Financial technology has been a slow burn in Egypt as banks swear they understand the need but decline to deliver on basic services such as bank accounts. So, startups are filling the gap.

Crowdfunding has been around for some time in Egypt, so the newest comers are in payments and savings services, providing digital workarounds and even faux bank accounts, in the case of mobile money.

With the world warming up to tech-enabled financial services (the GSMA Global Mobile Economy 2016 report showed 10 million dedicated mobile savings accounts have been opened worldwide), and Egyptian entrepreneurs are getting into savings, lending, and payments.

Savings, investing, and lending

In a country adept at holding its cash close - ‘under the floor tiles’ so to speak - digital saving platforms might seem too futuristic and untrustworthy.

But they are gaining traction.

Feloosy is a target-based savings startup. Users identify a goal they want to save for and attach their bank accounts to the app. They save a regular amount which is invested in different products, such as exchange traded funds or government bonds. It says it connects users with different “investment partners”.

Launched in 2015, Feloosy offers its service for free to users while deducting their own fees from their ”retail and investment partners”, meaning that once the money is truly within an investment cycle, the user and Feloosy both benefit.

“That is the concept of the startup, we don’t really tell you to just set money aside and get interest like banks. Feloosy becomes your wise friend telling you that if you want that phone, we’ll help you set aside enough cash to get it sooner than later. You can call it a milestone based savings application,” said Feloosy cofounder Karim Beltaji.

A cross between saving and lending is Money Fellows, an Egyptian app and website that launched in the UK in April, then Egypt in June this year.

Users form a group and pay in a certain sum for a certain period of time; each month one member receives the total amount of the common pot as a payout, and once everyone has received their payment, the group, or circle, closes. The startup takes a service fee on each payout between 1.5 and 2.5 percent, unless the user chooses to receive the payment by buying from a Money Fellows partner.

Money Fellows has digitzed this savings/lending hybrid which has long been used in Egypt, known by the name ‘gameaya’ or the ‘collective’.

“The premise is asking users to leverage their social cycles to crowdsource funds for specific needs, the bigger your cycle is, the more authority and reliability you have, cash collection, payments, accreditation and the rest is done electronically via Money Fellows,” said Money Fellows CEO Ahmed Wadi.

With over 1000 paying users on board and an initial seed round, Money Fellows is currently based in Egypt and are closing another investment round plus a major bank partnership deal.

Payments made digital

Mobile wallets and online payments are growing in prominence in Egypt, despite the lasting dependence on cash.

First there was electronic bill presentment pioneer Fawry, which is seeing some competition from an international service called Bee. Then came Wallety in 2012 but since has disappeared from the market, and Quicklet, a product streamlining payments and ticketing processes in hospitality.

Lasting generalist homegrown payments startups - excluding Fawry - are rarer, however.

One is Pay Me, a graduate of Egyptian incubators TIEC and AUC Venture Lab in June this year. This is a mobile payments processing app: users enter their credit or debit card number into the app and make purchases by scanning the vendor’s QR code and approving the sum on the app.

The vendor needs to use the Pay Me service and use QR codes.

The money goes directly into the seller’s account without having to wait for courier fees or long processing cycles.

It’s the brainchild of Mourad El Ashry and Hussein El Miniawi and recently partnered with the National Bank of Egypt to use their banking license for daily operations (thus bypassing central bank regulations preventing financial institutions dealing in the market without a license).

“The idea was pretty simple, you order food or clothes to be delivered to your home, why do you need to keep cash and why does your vendor need to carry a physical point of sales in order to process your credit/debit card transaction,” said El Miniawi.

If Pay Me facilitates payments, Dopay helps people get paid.

DoPay operates a cloud-based payroll service that allows employers to calculate salaries and pay employees into a Dopay bank account with a linked debit card. It brings those without accounts into the formal banking system simply, without them having to provide the screeds of paperwork and minimum deposit levels that Egyptian banks normally require.

They launched in June 2014, raised $2.4 million in investment early this year to keep tackling the Egypt market, and is currently offering banking services through a partnership with Barclays Bank. The bank is currently selling its banking license in Egypt, but Dopay assured Wamda it had interest from other local banks to take on the service.

Dopay has financial inclusion and literacy at its heart, as the app slowly teaches the user about managing daily finances, as well as allowing them to send money anywhere, anytime.

Mobile money - it’s finally here

Instead of setting people up with cards or ‘bank’ related solutions, some companies decided to go to direct carrier billing, or the ability to pay for things online using phone credit.

This alternative payment method is currently spearheaded in Egypt by TPay (a subsidiary of A15 and operating since 2003) and DCB Egypt which launched in 2014.

The industry is totally in the hands of the major mobile service providers. Startups create the interface, sign up the digital goods or content merchants and then each user’s transaction is performed via their respective telecom service provider, largely through SMS.

“Direct carrier billing is a no brainer in a country like Egypt,” said DCB Egypt CEO Mostafa El Shafeay. “There are 94 million registered SIM cards in Egypt through three providers. Users want to play games, download or stream digital content (exclusive videos and such) or subscribe to news services, all without having to leave the comfort of their sofabed or their favorite coffee place.”

El Shafeay is still bootstrapping now, but is in talks with investors.

He said the business was born out of a need to be informed or entertained via one’s mobile without having to go somewhere to pay. “Thus turning your pre-paid credit or post paid bill into a monetary form, a special inter-changeable kind of money.”

DCB Egypt has gained over one million users across three telecom operators in Egypt in less than two years. El Shafeay said the only problem facing the exchange of digital content via direct carrier billing was the quality of the content itself. “The only thing we focus on is enlisting good and decent content in compliance with the local laws, otherwise, users love the freedom DCB allows them.”

Mobile money is certainly trending in Egypt, and with more fintech players joining and with accelerators and incubators being specifically designed for this particular industry, Egyptian money may well be brought out from under the tiles and sent into the digital ether.