
ATMs, call centres, mobile banking, as well as internet banking. Despite the fact that only about