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Brokerage, asset management firms to be replaced by technological apps in 10 years - Daily News Egypt

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Brokerage, asset management firms to be replaced by technological apps in 10 years

Mubasher Capital activates custodian services, gets close to acquiring company for investment funds

Financial technology (fintech) is the winning horse as brokerage firms and asset management will be replaced by advanced technology applications in the next 10 years, according to Ehab Rashad, Vice-Chairperson of Mubasher Capital Holding for financial investments.

In an interview with Daily News Egypt, Rashad said that modern technological applications play the main role in supporting all financial transactions. They will also drive the economy to good growth rates.

How do you assess capital market performance right now, and the main challenges it faces?

The uncertainty the world is dealing with as a result of the novel coronavirus (COVID-19) crisis and its second wave is the main challenge the financial market is facing in general this year. 

I expect that 2021 will witness better performance than 2020, which witnessed the repercussions of the first wave of the pandemic, as the world has gained extensive experience in dealing with sudden crises in general.

Since crises always create opportunities, what opportunities is the capital market currently dealing with?

The coronavirus crisis played a major role in shifting attention of many companies in various economic sectors toward digital transformation and financial technology.

Whatever depends on innovative financial technology will be a good investment opportunity. It is expected that the future will witness a huge technological revolution, and companies must prepare for that vigorously in order to be able to keep pace with the rapid developments expected to take place in the coming years. 

The state’s vision is in line with the strategy that the group targets to implement, which began with the launch of a number of electronic applications, the latest of which was the Du brand for financial services. 

It is based on promoting the culture of investment and savings among various groups of people, by providing many investment solutions equipped with innovative technology.

This vision would ease many procedures for consumers to open saving accounts, and contribute to increasing the volume of domestic investment.

The company is betting on the Du brand during the coming years, because of its unique advantages over other applications. The brand, which has several platforms under its umbrella, will reinforce the decision issued by the Financial Regulatory Authority (FRA) to allow young people aged 16 to 21 to invest in the stock exchange, as Du will fully suit the nature of investments this segment targets. 

These investments are expected to be in small amounts. This is what the Du platforms allow, as there are no minimum investments required, and simple investments are always accepted. Moreover, the youth category does not have sufficient experience to invest in the stock exchange. 

The Du Play platform will be launched by the end of March. It is a simulation programme for investing in the stock exchange that allows dealers to train first before venturing out with real money.

How do you see the future of non-banking financial services (NBFS), and the growth opportunities in the coming period?

In the Egyptian capital market, I’m betting on the growth of NBFS as they meet the needs of investors online. This is why I rule out the existence of points of weaknesses that may cause concerns for investors within the sector, except in the case where the economy as a whole is affected by the repercussions of the coronavirus crisis, and the resulting decline in saving rates, causing a decline on demand of the shares of registered companies. 

How do you see the Egyptian Exchange in 10 years?

With technological development and companies competing to provide innovative technological solutions in all fields, in 10 years there will be no brokerage and management companies in the stock market. 

These companies will be nothing but “old fashioned”, and innovative financial technology applications will replace them. They will allow the implementation of all stock market transactions without the need for brokerage or asset management companies, only the presence of IT human elements. 

Other than that, robots and advanced technological applications will replace everything. Furthermore, during the coming years, the Central Bank of Egypt (CBE) may allow clients to transfer funds through their bank accounts to be executed on the stock exchange directly, so financial technology will create a completely different future in the Egyptian market. Many global stock exchanges are currently witnessing dealing with these technological applications, which have already replaced the brokerage and asset management companies.

What is the company’s work strategy during the coming period?

The general strategy of the company aims to transform into an integrated investment bank by adding new activities to Mubasher Capital. In light of the implementation of this strategy, the company begins today to activate the work of custodian activities to meet the needs of foreign investors in particular, as the company obtained a custodians license last January

The company has also obtained a preliminary approval to engage in the activity of promoting and covering IPOs. It is expected to obtain the final license and activate it before the middle of this year.

Additionally, Mubasher Capital is in the process of acquiring a company that is not listed in the Egyptian Stock Exchange and owns an investment fund. It has begun the procedures of due diligence for the acquisition, which is expected to be implemented soon. The company is the first in the Egyptian market to provide electronic subscription and redemption service on investment fund documents. It is currently offering this service to three funds.

In addition to the fund the company will own according to the awaited acquisition deal, it is also in negotiations with four new funds, including an NBE fund. It is expected to offer IPO and redemption on documents electronically and vertically. Moreover, the company aims to expand geographically by increasing its branches to 50 over the next 5 years. 

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