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December 1, 2024 | 1 month ago
Introduction to Regulation 24-04 of 13 October 2024 on the specific conditions for authorizing the establishment, authorization, and operation of digital banking activities.
This article looks at Regulation 24-04 of 13 October 2024, highlighting the key points of this new regulation, which has enriched the legal framework governing banking activities. From now on, it will be possible to set up a ‘digital bank’ to offer banking services and products via the Internet, without physical branches. A digital bank provides the same banking services and products as a traditional bank with a branch network.
Background to the promulgation of the regulation:
The issuance of this regulation is part of Law No. 23-09 of 21 June 2023 on Monetary and Banking Law, through which the public authorities introduced reforms to the banking sector to modernize it. Chapter 4, Article 90, on authorisations and approvals, explicitly refers to the possibility of authorizing the establishment of digital banks. This law also contains several provisions for adapting the banking system to the digitalization of financial services, recognizing that the public authorities attach great importance to the digitalization of all sectors, especially the banking sector.
This regulation, issued by the Bank of Algeria, aims to establish specific conditions and requirements for obtaining authorisations to establish, authorise and operate digital banking activities. It aims to regulate and supervise the creation and development of digital banks in Algeria, which are becoming increasingly important internationally.
Another objective of this regulation is to promote the competitiveness of the Algerian banking sector by offering new alternatives to customers, especially those who live far from traditional banking agencies or prefer digital tools and do not wish to visit traditional banking agencies.
The regulation begins by defining a digital bank as: "any bank that offers banking services and products exclusively through digital channels, platforms and media and that relies on modern technologies (IT, Fintech) in the course of its activities".
The reference to modern technologies in Article 2, particularly those related to information and communication technologies and financial technology, demonstrates the public authorities' intention to encourage innovation in the banking sector.
Conditions for Obtaining Authorization for Establishment and Approval:
To obtain authorisation to set up a digital bank, an application must be submitted to the Chairman of the Monetary and Banking Council, accompanied by the necessary documentation, by Regulation No. 24-01 of 6 February 2024 laying down the conditions for the authorisation of the establishment and licensing of banks and financial institutions (cf. Articles 8 and 9).
It is also necessary to submit an additional specific file for this category of banks, the content of which will be defined by a forthcoming application instruction from the Bank of Algeria.
Concerning authorisation, the application must be submitted to the Governor of the Bank of Algeria, accompanied by the necessary documentation as specified in Decree No. 24-01 of 6 February 2024 laying down the conditions for authorising the establishment and authorisation of banks and financial institutions (cf. Article 10).
It must also submit a report drawn up by an independent company with proven references highlighting the security guarantees of the information and technological systems used to protect customers and stabilise the banking sector. A forthcoming application instruction from the Bank of Algeria will specify the implementation modalities.
December 1, 2024 | 
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