Detailed Market Assessment

Mobile money has a strong potential, as a solution to high cost-to-serve for low-income clients and low banking penetration rate (44%)
• Use cases currently focus on peer-to-peer transfers and bill payments, with untapped potential in other payments & services
• Market is slightly conducive for future growth as latent demand is mitigated by payment institutions that already serve unbanked population, offering cash-based domestic transfers & services
• Otherwise, mobile money appears as a lower-cost solution with stronger accessibility (quasi-full mobile penetration combined to a widespread network of small retailers to be leveraged)
In the short term, digitalized bill payments (public utilities & services) and C2G-G2C transactions are expected to drive up the market.
• Government along with the central bank appear to be fully engaged in promoting such transactions: in the context of the universalisation of compulsory basic health insurance – from 8M citizens to more than 23M citizens –, the National Social Security Fund partnered with payment institutions in 2022 to facilitate access & reimbursements and encourage the opening of accounts for this population
• Going forward, and depending on the level of adoption, C2B merchant payments (esp. small retailers) and B2B wholesale transactions will kick off, securing and sustaining mobile money’s adoption – Other C2B and B2B use cases could be developed via large ecosystems (marketplace, online services, ad websites…) and aggregators (ex. agro-cooperatives, …)
Current low level of adoption can be explained by advanced but restrictive legislation in terms of KYC (see below) and by the fact that Moroccans are sceptical of cashless payment methods (73% transactions are cash-based)
• Furthermore, the country’s large number of bank branches supports the physical flow of money. The regulator is working hard to change people’s attitudes by incorporating technology on a large scale into its own processes, but this will not happen overnight. However, the pandemic-forced shift to cashless transactions has accelerated the adoption of digital financial services.

• As a result of these concerns, it is likely that emerging start-ups will find it more difficult to scale than fintech platforms managed by or partnering with established entities such as telcos and traditional banks. These organizations already have a customer base on which to sell their products and reap the benefits of operating a well-known brand. As a result, banks and telcos should take advantage of their superior position over independent fintechs and either invest now in developing their own digital financial offerings or actively pursue merger and acquisition opportunities with start-ups struggling to overcome the trust barrier in order to gain scale.

Moroccan institution were a relatively earlier mover in the field of digital payments, introducing ‘payment institutions’ in the 2014 Banking Law to regulate mobile money use cases
• Prior to 2014, the only entities authorized to provide bank or prepaid cards with digital payment capability were traditional banks and credit institutions, and users were required to have a bank account with a traditional financial institution. The revised law allows other entities to provide these services subject to regulatory approval and license allocation, and unbanked users can make cash deposits at participating branches.
• A payment institution is defined by law as an entity that provides payment services (money transfers, cash deposits and withdrawals).

Main actors in mobile payments are licenced payment institutions
• Those are mainly bank & telecom companies subsidiaries — click here to find a list of payment institutions
• No marketing push has been done yet to foster adoption: only around few millions dollars have been invested in mobile money marketing losses compared to ~$300M funding for Wave in 6 countries

• Main activities of most important payments institutions being cash-based transactions, cumulated network amounts to ~20K agents (end of 2021)
Non licenced players have emerged with business models not requiring the licence
• Some successful apps (Kenz’Up, WafR) positioned themselves as loyalty applications: they have the disadvantage of not having liquidity in the rewards collected by users but can operate without a license in a closed loop system

Bank Al Maghrib (central bank)

• Click here to find the list of corporate players (banks, payment institutions)
• Click here to find the list of start-ups operating in the segment

Remittances

Peer-to-peer international transfers • Cross border payment solutions

$
0
B
Minimum suspncta februarii. Donec quis Metenda hac modo quas.

Remittance inflows (2022)

< 0 % Minimum suspncta februarii. Donec quis Metenda hac modo quas.

Market share of digital players

The large Moroccan diaspora send significant sums into Morocco
• Migrant remittances to Morocco have steadily increased over the past 5 years, with a 2% CAGR between 2012 & 2020 and Covid accelerated the evolution, increasing remittances from $6.8B in 2020 to $10.9B in 2022
• Morocco is the third top ranking in Africa in terms of remittances’ value, according to the World Bank Group’s Migration and Development Brief in 2022
At the moment, the low use of mobile money platforms limits the use of digital remittance payments
• This market is dominated by MTOs, not lease because people are unaware that more convenient and cheaper solutions exist

International remittance providers must be licensed in Morocco as a general requirement. Despite this, an exception is made under the regulatory framework that allows mobile money providers to undertake an International Money Transfer (IMT) business as part of their core mobile money business without having to obtain a separate licence
- • Mobile money & digital wallet is regulated by the regulatory framework around ‘payment institutions’ (check-out the detailed assessment of the mobile money & digital wallet segment for more information)
- • Although the government and Bank Al Maghrib (central bank) have been working to create encouraging regulations, the current legislation is still restrictive for non-bank entities due to the country’s stringent KYC rules. While these rules make sense in terms of preventing money laundering and terrorist financing, they place significant restrictions on mobile account ownership. For example, the most relaxed mobile wallet level — which does not require a bank account or any identifying documents — limits money held in the wallet to MAD200, or about $20.
- • The Banking Law also restricts the size of transactions, with each account category having its own limit. 3 levels of account exist:
- – Up to $20 — can be created with only a national mobile telephone number
- – Up to $500 — requiring to fill an account opening form & national photographic ID verification
- – Up to $2,000 — full KYC, as above, proof of address & interview

Traditional money transfer operators (MTO) such as Western Union dominate the market and partner with payment institutions to allow for physical cash-out
• Multiple payments institutions with large physical networks with different profiles offer partners of choice for the traditional MTOs for physical cash-out

Bank Al Maghrib (central bank)
• Law No. 103-12 relating to credit institutions & similar bodies, as amended & completed (March 2022)
• Regulatory Decision No. 392/W/2018 on domestic mobile payment
• Circular letter N° LC/BKAM/2018/70 on domestic mobile payment

Foreign Exchange Office
- • Statistical surveys
Players list
- • Click here to find the list of corporate players (banks & payment institutions)

- • Click here to find the list of start-ups operating in the segment

Insurtech

Digital insurers • Digital intermediaries

0
%
Minimum suspncta februarii. Donec quis Metenda hac modo quas.

Penetration of insurance

2021, OECD

$
0
B
Minimum suspncta februarii. Donec quis Metenda hac modo quas.

Written premiums (of which $2.7B non-life) & 7% growth

2021, ACAPS

The Moroccan insurance market is underpenetrated at ~4.2% of GDP, with significant potential to catch up, compared to world average (6.8%)
On the B2B side, market penetration remains low in the SME segment and large corporate are still facing many pain points in their client journey
• SME only account for 20% of total enterprises insurance market and have a low insurance equipment rate in comparison to large corporates: they are expected to have +14% growth in GWP between 2020-30
• Large corporates are facing many pain points: heavy administrative burden (insurance contracts management for employees heavily reliant on paperwork), undifferentiated insurance coverage (not possible to customize it by type of employees and by company preferences) & low employee satisfaction (poor understanding of insurance coverage contracts terms and conditions)

Regulation is in favour of digital insurance, with full digital subscription recently allowed
• Existing laws allow electronic exchange of legal data and e-signatures: since July 2022, insurance companies & intermediaries and other entities authorised to offer insurance products to the public are allowed to sell them online
• Under a 1st option, the contract is concluded online, with an electronic signature by both parties; in the 2nd option, the offer is made online and the physical contract is sent to the client for handwritten signature

New entrants need to be accepted by regulator and incumbents
• Any new player wishing to enter the insurance Moroccan market needs to be approved by local regulator ACAPS and obtain an operating license; new players wishing to enter the market must also be approved by a joint commission of existing insurance companies, which makes it difficult for new entrants to enter organically (latest 2 market entries in Morocco were through acquisitions)
• Current regulation also sets a limit on international new entrants in the brokerage market: be governed by Moroccan law and have their headquarters in Morocco & have at least 50% of the capital held by individuals of Moroccan nationality or legal entities under Moroccan law
Legal framework for microinsurance exists and has also been recently improved for better access
• The current microinsurance catalogue is adequate, with 6 categories of microinsurance products available on the market: life, property, health, agricultural, disability, professional

• As part of the implementation of the “inclusive insurance” roadmap planned by the National Financial Inclusion Scheme (SNIF), payment institutions have been given the authorisation to distribute insurance products in July 2022

Market is concentrated among 6 companies
• 20 companies exist on the market, with 6 companies concentrating 80% market share on life & non-life products
There is a high potential for partnerships to launch new services with incumbents that have low level of digital maturity

• Players either have only a website with information on company, products, agencies or mobile application with some administrative services available online & possibility to start the buying process online; digital signatures are just starting to roll out, for certain types of contracts.
3 players launched innovative plays
• Assur’Wi: first digital broker & price aggregator platform (mainly for non-life insurance products including automotive, health)
• AssurH24: online digital broker launched by existing broker (Beassur March) & digital media player (Geomedia)
• OnePay: developed the first self-service digital kiosks focused on insurance services, containing all the functionalities needed to take out or renew a car insurance contract without having to go to the agency, it also allows to file a claim

ACAPS
• Licencing process
• Insurance regulation
• Instruction No P.IN 02/2022 on electronic devices for the online sale of insurance products

• Instruction on the presentation by payment institutions of insurance transactions meeting the conditions set out in Article 127-2 of the General Circular
Players list
• Click here to find the list of corporate players (insurances & payment institutions)
• Click here to find the list of start-ups operating in the segment

Crowdfunding

Donation & reward platforms • Investment-based crowdfunding

0
Minimum suspncta februarii. Donec quis Metenda hac modo quas.

Projects financed between 2019-2021

$
0
K
Minimum suspncta februarii. Donec quis Metenda hac modo quas.

