Egyptian household and individual consumption as a percentage of nominal GDP has remained consistently high despite global and regional health (COVID-19) and geopolitical volatility in Ukraine, the Gaza Strip, and Iran. 

Data curator CIEC Data estimated private consumption accounted for 94.1% of nominal GDP in 2025, up from 92.5% in 2024. That is the second-highest percentage on record, after August 2024, when consumption reached 97.1% of nominal GDP. Furthermore, consumption since the second half of 2024 has been higher than historical figures, which had not exceeded 87% since 2015, according to CIEC Data. 

This jump in consumption is due to annual inflation rates exceeding the Central Bank’s target of 7% plus or minus 2% since April 2022, when inflation rose to 9% and then reached 13.1%. Inflation also remained above 25% for 19 consecutive months. Interest rates stand at 19%, compared with 8.25% in 2021, raising the cost of borrowing. Lastly, the pound’s exchange rate rose from EGP 15.7 per dollar in 2020 to over EGP 50 per dollar in 2026, with Egypt historically importing between 60% and 65% of its needs. 

To cope with rising prices, local consumers have increasingly turned to borrowing and installment plans. Such loans mostly came from commercial banks, with the borrower’s income as collateral. In the past six years, however, consumers’ preferences have shifted to non-banks.   

“Younger generations have become closer to the idea of ‘buy now, pay later.’” Hany Aboul Fotouh, a managing partner at Alraya Consulting and Training, told local media in June. “When the cost of goods rises continuously, delaying a purchase becomes riskier than buying on installment because people fear tomorrow’s prices more than today’s installments.” 

Going forward, non-bank lenders will be reshaped by tightened regulations, AI adoption, and pressure to remain the lender of choice for increasingly tech-savvy and financially strapped local buyers. 

Preferred lenders 

In 2025, the Egyptian Financial Regulatory Authority (FRA) reported non-bank lending by all 2,532 registered non-banks reached EGP 1.4 trillion ($28.2 billion), with more than 64 million clients registered with at least one locally licensed non-bank. 

Furthermore, “the number of new [non-bank] account holders doubled during the first four months of 2026 … compared to … the same time last year,” according to state-owned Ahram English. 

According to CBE data, there are 53.8 million account holders across 36 commercial banks and CBE-regulated financial institutions, including traditional commercial bank deposits, Egypt Post accounts, mobile wallets, and prepaid cards. 

The near-parity of household and individual lending values between banks and non-banks, along with the latter’s notably large footprint, “carries significant risks,” Pamela Danziger, founder and president of Unity Marketing, noted in November. “Retailers face higher merchant fees, while vulnerable consumers are prone to overspending, increased debt, and missed payments.” Non-bank lending is a “ticking time bomb [that is] leading to potential financial disaster for all involved,” she said.   

Rules of access 

The CBE’s regulatory framework is newer and noticeably more restrictive than the FRA’s. The former law was updated in 2020, replacing the 2003 version. It enforces all requirements related to money laundering, combating the financing of terrorism, and Basel III capital adequacy, while working toward Basel IV for all banks. 

Additionally, individuals or organizations seeking to own a 10% or higher stake in a commercial bank must obtain CBE approval. Digital-only banks, such as onebank, must have a minimum capital of EGP 2 billion for general digital services and EGP 4 billion for financing large-scale companies, according to research from AmCham Egypt. 

Digital bank license “applicants must submit detailed feasibility studies covering cybersecurity, IT infrastructure, target segments, and product strategies,” AmCham Egypt research noted. Lastly, “successful applicants must establish the digital bank within a year from receiving preliminary approval from the CBE.” 

The CBE also requires traditional and digital-only commercial bank owners “to be an Egyptian joint-stock company or a branch of a foreign digital bank.” Furthermore, “the digital bank’s shareholders must include a financial institution, which must hold the majority share in the venture.” 

For non-banks, the FRA enforces a 2009 law that covers all local activities, including capital markets, insurance, mortgage finance, financial leasing, factoring, securitization, and microfinance. 

These regulations are deliberately less restrictive than those of the CBE, thus providing space for fintech startups and micro, small, and medium enterprises to innovate. 

There are also no restrictions on the ownership structure of a non-bank enterprise. In 2026, the CBE allowed commercial banks to wholly own non-banks, whereas previously they had been limited to a 40% stake. 

Lastly, the FRA requires registered companies to regularly provide updates on their internal operations to ensure they strictly adhere to authorized contract forms. 

Anchoring non-banks 

This regulatory gap means non-banks can lend to customers whom commercial banks deem too risky. That is a problem for banks, as they lend to non-banks, using the latter’s lending portfolio size as a criterion for approving loans. 

