The chief executive officer and board member at the Commercial International Bank (CIB), Hussein Abaza, said that the growth potential in the Egyptian economy in general and subsequently the banking sector in specific is enormous. Abaza told Daily News Egypt that the market is still filled with lucrative and untapped opportunities. He added that the ensuing investment inflows will stimulate job creation and, ultimately, the economy will immeasurably improve. Abaza continued that the banking sector is perhaps the strongest in the emerging markets, in terms of efficiency and liquidity, assuring that this sector is the strongest in the Egyptian economy. The CEO assured that the CIB is always on the lookout to cut across diverse and broad spectrums of sectors, both locally and internationally. Daily News Egypt sat down for an interview with Abaza, the transcript for which is below, lightly edited for clarity: Currently what your vision entails for Egyptian economy? With the ongoing economic reforms and the significant transformational decisions that are taking place, the growth potential in the economy in general, and subsequently the banking sector, is enormous. In fact, the market is still filled with lucrative and untapped opportunities.The New Investment Law, in addition to the other important economic reforms that the Egyptian Government has implemented, has eased numerous structural roadblocks and red tape to attract both domestic and foreign investors, and offers significant tax incentives for investors, not only for mega projects, but for small enterprises as well. The ensuing investment inflows will stimulate job creation and, ultimately, the economy will immeasurably improve. Further, the recent amendments to Egypt's capital markets law are credit positive for local banks, including the CIB. They increase the banks' income collected from their debt capital markets business and deliver funding options. Such economic measures will diversify banks' operating income. The amendments intent to increase the competitiveness of Egypt's economy and promote financial inclusion. Can you mention current strengths of Egyptian banking sector? The banking sector is perhaps the strongest in the emerging markets in terms of efficiency and liquidity, and certainly the strongest in the Egyptian economy. It is full of opportunities grounded by the solid fundamentals of the banking system—excess reserves, liquidity, and strong deposit base—that have enabled it to weather the economic turmoil of the past six years. As a result, banks were mostly unaffected by the most recent external shocks. Capitalisation levels are not only adequate, but exceed Basel III requirements. Banks remain well funded due to their strong deposit bases, and liquidity is ample with LDR standing at 46.79% as of April 2018 as per the latest the Central Bank of Egypt (CBE) published data, which is one of the lowest in emerging countries. Because of the banking sector's strength and stability, it can focus its efforts on bringing the large unbanked population into the formal economy. Whether through partnering with FinTech companies, building scalable businesses that cater to SME's, transitioning to digital platforms, or leveraging and capitalising on the information derived from data analytics to better serve the consumer, targeting this segment represents perhaps the greatest single growth prospect for banks. The end result will go a long way in helping the country increase financial inclusion, thus aligning the banking sector's interests with those of the government. Regarding your bank—what projects, activities does it focus on financing to assist economy? The CIB is always on the lookout to cut across diverse and broad spectrums of sectors, both locally and internationally, in primary growth industries including shipping, healthcare, renewable energy, infrastructure and tourism. We have been increasing our funding to businesses and individuals, achieving an 11% increase during the second quarter (Q2) of 2018 and 17% over 2017 year-end to reach EGP 120bn. Our loan market share was 6.97% as of March 2018. In addition, deposits grew by 4% during Q2 2018 and 6% over 2017 year-end to reach EGP 267bn, translating into a deposit market share of 7.35% Speaking of the institutional banking, the end-of-period gross loans were EGP 96.9bn in the Q2 2018, 12% higher qurter-over-quarter and 18% higher YTD. The bank directs all of its efforts to provide the most efficient, current and seamless experience for our customers in a safe and secure environment. The strategy to achieve this goal rests with our commitment to technology. This is where the CIB has differentiated itself, particularly in our investment in digital platforms, versus traditional channels, which has led to the launch of many significant products, such as the Smart Wallet and CIB Mobile Banking App. A critical component of our technology strategy is our effort to provide our customers with a safe banking environment. To that end, we have implemented a comprehensive cyber security strategy that is aligned with international standards and best practices to further strengthen and enhance the bank's cyber security posture. The strategy includes significant investments in both technology and human capital. We were the first Egyptian bank to establish a Security Operations Centre (SOC), to monitor, assess and defend our enterprise information systems on an ongoing basis. The CIB has been diversifying its digital banking offering, which includes Internet Banking, Mobile Banking and wide range of ATMs distributed across the country. Such services do not only empower customers to easily perform their daily transactions and payments, they also support the financial inclusion in the society by catering to different needs of customers, including the