Funded between 2019-2021 on crowdfunding platforms

Crowdfunding is just starting to emerge in Morocco, thanks to the introduction of a regulatory framework in 2022
• Some actors did not wait for the regulatory framework to be put in place to start their activities, incorporating abroad but financing Moroccan projects
• According to the 2019-2021 crowdfunding barometer by Happy Smala, 171 Moroccan projects have been financed on 13 international platforms for a total of $370K
International benchmark comparison reveals that there is untapped potential of crowdfunding in Morocco (see Cambridge Centre for Alternative Finance – Global benchmarking)

• Perceived level of trust in alternative finance platforms in Morocco is lowest in surveyed countries, as reported by platforms
• Also alternative finance volumes per capita is, like many African countries, among the lowest in the world

A regulatory framework was introduced in 2022 to regulate crowdfunding activities in Morocco
• Collaborative financing operations can take the form of investments, loans or donations

• A crowdfunding company (SFC) wishing to establish a collaborative crowdfunding platform (PFC) must have crowdfunding as its primary business activity and a minimum paid-up share capital of MAD300K ($30K)
• Prior to carrying out its activity, the SCF must have an authorisation issued either by the Moroccan Central Bank for “loan” or “grant” category operations, or by the Moroccan Capital Markets Regulatory Authority for operations in the “investment” category
• The SCP must publish project presentation notes, prepare & present collaborative funding contracts for signature by the parties, and manage the funds from the project sponsors and distribute them to the contributors, when applicable
• The draft law provides for the obligation for each proposed project to have a special account with an account holder (credit institution). This account is intended to receive funds collected in favor of the project promoters
Each project funded by a PFC is limited to a total funding amount of MAD20M ($2M), and no single individual may contribute more than MAD500,000 (USD48,000) in a single year.

• Several players are active abroad, financing projects in Morocco, some of them are relocating in Morocco and new players are emerging thanks to the new regulation 

AMMC (central bank)
• Law n°15-18 on collaborative financing

Happy Smala
• Morocco crowdfunding barometer 2019-2021
Players list
• Click here to find the list of start-ups operating in the segment

Lending

Credit scoring • Loan management • Merchant cash advance • BNPL • Overdraft • Payday loans • POS loans

$
0
B
Minimum suspncta februarii. Donec quis Metenda hac modo quas.

Credit outstanding

Bank Al Maghrib, Rapport sur la supervision bancaire (2021)

>
0
%
Minimum suspncta februarii. Donec quis Metenda hac modo quas.

Physical channels use for credit subscription

BCG REBEX (2022)

$
0
B
Minimum suspncta februarii. Donec quis Metenda hac modo quas.

Banking household debt

Bank Al Maghrib, Rapport sur la supervision bancaire (2021) 

Lending is developed in Morocco, with consumer credit growing
• Household debt is around 25% GDP (v. 9% in Egypt), growing at ~5% CAGR (2017-2021)
• There is an important appetite for consumer credit (35% of household debt, v. 65% for housing loans): according to BCG REBEX (2022), 35% of respondents say they want to take out a consumer loan in the next 12 months (23% a home loan)
• BNPL has not been developed in Morocco yet
Digital channel use is currently very limited for credit subscription (according to BCG REBEX survey)

• LIB, Mass and Mass affluent customers are the segments with the strongest short-term dynamics on digital: e.g. 21% of LIB customers intend to use online banking more than before in the next 12 months (v. 11% for Affluent segment)
• Credit subscription is mainly carried out through traditional physical channels (branch): consumer credit (94%), home loans (88%), term deposits (92%), and savings (71%)
• There is an opportunity to increase the digital penetration of credit to reach the level of other emerging countries: ~25% for consumer/real estate loans in Turkey, >30% in South Africa
• Level of digitalization of lending experience for businesses is also low
On account of this or as a consequence, lending infrastructure used lacks digitalisation & credit scoring capabilities remains traditional and not data enhanced

The distribution of credit is regulated and can only be carried out by licenced players
• The Banking Law (No. 103-12) regulate credit establishments. The last licence granted was in 2012, to CFG Bank.
• The profession of intermediary banking allows the distribution of credit on behalf of banks

• Although no law is officially in preparation, the central bank has made statements on open banking trends as “a powerful lever for innovation and research and development in banking”
Full digital subscription of loans is allowed thanks to a recent framework on digital trust services but not used yet
• Law No. 43-20 on trust services for electronic transactions defines the status of digital trust services providers and modifies the Commercial Code, allowing transactions carried out by credit institutions and similar bodies to be established and kept in electronic form
• The decrees implementing the law were published in the beginning of 2022
• Before the licensing of digital trust providers and use of their services, the distribution of credit (including microcredit) requires a physical identification step of the customer; in the meantime, the use of the national third-party trust service but only for the opening of accounts, thanks to a framework agreement between DGSN (Directorate General of National Security), Bank Al Maghrib (central bank), CNDP (National Supervisory Commission for the Protection of Personal Data) & GPBM (Professional Grouping of Banks in Morocco) for the use of the national third-party trust service by the banking sector

P2P lending is prohibited in Morocco

The credit market in Morocco is relatively concentrated
• More than 85% of loans (to household or non financial institutions) are distributed by banks — the rest is distributed by specialised consumer credit companies or leasing companies
• The share of the top three banks in the sector’s total assets was 62% in 2021, and the share of the five largest banks was 77%.

Banks have developed low income banking (LIB) accounts, but only a few banks have initiated development of delivery channels to reach the mass market beyond the existing service point structure
• Attijariwafa Bank is commercializing its Wafacash product through a subsidiary that has 1,200 service points
• Al Barid Bank uses 1,000 branches and 800 postal offices to serve 5 million accounts, 4 million of which were inherited from Poste Maroc
Few innovative initiatives exist in order to distribute credit without having to go to a physical branch
• BMCI, the Moroccan subsidiary of the French bank BNP Paribas, has teamed up with online marketplace Autochek Group Maroc. With this partnership, Moroccans can ‘access the financing they need’ to purchase their used vehicles via the KIFAL Auto platform, and without needing to enter a physical bank branch

• Success story Chari.ma just acquired AXA Crédit, AXA Maroc finance company, to offer B2B credit to small groceries retailers

Bank Al Maghrib (central bank)
• Law No. 103-12 relating to credit institutions & similar bodies, as amended & completed (March 2022)
• Annual report on banking supervision

DGSSI (Directorate-General for Security and Information Systems)
• Law n°43-20 on trust services for electronic transactions
• Decree No. 2-22- 687 implementing Law No. 43-20 on trust services for electronic transactions
Players list
• Click here to find the list of corporate players (banks, payment institutions)

• Click here to find the list of start-ups operating in the segment

Accounts

Neobanks • Banking-as-a-Service • Personal Financial Management • SME accounting • Comparison websites

0
%
Minimum suspncta februarii. Donec quis Metenda hac modo quas.

Population unbanked

World Bank (2021)

0
M
Minimum suspncta februarii. Donec quis Metenda hac modo quas.

Accounts opened in 2021

Bank Al Maghrib, Statistiques sur les comptes bancaires (2021)

$
0
B
Minimum suspncta februarii. Donec quis Metenda hac modo quas.

Bank commissions

Bank Al Maghrib, Rapport sur la supervision bancaire (2021)

Most banks have launched their online bank offer but digital adoption is not very developed
• The use of digital channels is significantly below the average of the countries surveyed during the 2021 BCG Rebex Survey (28 countries) with 11% for the web and 40% for mobile vs. 48% and 55% respectively
• The relational model in Morocco is very anchored in physical channels, with a strong differentiation between customers: 83% of those surveyed have never used internet banking in the last 12 months, 58% for the mobile application

• Strong shifts towards digital channels are expected in the coming years
Level of bank account ownership remains low in Morocco as banks have not found a relevant business model to address the low income populations
• 56% of the population was still unbanked in 2021 according to the World Bank
• Banks have developed low income banking (LIB) accounts, but only a few banks have initiated the development of delivery channels to reach the mass market beyond the existing service point structure (Attijariwafa Bank with its Wafacash payment institution, BCP through its microcredit organisation branches, Al Barid Bank with its postal network branches)
There is no open banking regulation framework implemented in Morocco yet, not allowing for the facilitated development of corresponding use cases (PFM, BaaS, etc.)

• Although no law is officially in preparation, the central bank has made statements on open banking trends as “a powerful lever for innovation and research and development in banking”

Banking activities are regulated and can only be carried out by licensed players
• The Banking Law (No. 103-12) regulate “credit establishments”. The last licence granted was in 2012, to CFG Bank.