To reduce commercial banks’ exposure to non-bank risks, the CBE announced in May that commercial banks will no longer grant or renew credit facilities to non-bank lenders unless they are legally recognized by the CBE. Also, they must report their customer data to both the Central Bank’s information network and the Egyptian Credit Bureau (I-Score). 

The CBE also instructed commercial banks that already have open accounts with non-bank lenders to sell or settle this debt if the non-bank doesn’t comply with these reporting requirements by August. 

The CBE clarified these limitations in its official announcement, attributing the decision to the non-compliance of several non-bank entities with previously issued credit data reporting requirements. 

Another potentially impactful move came when the CBE gave commercial banks free rein to fully own non-bank lending companies. That could be a sign that the CBE wants to consolidate the non-bank lending market into a handful of large players that it regulates through their parent companies. 

Next-gen non-banks 

Given AI’s increased popularity and increasingly transformative capabilities, the stakes are rising for non-banks to grow quickly while maintaining acceptable risk levels. “In some emerging markets, they provide more than a third of retail lending,” McKinsey noted in an April 2025 paper. “In some markets, they supply more than 80% of lending for retail segments such as automotive and consumer durables.” 

By integrating emerging technologies into decision-making, non-banks gain a significant competitive advantage, enabling them to “unleash new levels of efficiency, personalization, and customer engagement,” noted McKinsey. 

One major market force driving this shift to AI is “customers increasingly expecting a more digital experience.” Meanwhile, “[commercial] banks [are] moving down the consumer pyramid [where non-banks mostly operate].” 

Technology is also attracting new players, such as “digital-native fintechs and e-commerce majors,” which are “competing aggressively” with non-bank startups. 

The result is increasing pressure to offer “alternative lending models” that must comply with “tighter … regulatory scrutiny” and “higher …central bank interest rates,” noted McKinsey. 

New services 

The adoption of AI and other emerging technologies would influence non-banks’ financing models. “They can explore a range of solutions, including securitization, co-lending arrangements, alternative funding sources, and more, to equip themselves for the new paradigm,” said McKinsey. One prominent example is “creating lending portfolios committed to environmental, social, and governance (ESG) objectives.”

AI could also change non-banks’ product positioning. McKinsey said lenders can “expand into new high-ticket categories …  such as luxury apparel, aesthetic treatments and procedures, and home fitness equipment.” 

Another new AI-enabled non-bank service is “offering open lines of credit,” McKinsey noted. That is unlike commercial banks, which approve individual lending on a case-by-case basis. “Open lines of credit … can adjust limits and repayment terms based on user behavior in real time.” 

Another approach sees “consumer finance players … develop bundled solutions, such as four-in-one products that allow consumers to access a single credit line via a savings account, digital wallet, credit card or prepaid store card,” said McKinsey. “Consumer finance companies have achieved significant success in offering debt consolidation and debt transfer from less favorable finance products.” 

Ops update 

Non-banks are also likely to change how they “acquire” new customers and retain existing ones. “Ownership of the full marketing and sales funnel, omnichannel integration and digital marketing” gives non-banks control over communication and customer data, said McKinsey. 

That enables non-banks to “integrate the customer experience among channels,” the consultancy said. This includes “the company’s communication plan, from landing pages and channels to messaging and delivery.” 

This content must be “devised and executed based on microsegment personas to achieve a high conversion ratio.” McKinsey highlighted the target market’s age bracket as one differentiator. “[While] customers in every geography pass through multiple touchpoints before closing a purchase, [younger audiences] increasingly expect seamless, hassle-free handoffs between channels.” 

Getting this messaging, customer experience, and engagement right allows non-banks to “scale new customer acquisition with digital marketing,” McKinsey noted. 

Underwriting is another operation that will change due to AI. “Efficient and accurate underwriting will be a key to competitive lending for consumer finance players. Implement real-time, customer-level underwriting,” McKinsey said. “To embed point-of-sale–based lending in digital platforms, consumer finance players need an underwriting engine that can make go/no-go decisions in seconds.” 

Collections and recovery will also change because of AI. That includes “deploying smart customer microsegmentation,” McKinsey noted. “Gen AI can improve the efficiency of collection processes by supporting agents.” 

In practice, AI would “track every call, interpret context, identify patterns, and analyze sentiment to give agents timely and actionable feedback, significantly improving operational performance and service quality.” 

Lastly, to retain customer loyalty and, with it, market prestige, McKinsey recommended “using preapproval scorecards to generate repeat business [and] reengaging customers with hooks and prompts.” 

Ultimately, while using technology is crucial to the future of non-banks and consumer finance, it “isn’t just digital; It’s also Darwinian,” McKinsey stressed. “Companies that evolve, embracing AI and hyper-personalization, will thrive in this new ecosystem. As for the rest, the extinction event for outdated lending models has already begun.”