The country’s first fully digital banks are finally nearing launch. Banque Misr’s Onebank secured final approval from the Central Bank of Egypt last August and is entering its operational phase this year, with CEO Sherif El Behery setting an ambitious target of EGP 40 bn in deposits and 800k customers in year one. Private sector giant CIB is also planning an EGP 300 mn investment in a new digital arm over the next three years, with CEO Hisham Ezz Al Arab expecting a license soon and a full rollout slated for later this year.

Why it matters: As the CBE moves deeper into its monetary easing cycle — kicking off 2026 with a 100-bps cut — the record-high interest margins that buoyed bank earnings in recent years are beginning to narrow. With further rate cuts expected, the nation’s largest lenders may very well be looking to the long-awaited launch of fully digital subsidiaries as a way to keep margins high.

Yet industry voices caution against drawing a straight line between rate cuts and digital branches. Digital transformation expert Alaa Abu El Magd argues that the push toward digital banking is not a reaction to falling profitability. Lenders have been moving in this direction for years as part of a broader technological shift, he said. Many banks already operate digital branches with minimal or no on-site staff, reflecting a gradual evolution in service models rather than a sudden defensive pivot.

The long game

While digital banks theoretically boast lower overheads by ditching physical rents and large headcounts, the initial barrier to entry remains high. Abu El Magd told EnterpriseAM that launching a digital bank is a long-term strategic investment rather than an immediate cost-cutting solution. The upfront capital required for tech infrastructure, risk management, cybersecurity, and governance is substantial, he noted. However, former Industrial Development Bank Chairman Maged Fahmy argues that these costs are still far lower than the price tag of expanding through a traditional brick-and-mortar network.

Traditional branches aren’t going anywhere just yet. Banks continue to rely on their physical presence to customers who prefer face-to-face interaction, particularly in rural areas and among older segments. Lenders run detailed impact studies before trimming their branch footprint, mindful of local communities and customer loyalty, Fahmy notes. Abu El Magd highlighted the risk of “cannibalization,” where existing clients migrate to digital platforms without expanding the overall customer base.

High-margin products also still rely heavily on physical branches, while digital channels are dominated by low-yield services such as transfers and bill payments. That helps explain why banks expand cautiously, Abu El Magd noted. CBE data shows the number of bank branches reached roughly 4.75k by June 2025, inching up from 4.72k a year earlier.

The CBE has also taken a conservative regulatory approach, prioritizing financial stability and cybersecurity before granting licenses. Banking expert Marwa El Shafei says that the CBE has set strict criteria to ensure these institutions qualify as genuine digital banks. “The biggest challenge for the central bank lies in customer education and protection against cyberattacks,” El Shafei noted. Abu El Magd adds that legacy banking systems must be upgraded to support full digital operations.

Still, the groundwork is largely in place. Over the last few years, Egypt has rolled out digital IDs, enabled e-signatures, and strengthened anti-money laundering frameworks to curb fraudulent accounts, El Shafei said. These reforms have lowered structural barriers that once slowed digital adoption.

Most analysts expect the transition to be gradual rather than abrupt. Fahmy describes it as a natural evolution for Egypt’s banking sector, one that aligns with global trends and reflects the steady rise in digital transaction volumes at home.

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