• ‘Payment institution’ licence was introduced in 2014 Banking Law, to allow for mobile money accounts, but payment institutions cannot distribute credit or savings products (check-out the detailed assessment of the mobile money & digital wallet segment for more information)
Full digital account opening is allowed thanks to a recent framework on digital trust services & a framework agreement with National Security
• Law No. 43-20 on trust services for electronic transactions defines the status of digital trust services providers and modifies the Commercial Code, allowing transactions carried out by credit institutions and similar bodies to be established and kept in electronic form
• The decrees implementing the law were published in the beginning of 2022
• Digital opening of accounts has been enabled thanks to a framework agreement between DGSN (Directorate General of National Security), Bank Al Maghrib (central bank), CNPP (National Supervisory Commission for the Protection of Personal Data) & GPBM (Professional Grouping of Banks in Morocco) for the use of the national third-party trust service by the banking sector

The banking market in Morocco is relatively concentrated
• The share of the top three banks in the sector’s total assets was 62% in 2021, and the share of the five largest banks was 77%.
• There is no independent digital bank

Bank Al Maghrib (central bank)
• Law No. 103-12 relating to credit institutions & similar bodies, as amended & completed (March 2022)
• Annual report on banking supervision
• Statistics on bank accounts
DGSSI (Directorate-General for Security and Information Systems)

• Law n°43-20 on trust services for electronic transactions
• Decree No. 2-22- 687 implementing Law No. 43-20 on trust services for electronic transactions
Players list
• Click here to find the list of corporate players (banks)
• Click here to find the list of start-ups operating in the segment

Payment infrastructure

Issuing • Acquiring (PSP, PoS, Cards) • Routing Infrastructure • Switch services • Clearing

$
0
B
Minimum suspncta februarii. Donec quis Metenda hac modo quas.

Mobile money transactions potential

Central bank estimate

~
0
M
Minimum suspncta februarii. Donec quis Metenda hac modo quas.

Cards from Moroccan banks

2022

0
K
Minimum suspncta februarii. Donec quis Metenda hac modo quas.

PoS at merchants

2021

Morocco is a cash-based economy, but card payments are growing rapidly
- • During the first 9-month period 2022, Moroccan cards recorded, in payments and withdrawals, 364.5 million transactions for an amount of $29B, up +15% in number of transactions and +12% in overall amount of transactions
- • The withdrawal constitutes the largest share of activity with 73% in number of operations and 88% in amount
- • The payment at merchants and eMerchants constitues 26.8% as a share of number of transactions and 12.0% as a share of amount
- • The merchants and e-merchants affiliated to the CMI (biggest acquirer in Morocco) recorded, during the first 9 months period 2022: 108.6 million payment transactions, by Moroccan and foreign bank cards, for a total amount of $4.65 B, up +33.9% in number of transactions and +39.7% in amount compared to the same period of the year 2021
E-commerce is also growing rapidly & leading the migration to card payments, although 90% of e-commerce merchants orders are still pay-on-delivery
- • $700M of online payment operations (with CMI affiliated merchants) through Moroccan and foreign cards (+24,6 % vs same period in 2021)
- • 20,4 M online payment operations (with CMI affiliated merchants) through Moroccan and foreign cards (+37,1 % vs same period in 2021)
- • 60% of Internet users purchase products/services or make payments online
- • The introduction of mobile wallets by payment institutions witnessed a rapid adoption in the last years
- • Morocco was home to 6,3 M wallet at end of 2021 (+102% vs end of 2020) : 75% opened through payment institutions
- • These wallets activity is growing significantly, with 4,9 M transactions at the end of 2021 (vs 1,4 end of 2020). The amount transmitted through these wallets is also growing steadily, with 100 M$ transmitted in 2021 (vs $ 45M in 2020)
- • Transfers made through the wallets: bill payment 74%, Mobile-To-Mobile transfers 19% and merchant payments 7% 
Many enablers were put in place to enhance these changes
- • Interoperability via switch for both wallets and bank accounts : By the end of the first half of 2018, all banks and payment institutions licensed by Bank Al-Maghrib were interconnected through HPS Switch for domestic interoperable payment and withdrawal activities
- • Instant bank transfers do not exist yet (~2 processing days), but the modernization of the national clearing system is on-going, with CIH Bank & CFG Bank already offering the service

The central bank broke the monopoly of a historical player, the CMI (Centre Monétique Interbancaire), by separating the switching and acquiring activities
- • CMI (Centre Monétique Interbancaire), is a limited company wholly owned by Moroccan banks union (GPBM) and was approved in 2002 to provide switch services and was also the single electronic money acquirer
- • To break this monopoly, the central bank (Bank Al Maghrib), decided on a strict separation between the switching activity (activity of general interest: authorization, clearing, settlement) from the acquisition activity (profit-making activity )
- • This led to the emission of the switching regulation activity by Bank Al-Maghrib, in accordance with the circular of July 2014 on the “minimum requirements for the management of a domestic Switch in charge of routing authorizations and clearing electronic money flows” which defines the rules of interoperability, the rules of access and the conditions of participation and pricing
The acquirer markup is 2% for Moroccan cards payments and 2,75%% for foreign cards (vs. 1,5% to 3,5% on the US and 0,5% to 3% in Europe)
On the PSP (gateway) market, in addition to the set-up fee, typically a 0.5% commission is charged on each transaction by the PSP
- • No regulation on commissions for PSPs exist, therefore light bargaining possibility exists for merchants depending on the volume of transactions.
- • As per market access, any new PSP player will have to be “homologated” by the CMI: this requires to connect to CMI’s platform, to be certified PCI DSS and 3D-Secure standards (these certificates are issued and sold by the Visa/Mastercard/AmEx/JCB Consortium); once these certificates are obtained, each PSP negotiates a contract with the CMI to connect to its platform and carries out tests called “certification tests”
Many elements highlight a particularly strong position occupied by the CMI on the acquiring business
- • The holding of an entry power as the only effective e-commerce acquirer on the market for the connection to its platform by any PSP
- • The holding of the integrated multi-channel online payment platform “FATOURATI”
- • Substantial market power in the PoS terminals segment
- • Holding the leading prepaid card in Morocco
- • The sponsoring (guarantors of last resort vis-à-vis Visa and Mastercard) of the new acquirers approved by Bank Al-Maghrib and by the local banks which are at the same time the owners of the CMI
To tackle this strong position by CMI, the central bank of Morocco (Bank al Maghrib) opened the payment activity to a new non-bank type of players, the payment institutions
- • Pursuant to Article 16 of the Act No. 103.12, payment institutions are those that offer one or more payment services, including:
- – The execution of payment transactions by any means of remote communication, provided that the operator acts solely as an intermediary between the payer and the supplier of goods and services
- – The execution of standing or unitary debits, card payment transactions and the execution of transfers, when these relate to funds placed on a payment account
- • The services offered by the authorized payment institutions concern:
- – Payment accounts
- – Issuance of “M-Wallet” and payment cards
- – Merchant electronic payment acquisition
- – Merchant mobile acquisition
- – E-com acquisition
- • For instance in e-commerce acquisition, this new type of licences allows PSPs to propose wallets with possibility to cash out (or other open loop reward -like cash back on purchase- incentives) or purchase items through partnering merchants.
- • To access this status, businesses must meet a certain number of criterias
- – Payment institutions must be set up in the form of a public limited company (PLC) (Société anonyme) or limited liability company (LLC) (SARL) (article 35, paragraph 2 of the banking law)
- – Payment institution requesting approval (BAM licence) must have the technical means allowing it to implement the planned activity. To do this, it must first have staff with the skills and experience required to perform the operations inherent to the activity
- – Payment institutions must ensure internal control of the operations it intends to carry out
- – A capital or minimum endowment required for two types of credit institutions: the Payment institutions which must always justify in their balance sheets a paid-up capital or a fully paid endowment of $600K and other companies approved to offer other payment services provided for in article 16 of the banking law, which must prove a minimum capital or endowment of $1M
Issuing requires a credit or payment institution authorization given by BAM
- • The interchange fees are ~1.2% (for e-commerce) which includes switch flat commission

Processing
- • To break CMI strong position on both processing and acquiring spaces, Bank Al-Maghrib authorized, on January 15, 2015, two new operators, Visa and Mastercard, to carry out the activity of routing authorizations, processing and clearing of electronic money flows and this, in compliance with the principles and international best practices in the field.
- • The authorization of a new national switch “HPSS” came the same year, empowered to centralize, for the benefit of the domestic banking system, the processing of all interbank electronic money transactions at the national level
- • HPS Switch (HPSS) is the entity authorized to centralize, for the benefit of the domestic banking system, the processing of all interbank electronic money transactions at the national level. Thus, interbank exchange and clearing operations relating to bank card transactions are centralized and processed via this mass multilateral clearing system, dedicated exclusively to electronic payment instruments.
- • While both CMI and HPS are involved in the processing of electronic transactions in Morocco, their roles are distinct. CMI provides the payment infrastructure and clearing services, while HPS provides the technology and services for processing electronic payments
Acquiring
- • Physical acquiring market is divided between 3 players: CMI, Naps (subsidiary of m2m), Al Barid Bank
- • Online acquiring market is divided between 4 players: CMI (that cumulates both PSP and acquiring activities), Fast Payment, AmanPay & Payzone
Issuing
- • The issuing entities distributes cards, provides authorization, and processes payment for the customer
- • +20 banking institutions and 18 payment institutions are active on the Moroccan market

