Algeria’s economy has just entered a new banking era with the authorization to establish digital banks. This is a first for Algeria, promising a major transformation.
Experts agree that this shift will offer numerous benefits to Algeria’s economy, including reducing dependency on physical currency, fighting the black market, simplifying financial services, and much more.
However, conducting digital banking activities is subject to strict laws set by Regulation No. 24-04, signed on October 13, 2023, by the Governor of the Bank of Algeria.
Algeria Moves to the Digital Banking Era: A Strict Legal Framework for a Promising Sector
The authorization to create digital banks in Algeria is based on stringent rules published in the Official Gazette No. 77. Furthermore, last year’s regulation specifies the modalities for granting licenses and the rules applicable to digital banking activities. Here are the main conditions for establishing digital banks in Algeria:
- Mandatory Participation of a Local Bank: One of the shareholders must be a recognized Algerian bank in online banking services, holding at least 30% of the capital.
- Headquarters in Algeria: For administrative management and handling customer complaints, digital banks must be established in Algeria.
- No Traditional Physical Branches Allowed: Banks can only open automated digital branches.
- Limited Loans: Digital banks can only grant loans to small and medium-sized enterprises (SMEs). Limited exceptions might apply for large companies.
Digital Banks in Algeria for the First Time: A Potential of $90 Billion to Exploit
The introduction of digital banks in Algeria marks a leap towards a modernized economy. These institutions will also stimulate the development of startups, thus supporting innovation and the knowledge economy.
Currently, with 12.5 million bank accounts totaling $28 billion, the implementation of digital banks could potentially double the number of bank accounts, particularly by integrating the $90 billion currently circulating in the parallel economy.
Indeed, integrating these funds, which are currently outside official channels, into digital banks represents a significant financial potential to be exploited, especially to finance certain projects and support Algerian SMEs.
