Q&A: Hussein Abaza, chief executive officer and managing director, CIB
How has hosting COP27 helped Egypt and CIB strengthen their commitment to sustainability and the energy transition?
COP27 demonstrated the power of well organised climate-vulnerable nations pursuing collective, purposeful action for climate justice. The Middle East and Africa were core actors at COP27, since they were considered to be the most vulnerable to climate change. CIB is committed to working with stakeholders to achieve decarbonisation and climate goals. By collaborating and providing leadership, the bank aims to support the transition towards a green economy that benefits communities, the environment, and the economy.
Our bank has partnered with the International Finance Corporation in developing a climate risk management framework according to the Task Force on Climate-related Financial Disclosures’ recommendations and guidance. The advisory services include initial portfolio screening against transition and physical risks, along with scenario analysis and stress testing framework. CIB has also collaborated with the IFC in issuing Egypt’s first private sector corporate green bond — a $100m transaction — to help unlock finance for climate-smart projects. This is in addition to another $100m from the IFC as a green trust fund for climate mitigation and adaptation finance.
CIB’s client transition programs are helping support clients to develop carbon emission reduction solutions, in addition to innovating sustainable finance instruments. Our Sustaining Sectors and Sustaining SMEs Program helps corporates in different sectors leverage sustainability to realise their growth potential while driving system transformation toward a circular economy. An ESG Data Digitalisation programme, meanwhile, will develop an innovative hub to track sustainability performance.
What is the bank’s strategy for expansion into new markets?
Looking for lucrative opportunities whenever and wherever they arise has always been an integral part of CIB’s overall growth strategy. Egypt is the gateway to Africa, which makes the continent a logical market for a focus of expansion. Expansion into the African continent serves to accelerate balance sheet and earnings growth and follow our corporate customers who are moving into Africa. It also allows us to capture a significant share of the fast growing Egypt-Africa trade, export CIB’s competitive advantage in data and consumer markets to select African countries, and have CIB play a national role in serving the sovereign mission to maintain close economic ties with the entire continent.
CIB has looked to Kenya as the most economically developed market in East Africa and for its relative geographic proximity. The bank recently acquired Mayfair Bank, making CIB the first Egyptian bank to expand its operations into Sub-Saharan Africa. Kenya is widely viewed as the region’s commercial and industrial hub, due to its political stability, macroeconomic fundamentals, business environment and logistical services that place the country very close to all regional trade transactions.
CIB Kenya will enable the bank to capitalise on Kenya’s position as a trade hub by providing trade finance and credit facilities for Egyptian mid-sized corporates. Firms will benefit from the strength, safety and security of Egypt’s leading private sector bank. Importantly, having an established and fully operational bank will allow for a focus on SMEs, in addition to high net worth individuals. Finally, I would like to note this acquisition is a first step in our continued identification and evaluation of further opportunities in Africa.
Digitalisation, innovation and fintech hold great potential for Egyptian banks. How is CIB engaging with these trends?
Digitalisation has the potential to revolutionise Egypt’s banking industry. By adopting digital technologies, banks can improve efficiency, reduce costs and reach a wider range of customers. They can also offer new and innovative products and services that meet the needs of a changing customer base. CIB is one of the leading Egyptian banks in engaging with digitalisation trends. Our commitment to innovation and digitalisation led to the creation of our Bank of the Future program in late 2020. Its six key pillars are service digitalisation; operations centralisation; robotics; branch digital experience; branch classification; and digital sales. The program has improved several customer service areas including internal and external fund transfer migration rates, cost synergies and transaction volumes.
The bank has invested heavily in digital infrastructure and technologies, and has launched a number of innovative digital products and services. Our focus has been — and continues to be — on innovative solutions, digital channels, data analytics and the customer journey. This has allowed us to create unique digital value propositions and sales efficiency and to manage costs. Our digital readiness enables us to support our customers as well as the wider community.
Online platforms have become a highly effective digital sales channel. They now contribute 48% of the bank’s total annual certificates of deposit and term deposit booking by volume and 44% by value. This has enabled CIB to reduce branch traffic and enhance the customer experience. Almost 66% of the bank’s customer base uses online banking, with 2.2 million internet banking transactions totalling around EGP 65.6bn executed last year — a 13% year-on-year increase. The online banking customer base reached 1.3 million users in 2022 — an increase of 25% — and mobile banking transactions increased by 57% to 11.4 million. Zaki the Bot — CBI’s AI-powered chatbot — conducted over 488,000 interactions on both the public website and Facebook Messenger.
CIB’s ‘bank-as-a-service’ infrastructure enables fintechs and corporates to interact directly through application programming interfaces or APIs, and it has adopted new technologies, such as the instant payment network (IPN) that creates a real time, interoperable ecosystem allowing instant, seamless transfers through digital channels or payment service provider applications.
How is CIB using collaboration and partnerships to expand its services?
Egypt is a country with a large population of over 105 million people. Most Egyptians are either entirely unbanked or underserved, meaning they lack access to basic financial services such as payment products, savings accounts, credit facilities and insurance. CIB is partnering with fintechs and other technology-enabled platforms to develop innovative tailored solutions that can help facilitate access to financial services to vulnerable segments of society in a more sustainable manner. CIB is providing entrepreneurs with the mentorship, infrastructure and banking services needed to complement CIB’s strategy and drive the national agenda of sustainable financial inclusion for all segments of society.