Bank Al Maghrib (central bank)
DGSSN
Other
- • Opinion of the Conseil de la Concurrence on the state of competition on the markets of online payment by bank card
Players list
- • Click here to find the list of payment institutions
- • Click here to find the list of start-ups operating in the segment

Financial infrastructure

Core Banking Platforms • Financial Data Aggregation • APIs • Analytics Platforms • Document Management • Process automation • Customer Management • Personalised Communications • Enterprise AI • Enterprise Blockchain

~$
0
M
Minimum suspncta februarii. Donec quis Metenda hac modo quas.

estimated IT spending of banks & insurance cos. for software & services

Most banks are only starting to enter unstructured open banking
• All local banks are not opening their APIs at scale to share their customers’ financial data and services with third parties, either because of :
– The maturity of their IT infrastructure, ranging from a legacy Core Banking System to a nascent digital platform
– The lack of strategic decisions to on-board Fintech startups into their ecosystem

• Most of the local banks are rather at the ‘closed’ banking stage: technology is seen as an imperative rather than a strong potential strategic differentiator in the short term
• Data is owned primarily by banks & financial services primarily offered by traditional banking players. The most advanced ones are starting to unbundle financial services with lower regulatory requirements (payments, lending)
• Core banking system solutions are custom-made or mainly supplied by large European fintechs (e.g. Sopra, Temenos); data & smart business layers are partly developed in-house
Insurance companies lack service providers for both Core Insurance System & digital layers
• CIS providers for Moroccan players are either global (e.g. GuideWire) with high licensing fees and without local integrators, small providers or through in-house building

• Several players have opted for specific development in-house, and can even already integrate open their APIs
• Current needs are mainly the development of interfacing with external counterparts through dematerialization of information exchanges
There is no open banking regulation framework implemented in Morocco yet, not allowing for the facilitated development of corresponding use cases
• Although no law is officially in preparation, the central bank has made statements on open banking trends as “a powerful lever for innovation and research and development in banking”

Banking activities are regulated and can only be carried out by licenced players
• The Banking Law (No. 103-12) regulate “credit establishments”. The last licence granted was in 2012, to CFG Bank
In the insurance sector, regulation is in favour of digital insurance, with full digital subscription recently allowed but new entrants in insurance need to be accepted by regulator and incumbents
• Any new player wishing to enter the insurance Moroccan market needs to be approved by local regulator ACAPS and obtain an operating license; new players wishing to enter the market must also be approved by a joint commission of existing insurance companies, which makes it difficult for new entrants to enter organically (latest 2 market entries in Morocco were through acquisitions)
• Current regulation also sets a limit on international new entrants in the brokerage market: be governed by Moroccan law and have their headquarters in Morocco & have at least 50% of the capital held by individuals of Moroccan nationality or legal entities under Moroccan law

• Nevertheless, exceptions can exist: for instance, without an insurance licence, Lloyd’s opened an office in Morocco in 2018 with the CFC status, allowing coverholders and service companies in Morocco to underwrite marine, aviation and other specialised Moroccan risks where cover cannot be found locally, subject to prior approval by ACAPS (the Moroccan insurance regulator) on a case-by-case basis, as well as (re)insurance of non-Moroccan risks, subject to the restrictions governing the (re)insurance of the risk in the jurisdiction where the risk is located & reinsurance of Moroccan risks
The collection, use and transmission of personal data is governed in Morocco by Law No. 09-08 (2009) relating to the protection of natural people with respect to processed personal data
• The obligations of any personal data processors are:
(i) to not process any personal data without the consent of the concerned person;
(ii) to declare the process of personal data to the Moroccan competent authority, the CNDP (National Supervisory Commission for Personal Data Protection);
(iii) to apply for the CNDP’s authorization in order to transfer the processed personal data outside of Morocco, or in order to process personal data considered as sensitive data. The rights of people whose personal data is processed are the rights to information, to access, to modification and to objection.
• Morocco ambitions to update its regulatory framework to become GDPR compliant and be considered by the EU as a country which provides a sufficient privacy protection level; banks, having already many clients with European nationality are already complying with GDPR provisions
Morocco has put in place restrictions on the location of data hosting: sensitive information systems and data must be hosted on the national territory

• Data handled by financial institutions (banks, insurance companies, payment institutions) being mostly considered as “sensitive” and thus must be hosted on the national territory
• Exceptions exist but have to first get approval from the authorities to prove that the solution proposed is secure

The banking market in Morocco is relatively concentrated

• The share of the top three banks in the sector’s total assets was 62% in 2021, and the share of the five largest banks was 77%.
• There is no independent digital bank
Insurance market is highly concentrated among 6 companies
• 20 companies exist on the market, with 6 companies concentrating 80% market share on life & non-life products
• There is a high potential for partnerships to launch new services with incumbents that have low level of digital maturity

• Players either have only a website with information on company, products, agencies or mobile application with some administrative services available online & possibility to start the buying process online and are just starting to roll out digital signature, for certain types of contracts

Bank Al Maghrib (central bank)
• Law No. 103-12 relating to credit institutions & similar bodies, as amended & completed (March 2022)
• Annual report on banking supervision

• Statistics on bank accounts
ACAPS (Insurance supervisory authority)
• Licencing process
• Insurance regulation
CNDP (National Supervisory Commission for the Protection of Personal Data)

• Law No. 09-08 on the protection of individuals with regard to the processing of personal data
• Decree 2-09-165 taken for the application of Law 09-08 on the protection of individuals with regard to the processing of personal data
DGSSI (Directorate-General for Security and Information Systems)
• Law n°43-20 on trust services for electronic transactions
• Decree No. 2-22- 687 implementing Law No. 43-20 on trust services for electronic transactions

• Law No. 09-08 on the protection of individuals with regard to the processing of personal data
• Law No. 05-20 on cybersecurity
Players list
• Click here to find the list of corporate players (banks, insurances)
• Click here to find the list of start-ups operating in the segment

Regtech

KYC & AML/CFT • Monitoring • Reporting • Risk analysis • Data Compliance

~$
0
M
Minimum suspncta februarii. Donec quis Metenda hac modo quas.

Estimated IT spending of banks & insurance cos. for software & services

Level of digital maturity of Moroccan banks is relatively low
• Most banks & insurances are currently unbundling their core platforms and building a first data layer, starting to gather their data on an integrated data platform
• Monitoring & reporting solutions will have to wait for such data platforms to be implemented before building on it
On the KYC & AML/CFT space, financial institutions & insurances in Morocco can benefit from technology innovation

• A lot of front-end & back-end procedures need to become paperless and automated but lack adapted OCR technologies for instance
• Biggest banks in the country have activities in Europe (e.g. Attijariwafa Bank, Bank of Africa, etc.) requiring to comply with strong AML/CFT requirements

Law No. 43-05 relating to anti-money laundering lists the acts which are considered as AML crimes along with the related sanctions
• This is not an exhaustive list, but it includes, among other things, the acquisition/transfer of assets in order to conceal their origin when they are the result of the following offenses: narcotic trafficking; human trafficking; immigrant trafficking; weapon trafficking; terrorism acts; corruption; fraud on monies; bill of exchanges; promissory notes; and any other means of payment.

• Fintech companies must comply with AML regulations. For starters, fintech companies should not be used to launder money. Second, as licensed entities, fintech companies must follow legal obligations, which include controlling any transactions they conduct on behalf of their clients. They must report any suspicious transactions to the appropriate authorities.
Morocco introduced in 2020 a regulatory framework for digital trust service provision, allowing for digital signature & identification/authentication
• Law No. 43-20 on trust services for electronic transactions defines the status of digital trust services providers and modifies the Commercial Code, allowing transactions carried out by credit institutions and similar bodies to be established and kept in electronic form
• The decrees implementing the law were published in the beginning of 2022
• This framework will enable client identification & KYC processes to be conducted digitally

The collection, use and transmission of personal data is governed in Morocco by Law No. 09-08 (2009) relating to the protection of natural persons with respect to processed personal data
• The obligations of any personal data processors are:
(i) to not process any personal data without the consent of the concerned person;
(ii) to declare the process of personal data to the Moroccan competent authority, the CNDP (National Supervisory Commission for Personal Data Protection);
(iii) to apply for the CNDP’s authorisation in order to transfer the processed personal data outside of Morocco, or in order to process personal data considered as sensitive data. The rights of persons whose personal data is processed are the rights to information, to access, to modification and to objection.
• Morocco ambitions to update this regulatory framework to become GDPR compliant to be considered by the EU as a country which provides a sufficient privacy protection level; banks, having already many clients with European nationality are already complying with GDPR provisions
Morocco has put in place restrictions on the location of data hosting: sensitive information systems and data must be hosted on the national territory
• Data handled by financial institutions (banks, insurance companies, payment institutions) being mostly considered as “sensitive” and thus must be hosted on the national territory

• Exceptions exist but have to first get approval from the authorities to prove that the solution proposed is secure

The banking market in Morocco is relatively concentrated
• The share of the top three banks in the sector’s total assets was 62% in 2021, and the share of the five largest banks was 77%.
• There is no independent digital bank

Insurance market is highly concentrated among 6 companies
• 20 companies exist on the market, with 6 companies concentrating 80% market share on life & non-life products
• There is a high potential for partnerships to launch new services with incumbents that have low level of digital maturity
Several start-ups have developed technologies in Morocco, for eKYC, AML & digital trust
• For instance, ShareID is a start-up that enable real-time, on-demand verification of user identities through AI-based facial recognition, incubated by 212 Founders and raised in the beginning of 2023 $2M, including from CDG Invest

DGSSI (Directorate-General for Security and Information Systems)
• Law No. 43-20 on trust services for electronic transactions
• Decree No. 2-22- 687 implementing Law No. 43-20 on trust services for electronic transactions
Law No. 09-08 on the protection of individuals with regard to the processing of personal data
• Law No. 05-20 on cybersecurity

Players list
• Click here to find the list of corporate players (banks, insurances)
• Click here to find the list of start-ups operating in the segment

Trading & investment

Trading platforms • Robo-Advisor • Portfolio Management • Market Analytics • Crypto-trading

$
0
B
Minimum suspncta februarii. Donec quis Metenda hac modo quas.

