Strictly automatic: Bolstering efficiency and backing up the system

The increasing use of ICT by banks has brought greater efficiencies and heightened access to the market. All of Egypt’s major players have invested in online banking functionality, and firm resolutions to expand upon this technological base to offer customers new and more convenient ways to bank has become a staple of annual reports across the sector. However, new technology brings risk, and the Central Bank of Egypt (CBE) has therefore intensified its efforts to address this concern both within its own organisation and throughout the sector as a whole.

The civil unrest seen in Cairo over 2011 was a reminder to Egypt’s banking sector of the importance of an adequate disaster recovery plan. Mission-critical ICT systems, in particular, have the potential to cause wholesale disruption if taken offline, and the provision of redundancy and dispersed capability has therefore become an issue of heightened importance in the wake of the recent uprising.

Like the private sector banks, the CBE is taking steps to ensure that it is capable of retaining ICT functionality in the face of a crisis. Its head office in Elgomhoreya Street in central Cairo is close to a number of locations which became focal points for the sporadic confrontations that lasted throughout 2011, and it is therefore establishing a permanent disaster recovery site in the CBE building in Tanta, a Nile Delta city located 94 km north of the capital. The site’s completion will, according to the CBE, “ensure the continuity of IT services, in a timely and accurate manner.”

RECOVERY PROCESS: The CBE’s disaster recovery project is part of a wider initiative to upgrade its ICT functionality and security which has run for the past half-decade. Its focus back in 2009 was on employing ICT to enhance the reliability of payment settlements, and in March of that year it introduced its real time gross settlements system – which represented a significant reduction in credit settlement risk. In 2012, it has shifted attention to reducing risk in the wider sector by increasing its oversight of licensed financial institutions. To this end, it is in the process of establishing a data warehouse to host a database of banking sector units, which will allow the CBE to have simplified access to transparent reports and monitor the performance of banking sector units, and thereby make better-informed decisions.

AUTOMATION: The central bank has also taken steps to improve the efficiency of some of its processes over the past year. Its newly introduced Auction Portal System, for example, has brought automation to the procedures of bidding for T-bills, bond auctions, and the CBE’s certificates of deposits (CDs). Using the system, primary and secondary dealers can bid online via a secure and private data network which connects the CBE with participating banks. Efforts continue, meanwhile, to further integrate the various ICT systems which exist across the CBEs locations. The CBE is working with the banknote printing house to migrate its IT applications to achieve compatibility with other systems, while it is continuing modernise IT systems and unify accounting methods at branches in Alexandria, Mohandessin and Port Said.

PRIVATE SECTOR: The CBE is also examining the use of ICT in the private sector, particularly the consumer web portals, which serve an increasing proportion of the nation’s bankable population. Due to the mounting risk that this trend represents the CBE has launched a programme by which licensed banks are now compelled to analyse the risk of the data networks which serve their internet banking systems and websites. Under the latest provisions, banks are also required to review the design of their information security systems and engage third-party, specialised companies to conduct security assessments. The results of the banks’ analyses are then to be combined with findings of security consultants, for the production of a final vulnerability assessment document. An analysis of these documents will form the reference from which the CBE’s future policies on the subject of online activity in the banking sector will be created.