unbanked citizens, the move towards a cashless society and accelerate economic growth. What role does your bank play in supporting financial inclusion in Egypt? An integral part of the government's goal of increasing financial inclusion is targeting high potential sectors, particularly SMEs and the young, unbanked population. This strategy is closely aligned with the CIB's strategy. In targeting both the retail sector and SMEs, where we see the greatest growth potential, we are working hard to ensure our products and services reflect current technology enhancement and meet the demands of the younger generation of customers. Tailoring truly customercentric digital products and delivering all the services digitally, versus through traditional channels, is the ideal way to attract young, unbanked consumers. This is a core focus of the CIB, as we continuously develop innovative digital services, including the CIB Smart Wallet, which replaces traditional payment methods with an advanced, cashless, secured, faster and smarter experience. The Wallet facilitates the customer's daily payment process, integrating different technologies, such as smartphones, with banking services to expand the scope of financial services to reach broader segments of customers, allowing the customer to bank anytime and anywhere. With respect to SMEs, we were the first bank to devote a full-scale effort to SMEs back in 2010. The CIB Business Banking provides SMEs with comprehensive, bespoke financial and non-financial services. Through our work with SMEs we are helping them grow into larger enterprises and emerge as successful contributors to the economy. In addition, we are working with emerging Egyptian FinTech start-ups to help accelerate innovation in the financial services sector and promote cashless activity. We are supporting an innovative platform in partnership with the American University in Cairo. We have also established Digital Labs, another platform designed to bridge the gap between the financial services sector and the emerging entrepreneurial ecosystem. The CIB has also established a direction powered by Data Management, which plays an enormous and vital role in meeting our customers' needs. We are undisputed first- mover in the banking sector in this regard; and data analytics has enabled us to identify with precision the needs of the retail customer and deliver the right solutions. This is an enormous value proposition for the customer. As for the potential to drive sales, boost retention, and improve service for our customers, it will with no doubt significantly impact the bank's growth prospects and enable it to maintain its competitive edge. Due to our first move in data analytics, we have succeeded to create a transformational model that was recognised by one of the world's top five universities, such as The London Business School (LBS), whereby the LBS Leadership Institute has produced a case study on the CIB with a large portion of the study focusing on the development of data analytics function and the growth implications for the bank. It has positioned the CIB's data management service a pioneering position in Egypt's banking sector and a key player in the banking transformation. In further recognition, the LBS hosted a special event titled "Leading Transformation in Turbulent Times: In Conversation with Commercial International Bank – Egypt (CIB)" for an extensive look at the case study and its findings. What type of new services bank offers or targets offering in Egypt during coming period? Based on data analytics, we focus on tailoring customer centric products to satisfy the evolving needs of the banked and unbanked citizens. Vast amounts of valuable data have been collected, and mining them can reveal movements including money transactions, and major disasters such as fraud and thefts. It also allows for better understanding of consumer behaviour. The CIB has also differentiated itself through its investment in digital platforms, which have led to the launch of many significant products such as the Smart Wallet, Internet Banking, CIB Mobile Banking App, the cash-recycling ATMs for a large hypermarket chain and many more. Such digitisation underscores the fact that all customers can conveniently bank 24/7 through their preferred channels, better manage their finances and enjoy a distinctive experience using smartphones, tablets, and laptops. The bank's digital strategy is not only limited to its ongoing investments in technology and IT infrastructure, it is also supporting the FinTech entrepreneurs to accelerate innovation in the financial services sector and promote cashless activity. Moreover, the Business Banking provides high-quality training and workshops for its customers, in partnership with other reputable financial institutions, such as IFC, EBRD, and EBI. The ultimate objective of this training is to support our customers' business development, and contribute to supporting financial inclusion and accelerating economic growth. For the upcoming period and in line with the bank's digital direction, we have begun the process of migrating existing products and services to online channels. In the near term, we expect to offer new online services that will expedite turn-around time, enhance operational efficiency for our customers and the bank, and improve our customers' experience. In addition, by employing data analytics, the bank will be able to more effectively and efficiently bundle products and services directed to the subsegments within Business Banking. The bank will also leverage its alliances with third party, non-financial services to enhance its services and, at the same time, create a unique competitive advantage in the SME market. Such non-banking, value-added services include auditing and bookkeeping, marketing and exports assistance.