AUM by UCITS

BkAM – Rapport sur la stabilité financière (2021)

$
0
B
Minimum suspncta februarii. Donec quis Metenda hac modo quas.

Households financial wealth

BkAM – Rapport sur la stabilité financière (2021)

0
M
Minimum suspncta februarii. Donec quis Metenda hac modo quas.

Individuals with >$5K/y income

Economist Intelligence Unit (CGIDD, 2022)

Morocco has an expanding affluent segment who are looking for opportunities and mechanisms to make investments

• The household financial wealth in 2022 was $92B in 2021, with significant upper & middle classes population (2.5M individuals with >$5K/y income)
• This wealth’s structure has not changed much for more than 10 years, being composed of bank deposits by 82%, while life insurance represents only 11% and financial securities 7%.
• Finally, individuals only hold 7% of the assets in UCITS directly
Lack of investment platforms pushes Moroccans to invest in risky & forbidden assets: despite the ban of cryptoassets trading, Moroccans were among the biggest investors in crypto
• The ban of crypto assets trading did little to curb the appetite of consumers as crypto ownership continued to rise, with Morocco becoming the fastest-growing crypto market in Northern Africa. The latest data suggest that the number of crypto holders in the country reached 1.15 million in 2022 (according to the Policy Center for the New South). Cryptocurrency trading reached $6M in Morocco in 2021, 4th in Africa behind Nigeria, South Africa, and Kenya, outperforming Egypt (according to Local Bitcoins)

AMMC is the authority regulating the capital markets activities
Vehicles of investment are limited in Morocco, especially because of strict exchange control, but a new law is expected to open the market
• A new law on UCITS, which has been awaited for several years, is expected to introduce several new features for the asset management market: AMMC announced that it should be completed in 2023

• Among other things, it allows UCITS to expand internationally (Morocco has strict foreign exchange control), marks the start of Sharia Compliant UCITS and offers the possibility for funds to be listed, which will make it possible to launch the much awaited ETFs
Trading in cryptocurrencies is currently outlawed in Morocco
• The country’s market watchdogs did not acknowledge the existence of digital assets until 2017, when the country announced a nationwide ban on trading and holding crypto. The Moroccan exchange authority (“Office des Changes”) informed the public in 2017 that any cryptocurrency transaction is considered a violation of Moroccan exchange laws and will result in sanctions and penalties. Indeed, any funds transfer to or from Morocco should be made through a licensed intermediary, such as a bank, and only in legal foreign currencies listed by BAM. A second joint media announcement, dated November 21, 2017, and issued by BAM and the AMMC in collaboration with the Moroccan finance ministry, warned the public that using cryptocurrencies as a method of payment would be a clear violation of the applicable laws, as no protection is provided to customers. The two announcements made no distinction between the various types of cryptocurrencies
• Nevertheless, in Dec. 2022, the central bank governor announced that “the draft law regulating the crypto market in Morocco is ready”: the draft legislation offers a definition for cryptocurrency that is adapted to the Moroccan context, the governor explained, adding that the piece of legislation does not aim to constrain innovation, but rather to protect individuals from risks associated with dealing in the highly-speculative market.
In order to support FinTech players in their projects and encourage the development of new technologies that contribute to the digital transformation of the financial sector, the AMMC (capital markets authority) has created a special FinTech portal on its website

• Through this portal, Moroccan financial technology companies can get in touch with the AMMC for an exchange of information.

The asset management ecosystem in Morocco comprises various players, including the central depository, the Casablanca Stock Exchange, brokerage firms, trading rooms, investors, counterparties and auditors.
• 19 brokerage firms & 559 UCITS were registered end of 2022

ASFIM (Association of Moroccan Management Companies and Investment Funds)
• Analysis and opinion notes
• Members & experts
AMMC (capital markets authority)
• Fintech portal

• Law No. 19-14 on the stock exchange, brokerage companies and financial investment advisers
Bank Al Maghrib (central bank)
• Financial stability report
• Virtual currency information
Players list

• Click here to find the list of corporate players (banks)
• Click here to find the list of start-ups operating in the segment

Mobile money & digital wallets

Mobile payments • Digital wallets • Peer-to-peer payments • Online payments • Bill payments • Smart cards • Telecom payments • Prepaid payments

$
0
B
Minimum suspncta februarii. Donec quis Metenda hac modo quas.

Mobile money transactions potential

0
%
Minimum suspncta februarii. Donec quis Metenda hac modo quas.

Transactions still in cash

$
0
B
Minimum suspncta februarii. Donec quis Metenda hac modo quas.

Domestic cash transfers in agencies

Mobile money has a strong potential, as a solution to high cost-to-serve for low-income clients and low banking penetration rate (44%)
• Use cases currently focus on peer-to-peer transfers and bill payments, with untapped potential in other payments & services
• Market is slightly conducive for future growth as latent demand is mitigated by payment institutions that already serve unbanked population, offering cash-based domestic transfers & services
• Otherwise, mobile money appears as a lower-cost solution with stronger accessibility (quasi-full mobile penetration combined to a widespread network of small retailers to be leveraged)
In the short term, digitalized bill payments (public utilities & services) and C2G-G2C transactions are expected to drive up the market.
• Government along with the central bank appear to be fully engaged in promoting such transactions: in the context of the universalisation of compulsory basic health insurance – from 8M citizens to more than 23M citizens –, the National Social Security Fund partnered with payment institutions in 2022 to facilitate access & reimbursements and encourage the opening of accounts for this population
• Going forward, and depending on the level of adoption, C2B merchant payments (esp. small retailers) and B2B wholesale transactions will kick off, securing and sustaining mobile money’s adoption – Other C2B and B2B use cases could be developed via large ecosystems (marketplace, online services, ad websites…) and aggregators (ex. agro-cooperatives, …)
Current low level of adoption can be explained by advanced but restrictive legislation in terms of KYC (see below) and by the fact that Moroccans are sceptical of cashless payment methods (73% transactions are cash-based)
• Furthermore, the country’s large number of bank branches supports the physical flow of money. The regulator is working hard to change people’s attitudes by incorporating technology on a large scale into its own processes, but this will not happen overnight. However, the pandemic-forced shift to cashless transactions has accelerated the adoption of digital financial services.

• As a result of these concerns, it is likely that emerging start-ups will find it more difficult to scale than fintech platforms managed by or partnering with established entities such as telcos and traditional banks. These organizations already have a customer base on which to sell their products and reap the benefits of operating a well-known brand. As a result, banks and telcos should take advantage of their superior position over independent fintechs and either invest now in developing their own digital financial offerings or actively pursue merger and acquisition opportunities with start-ups struggling to overcome the trust barrier in order to gain scale.

Moroccan institution were a relatively earlier mover in the field of digital payments, introducing ‘payment institutions’ in the 2014 Banking Law to regulate mobile money use cases
• Prior to 2014, the only entities authorized to provide bank or prepaid cards with digital payment capability were traditional banks and credit institutions, and users were required to have a bank account with a traditional financial institution. The revised law allows other entities to provide these services subject to regulatory approval and license allocation, and unbanked users can make cash deposits at participating branches.
• A payment institution is defined by law as an entity that provides payment services (money transfers, cash deposits and withdrawals).

Main actors in mobile payments are licenced payment institutions
• Those are mainly bank & telecom companies subsidiaries — click here to find a list of payment institutions
• No marketing push has been done yet to foster adoption: only around few millions dollars have been invested in mobile money marketing losses compared to ~$300M funding for Wave in 6 countries

• Main activities of most important payments institutions being cash-based transactions, cumulated network amounts to ~20K agents (end of 2021)
Non licenced players have emerged with business models not requiring the licence
• Some successful apps (Kenz’Up, WafR) positioned themselves as loyalty applications: they have the disadvantage of not having liquidity in the rewards collected by users but can operate without a license in a closed loop system

Bank Al Maghrib (central bank)

• Click here to find the list of corporate players (banks, payment institutions)
• Click here to find the list of start-ups operating in the segment

Remittances

Peer-to-peer international transfers • Cross border payment solutions

$
0
B
Minimum suspncta februarii. Donec quis Metenda hac modo quas.

Remittance inflows (2022)

< 0 % Minimum suspncta februarii. Donec quis Metenda hac modo quas.

Market share of digital players

The large Moroccan diaspora send significant sums into Morocco
• Migrant remittances to Morocco have steadily increased over the past 5 years, with a 2% CAGR between 2012 & 2020 and Covid accelerated the evolution, increasing remittances from $6.8B in 2020 to $10.9B in 2022
• Morocco is the third top ranking in Africa in terms of remittances’ value, according to the World Bank Group’s Migration and Development Brief in 2022
At the moment, the low use of mobile money platforms limits the use of digital remittance payments
• This market is dominated by MTOs, not lease because people are unaware that more convenient and cheaper solutions exist

International remittance providers must be licensed in Morocco as a general requirement. Despite this, an exception is made under the regulatory framework that allows mobile money providers to undertake an International Money Transfer (IMT) business as part of their core mobile money business without having to obtain a separate licence
- • Mobile money & digital wallet is regulated by the regulatory framework around ‘payment institutions’ (check-out the detailed assessment of the mobile money & digital wallet segment for more information)
- • Although the government and Bank Al Maghrib (central bank) have been working to create encouraging regulations, the current legislation is still restrictive for non-bank entities due to the country’s stringent KYC rules. While these rules make sense in terms of preventing money laundering and terrorist financing, they place significant restrictions on mobile account ownership. For example, the most relaxed mobile wallet level — which does not require a bank account or any identifying documents — limits money held in the wallet to MAD200, or about $20.
- • The Banking Law also restricts the size of transactions, with each account category having its own limit. 3 levels of account exist:
- – Up to $20 — can be created with only a national mobile telephone number
- – Up to $500 — requiring to fill an account opening form & national photographic ID verification
- – Up to $2,000 — full KYC, as above, proof of address & interview

Traditional money transfer operators (MTO) such as Western Union dominate the market and partner with payment institutions to allow for physical cash-out
• Multiple payments institutions with large physical networks with different profiles offer partners of choice for the traditional MTOs for physical cash-out

Bank Al Maghrib (central bank)
• Law No. 103-12 relating to credit institutions & similar bodies, as amended & completed (March 2022)
• Regulatory Decision No. 392/W/2018 on domestic mobile payment
• Circular letter N° LC/BKAM/2018/70 on domestic mobile payment

Foreign Exchange Office
- • Statistical surveys
Players list
- • Click here to find the list of corporate players (banks & payment institutions)

- • Click here to find the list of start-ups operating in the segment

Insurtech

Digital insurers • Digital intermediaries

0
%
Minimum suspncta februarii. Donec quis Metenda hac modo quas.

Penetration of insurance

2021, OECD

$
0
B
Minimum suspncta februarii. Donec quis Metenda hac modo quas.

Written premiums (of which $2.7B non-life) & 7% growth

2021, ACAPS

The Moroccan insurance market is underpenetrated at ~4.2% of GDP, with significant potential to catch up, compared to world average (6.8%)
On the B2B side, market penetration remains low in the SME segment and large corporate are still facing many pain points in their client journey
• SME only account for 20% of total enterprises insurance market and have a low insurance equipment rate in comparison to large corporates: they are expected to have +14% growth in GWP between 2020-30
• Large corporates are facing many pain points: heavy administrative burden (insurance contracts management for employees heavily reliant on paperwork), undifferentiated insurance coverage (not possible to customize it by type of employees and by company preferences) & low employee satisfaction (poor understanding of insurance coverage contracts terms and conditions)

Regulation is in favour of digital insurance, with full digital subscription recently allowed
• Existing laws allow electronic exchange of legal data and e-signatures: since July 2022, insurance companies & intermediaries and other entities authorised to offer insurance products to the public are allowed to sell them online
• Under a 1st option, the contract is concluded online, with an electronic signature by both parties; in the 2nd option, the offer is made online and the physical contract is sent to the client for handwritten signature

New entrants need to be accepted by regulator and incumbents
• Any new player wishing to enter the insurance Moroccan market needs to be approved by local regulator ACAPS and obtain an operating license; new players wishing to enter the market must also be approved by a joint commission of existing insurance companies, which makes it difficult for new entrants to enter organically (latest 2 market entries in Morocco were through acquisitions)
• Current regulation also sets a limit on international new entrants in the brokerage market: be governed by Moroccan law and have their headquarters in Morocco & have at least 50% of the capital held by individuals of Moroccan nationality or legal entities under Moroccan law
Legal framework for microinsurance exists and has also been recently improved for better access
• The current microinsurance catalogue is adequate, with 6 categories of microinsurance products available on the market: life, property, health, agricultural, disability, professional

• As part of the implementation of the “inclusive insurance” roadmap planned by the National Financial Inclusion Scheme (SNIF), payment institutions have been given the authorisation to distribute insurance products in July 2022

Market is concentrated among 6 companies
• 20 companies exist on the market, with 6 companies concentrating 80% market share on life & non-life products
There is a high potential for partnerships to launch new services with incumbents that have low level of digital maturity

• Players either have only a website with information on company, products, agencies or mobile application with some administrative services available online & possibility to start the buying process online; digital signatures are just starting to roll out, for certain types of contracts.
3 players launched innovative plays
• Assur’Wi: first digital broker & price aggregator platform (mainly for non-life insurance products including automotive, health)
• AssurH24: online digital broker launched by existing broker (Beassur March) & digital media player (Geomedia)
• OnePay: developed the first self-service digital kiosks focused on insurance services, containing all the functionalities needed to take out or renew a car insurance contract without having to go to the agency, it also allows to file a claim

ACAPS
• Licencing process
• Insurance regulation
• Instruction No P.IN 02/2022 on electronic devices for the online sale of insurance products

• Instruction on the presentation by payment institutions of insurance transactions meeting the conditions set out in Article 127-2 of the General Circular
Players list
• Click here to find the list of corporate players (insurances & payment institutions)
• Click here to find the list of start-ups operating in the segment

Crowdfunding

Donation & reward platforms • Investment-based crowdfunding

0
Minimum suspncta februarii. Donec quis Metenda hac modo quas.

Projects financed between 2019-2021

$
0
K
Minimum suspncta februarii. Donec quis Metenda hac modo quas.

Funded between 2019-2021 on crowdfunding platforms

Crowdfunding is just starting to emerge in Morocco, thanks to the introduction of a regulatory framework in 2022
• Some actors did not wait for the regulatory framework to be put in place to start their activities, incorporating abroad but financing Moroccan projects
• According to the 2019-2021 crowdfunding barometer by Happy Smala, 171 Moroccan projects have been financed on 13 international platforms for a total of $370K
International benchmark comparison reveals that there is untapped potential of crowdfunding in Morocco (see Cambridge Centre for Alternative Finance – Global benchmarking)

• Perceived level of trust in alternative finance platforms in Morocco is lowest in surveyed countries, as reported by platforms
• Also alternative finance volumes per capita is, like many African countries, among the lowest in the world

A regulatory framework was introduced in 2022 to regulate crowdfunding activities in Morocco
• Collaborative financing operations can take the form of investments, loans or donations

• A crowdfunding company (SFC) wishing to establish a collaborative crowdfunding platform (PFC) must have crowdfunding as its primary business activity and a minimum paid-up share capital of MAD300K ($30K)
• Prior to carrying out its activity, the SCF must have an authorisation issued either by the Moroccan Central Bank for “loan” or “grant” category operations, or by the Moroccan Capital Markets Regulatory Authority for operations in the “investment” category
• The SCP must publish project presentation notes, prepare & present collaborative funding contracts for signature by the parties, and manage the funds from the project sponsors and distribute them to the contributors, when applicable
• The draft law provides for the obligation for each proposed project to have a special account with an account holder (credit institution). This account is intended to receive funds collected in favor of the project promoters
Each project funded by a PFC is limited to a total funding amount of MAD20M ($2M), and no single individual may contribute more than MAD500,000 (USD48,000) in a single year.

• Several players are active abroad, financing projects in Morocco, some of them are relocating in Morocco and new players are emerging thanks to the new regulation 

AMMC (central bank)
• Law n°15-18 on collaborative financing

Happy Smala
• Morocco crowdfunding barometer 2019-2021
Players list
• Click here to find the list of start-ups operating in the segment

Lending

Credit scoring • Loan management • Merchant cash advance • BNPL • Overdraft • Payday loans • POS loans

$
0
B
Minimum suspncta februarii. Donec quis Metenda hac modo quas.

Credit outstanding

Bank Al Maghrib, Rapport sur la supervision bancaire (2021)

>
0
%
Minimum suspncta februarii. Donec quis Metenda hac modo quas.

Physical channels use for credit subscription

BCG REBEX (2022)

$
0
B
Minimum suspncta februarii. Donec quis Metenda hac modo quas.

Banking household debt

Bank Al Maghrib, Rapport sur la supervision bancaire (2021) 

Lending is developed in Morocco, with consumer credit growing
• Household debt is around 25% GDP (v. 9% in Egypt), growing at ~5% CAGR (2017-2021)
• There is an important appetite for consumer credit (35% of household debt, v. 65% for housing loans): according to BCG REBEX (2022), 35% of respondents say they want to take out a consumer loan in the next 12 months (23% a home loan)
• BNPL has not been developed in Morocco yet
Digital channel use is currently very limited for credit subscription (according to BCG REBEX survey)

• LIB, Mass and Mass affluent customers are the segments with the strongest short-term dynamics on digital: e.g. 21% of LIB customers intend to use online banking more than before in the next 12 months (v. 11% for Affluent segment)
• Credit subscription is mainly carried out through traditional physical channels (branch): consumer credit (94%), home loans (88%), term deposits (92%), and savings (71%)
• There is an opportunity to increase the digital penetration of credit to reach the level of other emerging countries: ~25% for consumer/real estate loans in Turkey, >30% in South Africa
• Level of digitalization of lending experience for businesses is also low
On account of this or as a consequence, lending infrastructure used lacks digitalisation & credit scoring capabilities remains traditional and not data enhanced

The distribution of credit is regulated and can only be carried out by licenced players
• The Banking Law (No. 103-12) regulate credit establishments. The last licence granted was in 2012, to CFG Bank.
• The profession of intermediary banking allows the distribution of credit on behalf of banks

• Although no law is officially in preparation, the central bank has made statements on open banking trends as “a powerful lever for innovation and research and development in banking”
Full digital subscription of loans is allowed thanks to a recent framework on digital trust services but not used yet
• Law No. 43-20 on trust services for electronic transactions defines the status of digital trust services providers and modifies the Commercial Code, allowing transactions carried out by credit institutions and similar bodies to be established and kept in electronic form
• The decrees implementing the law were published in the beginning of 2022
• Before the licensing of digital trust providers and use of their services, the distribution of credit (including microcredit) requires a physical identification step of the customer; in the meantime, the use of the national third-party trust service but only for the opening of accounts, thanks to a framework agreement between DGSN (Directorate General of National Security), Bank Al Maghrib (central bank), CNDP (National Supervisory Commission for the Protection of Personal Data) & GPBM (Professional Grouping of Banks in Morocco) for the use of the national third-party trust service by the banking sector

P2P lending is prohibited in Morocco

The credit market in Morocco is relatively concentrated
• More than 85% of loans (to household or non financial institutions) are distributed by banks — the rest is distributed by specialised consumer credit companies or leasing companies
• The share of the top three banks in the sector’s total assets was 62% in 2021, and the share of the five largest banks was 77%.

Banks have developed low income banking (LIB) accounts, but only a few banks have initiated development of delivery channels to reach the mass market beyond the existing service point structure
• Attijariwafa Bank is commercializing its Wafacash product through a subsidiary that has 1,200 service points
• Al Barid Bank uses 1,000 branches and 800 postal offices to serve 5 million accounts, 4 million of which were inherited from Poste Maroc
Few innovative initiatives exist in order to distribute credit without having to go to a physical branch
• BMCI, the Moroccan subsidiary of the French bank BNP Paribas, has teamed up with online marketplace Autochek Group Maroc. With this partnership, Moroccans can ‘access the financing they need’ to purchase their used vehicles via the KIFAL Auto platform, and without needing to enter a physical bank branch

• Success story Chari.ma just acquired AXA Crédit, AXA Maroc finance company, to offer B2B credit to small groceries retailers

Bank Al Maghrib (central bank)
• Law No. 103-12 relating to credit institutions & similar bodies, as amended & completed (March 2022)
• Annual report on banking supervision

DGSSI (Directorate-General for Security and Information Systems)
• Law n°43-20 on trust services for electronic transactions
• Decree No. 2-22- 687 implementing Law No. 43-20 on trust services for electronic transactions
Players list
• Click here to find the list of corporate players (banks, payment institutions)

• Click here to find the list of start-ups operating in the segment

Accounts

Neobanks • Banking-as-a-Service • Personal Financial Management • SME accounting • Comparison websites

0
%
Minimum suspncta februarii. Donec quis Metenda hac modo quas.

Population unbanked

World Bank (2021)

0
M
Minimum suspncta februarii. Donec quis Metenda hac modo quas.

Accounts opened in 2021

Bank Al Maghrib, Statistiques sur les comptes bancaires (2021)

$
0
B
Minimum suspncta februarii. Donec quis Metenda hac modo quas.

Bank commissions

Bank Al Maghrib, Rapport sur la supervision bancaire (2021)

Most banks have launched their online bank offer but digital adoption is not very developed
• The use of digital channels is significantly below the average of the countries surveyed during the 2021 BCG Rebex Survey (28 countries) with 11% for the web and 40% for mobile vs. 48% and 55% respectively
• The relational model in Morocco is very anchored in physical channels, with a strong differentiation between customers: 83% of those surveyed have never used internet banking in the last 12 months, 58% for the mobile application

• Strong shifts towards digital channels are expected in the coming years
Level of bank account ownership remains low in Morocco as banks have not found a relevant business model to address the low income populations
• 56% of the population was still unbanked in 2021 according to the World Bank
• Banks have developed low income banking (LIB) accounts, but only a few banks have initiated the development of delivery channels to reach the mass market beyond the existing service point structure (Attijariwafa Bank with its Wafacash payment institution, BCP through its microcredit organisation branches, Al Barid Bank with its postal network branches)
There is no open banking regulation framework implemented in Morocco yet, not allowing for the facilitated development of corresponding use cases (PFM, BaaS, etc.)

• Although no law is officially in preparation, the central bank has made statements on open banking trends as “a powerful lever for innovation and research and development in banking”

Banking activities are regulated and can only be carried out by licensed players
• The Banking Law (No. 103-12) regulate “credit establishments”. The last licence granted was in 2012, to CFG Bank.

• ‘Payment institution’ licence was introduced in 2014 Banking Law, to allow for mobile money accounts, but payment institutions cannot distribute credit or savings products (check-out the detailed assessment of the mobile money & digital wallet segment for more information)
Full digital account opening is allowed thanks to a recent framework on digital trust services & a framework agreement with National Security
• Law No. 43-20 on trust services for electronic transactions defines the status of digital trust services providers and modifies the Commercial Code, allowing transactions carried out by credit institutions and similar bodies to be established and kept in electronic form
• The decrees implementing the law were published in the beginning of 2022
• Digital opening of accounts has been enabled thanks to a framework agreement between DGSN (Directorate General of National Security), Bank Al Maghrib (central bank), CNPP (National Supervisory Commission for the Protection of Personal Data) & GPBM (Professional Grouping of Banks in Morocco) for the use of the national third-party trust service by the banking sector

The banking market in Morocco is relatively concentrated
• The share of the top three banks in the sector’s total assets was 62% in 2021, and the share of the five largest banks was 77%.
• There is no independent digital bank

Bank Al Maghrib (central bank)
• Law No. 103-12 relating to credit institutions & similar bodies, as amended & completed (March 2022)
• Annual report on banking supervision
• Statistics on bank accounts
DGSSI (Directorate-General for Security and Information Systems)

• Law n°43-20 on trust services for electronic transactions
• Decree No. 2-22- 687 implementing Law No. 43-20 on trust services for electronic transactions
Players list
• Click here to find the list of corporate players (banks)
• Click here to find the list of start-ups operating in the segment

Payment infrastructure

Issuing • Acquiring (PSP, PoS, Cards) • Routing Infrastructure • Switch services • Clearing

$
0
B
Minimum suspncta februarii. Donec quis Metenda hac modo quas.

Mobile money transactions potential

Central bank estimate

~
0
M
Minimum suspncta februarii. Donec quis Metenda hac modo quas.

Cards from Moroccan banks

2022

0
K
Minimum suspncta februarii. Donec quis Metenda hac modo quas.

PoS at merchants

2021

Morocco is a cash-based economy, but card payments are growing rapidly
- • During the first 9-month period 2022, Moroccan cards recorded, in payments and withdrawals, 364.5 million transactions for an amount of $29B, up +15% in number of transactions and +12% in overall amount of transactions
- • The withdrawal constitutes the largest share of activity with 73% in number of operations and 88% in amount
- • The payment at merchants and eMerchants constitues 26.8% as a share of number of transactions and 12.0% as a share of amount
- • The merchants and e-merchants affiliated to the CMI (biggest acquirer in Morocco) recorded, during the first 9 months period 2022: 108.6 million payment transactions, by Moroccan and foreign bank cards, for a total amount of $4.65 B, up +33.9% in number of transactions and +39.7% in amount compared to the same period of the year 2021
E-commerce is also growing rapidly & leading the migration to card payments, although 90% of e-commerce merchants orders are still pay-on-delivery
- • $700M of online payment operations (with CMI affiliated merchants) through Moroccan and foreign cards (+24,6 % vs same period in 2021)
- • 20,4 M online payment operations (with CMI affiliated merchants) through Moroccan and foreign cards (+37,1 % vs same period in 2021)
- • 60% of Internet users purchase products/services or make payments online
- • The introduction of mobile wallets by payment institutions witnessed a rapid adoption in the last years
- • Morocco was home to 6,3 M wallet at end of 2021 (+102% vs end of 2020) : 75% opened through payment institutions
- • These wallets activity is growing significantly, with 4,9 M transactions at the end of 2021 (vs 1,4 end of 2020). The amount transmitted through these wallets is also growing steadily, with 100 M$ transmitted in 2021 (vs $ 45M in 2020)
- • Transfers made through the wallets: bill payment 74%, Mobile-To-Mobile transfers 19% and merchant payments 7% 
Many enablers were put in place to enhance these changes
- • Interoperability via switch for both wallets and bank accounts : By the end of the first half of 2018, all banks and payment institutions licensed by Bank Al-Maghrib were interconnected through HPS Switch for domestic interoperable payment and withdrawal activities
- • Instant bank transfers do not exist yet (~2 processing days), but the modernization of the national clearing system is on-going, with CIH Bank & CFG Bank already offering the service

The central bank broke the monopoly of a historical player, the CMI (Centre Monétique Interbancaire), by separating the switching and acquiring activities
- • CMI (Centre Monétique Interbancaire), is a limited company wholly owned by Moroccan banks union (GPBM) and was approved in 2002 to provide switch services and was also the single electronic money acquirer
- • To break this monopoly, the central bank (Bank Al Maghrib), decided on a strict separation between the switching activity (activity of general interest: authorization, clearing, settlement) from the acquisition activity (profit-making activity )
- • This led to the emission of the switching regulation activity by Bank Al-Maghrib, in accordance with the circular of July 2014 on the “minimum requirements for the management of a domestic Switch in charge of routing authorizations and clearing electronic money flows” which defines the rules of interoperability, the rules of access and the conditions of participation and pricing
The acquirer markup is 2% for Moroccan cards payments and 2,75%% for foreign cards (vs. 1,5% to 3,5% on the US and 0,5% to 3% in Europe)
On the PSP (gateway) market, in addition to the set-up fee, typically a 0.5% commission is charged on each transaction by the PSP
- • No regulation on commissions for PSPs exist, therefore light bargaining possibility exists for merchants depending on the volume of transactions.
- • As per market access, any new PSP player will have to be “homologated” by the CMI: this requires to connect to CMI’s platform, to be certified PCI DSS and 3D-Secure standards (these certificates are issued and sold by the Visa/Mastercard/AmEx/JCB Consortium); once these certificates are obtained, each PSP negotiates a contract with the CMI to connect to its platform and carries out tests called “certification tests”
Many elements highlight a particularly strong position occupied by the CMI on the acquiring business
- • The holding of an entry power as the only effective e-commerce acquirer on the market for the connection to its platform by any PSP
- • The holding of the integrated multi-channel online payment platform “FATOURATI”
- • Substantial market power in the PoS terminals segment
- • Holding the leading prepaid card in Morocco
- • The sponsoring (guarantors of last resort vis-à-vis Visa and Mastercard) of the new acquirers approved by Bank Al-Maghrib and by the local banks which are at the same time the owners of the CMI
To tackle this strong position by CMI, the central bank of Morocco (Bank al Maghrib) opened the payment activity to a new non-bank type of players, the payment institutions
- • Pursuant to Article 16 of the Act No. 103.12, payment institutions are those that offer one or more payment services, including:
- – The execution of payment transactions by any means of remote communication, provided that the operator acts solely as an intermediary between the payer and the supplier of goods and services
- – The execution of standing or unitary debits, card payment transactions and the execution of transfers, when these relate to funds placed on a payment account
- • The services offered by the authorized payment institutions concern:
- – Payment accounts
- – Issuance of “M-Wallet” and payment cards
- – Merchant electronic payment acquisition
- – Merchant mobile acquisition
- – E-com acquisition
- • For instance in e-commerce acquisition, this new type of licences allows PSPs to propose wallets with possibility to cash out (or other open loop reward -like cash back on purchase- incentives) or purchase items through partnering merchants.
- • To access this status, businesses must meet a certain number of criterias
- – Payment institutions must be set up in the form of a public limited company (PLC) (Société anonyme) or limited liability company (LLC) (SARL) (article 35, paragraph 2 of the banking law)
- – Payment institution requesting approval (BAM licence) must have the technical means allowing it to implement the planned activity. To do this, it must first have staff with the skills and experience required to perform the operations inherent to the activity
- – Payment institutions must ensure internal control of the operations it intends to carry out
- – A capital or minimum endowment required for two types of credit institutions: the Payment institutions which must always justify in their balance sheets a paid-up capital or a fully paid endowment of $600K and other companies approved to offer other payment services provided for in article 16 of the banking law, which must prove a minimum capital or endowment of $1M
Issuing requires a credit or payment institution authorization given by BAM
- • The interchange fees are ~1.2% (for e-commerce) which includes switch flat commission

Processing
- • To break CMI strong position on both processing and acquiring spaces, Bank Al-Maghrib authorized, on January 15, 2015, two new operators, Visa and Mastercard, to carry out the activity of routing authorizations, processing and clearing of electronic money flows and this, in compliance with the principles and international best practices in the field.
- • The authorization of a new national switch “HPSS” came the same year, empowered to centralize, for the benefit of the domestic banking system, the processing of all interbank electronic money transactions at the national level
- • HPS Switch (HPSS) is the entity authorized to centralize, for the benefit of the domestic banking system, the processing of all interbank electronic money transactions at the national level. Thus, interbank exchange and clearing operations relating to bank card transactions are centralized and processed via this mass multilateral clearing system, dedicated exclusively to electronic payment instruments.
- • While both CMI and HPS are involved in the processing of electronic transactions in Morocco, their roles are distinct. CMI provides the payment infrastructure and clearing services, while HPS provides the technology and services for processing electronic payments
Acquiring
- • Physical acquiring market is divided between 3 players: CMI, Naps (subsidiary of m2m), Al Barid Bank
- • Online acquiring market is divided between 4 players: CMI (that cumulates both PSP and acquiring activities), Fast Payment, AmanPay & Payzone
Issuing
- • The issuing entities distributes cards, provides authorization, and processes payment for the customer
- • +20 banking institutions and 18 payment institutions are active on the Moroccan market

Bank Al Maghrib (central bank)
DGSSN
Other
- • Opinion of the Conseil de la Concurrence on the state of competition on the markets of online payment by bank card
Players list
- • Click here to find the list of payment institutions
- • Click here to find the list of start-ups operating in the segment

Financial infrastructure

estimated IT spending of banks & insurance cos. for software & services

Most banks are only starting to enter unstructured open banking
• All local banks are not opening their APIs at scale to share their customers’ financial data and services with third parties, either because of :
– The maturity of their IT infrastructure, ranging from a legacy Core Banking System to a nascent digital platform
– The lack of strategic decisions to on-board Fintech startups into their ecosystem

• Most of the local banks are rather at the ‘closed’ banking stage: technology is seen as an imperative rather than a strong potential strategic differentiator in the short term
• Data is owned primarily by banks & financial services primarily offered by traditional banking players. The most advanced ones are starting to unbundle financial services with lower regulatory requirements (payments, lending)
• Core banking system solutions are custom-made or mainly supplied by large European fintechs (e.g. Sopra, Temenos); data & smart business layers are partly developed in-house
Insurance companies lack service providers for both Core Insurance System & digital layers
• CIS providers for Moroccan players are either global (e.g. GuideWire) with high licensing fees and without local integrators, small providers or through in-house building

• Several players have opted for specific development in-house, and can even already integrate open their APIs
• Current needs are mainly the development of interfacing with external counterparts through dematerialization of information exchanges
There is no open banking regulation framework implemented in Morocco yet, not allowing for the facilitated development of corresponding use cases
• Although no law is officially in preparation, the central bank has made statements on open banking trends as “a powerful lever for innovation and research and development in banking”

Banking activities are regulated and can only be carried out by licenced players
• The Banking Law (No. 103-12) regulate “credit establishments”. The last licence granted was in 2012, to CFG Bank
In the insurance sector, regulation is in favour of digital insurance, with full digital subscription recently allowed but new entrants in insurance need to be accepted by regulator and incumbents
• Any new player wishing to enter the insurance Moroccan market needs to be approved by local regulator ACAPS and obtain an operating license; new players wishing to enter the market must also be approved by a joint commission of existing insurance companies, which makes it difficult for new entrants to enter organically (latest 2 market entries in Morocco were through acquisitions)
• Current regulation also sets a limit on international new entrants in the brokerage market: be governed by Moroccan law and have their headquarters in Morocco & have at least 50% of the capital held by individuals of Moroccan nationality or legal entities under Moroccan law

• Nevertheless, exceptions can exist: for instance, without an insurance licence, Lloyd’s opened an office in Morocco in 2018 with the CFC status, allowing coverholders and service companies in Morocco to underwrite marine, aviation and other specialised Moroccan risks where cover cannot be found locally, subject to prior approval by ACAPS (the Moroccan insurance regulator) on a case-by-case basis, as well as (re)insurance of non-Moroccan risks, subject to the restrictions governing the (re)insurance of the risk in the jurisdiction where the risk is located & reinsurance of Moroccan risks
The collection, use and transmission of personal data is governed in Morocco by Law No. 09-08 (2009) relating to the protection of natural people with respect to processed personal data
• The obligations of any personal data processors are:
(i) to not process any personal data without the consent of the concerned person;
(ii) to declare the process of personal data to the Moroccan competent authority, the CNDP (National Supervisory Commission for Personal Data Protection);
(iii) to apply for the CNDP’s authorization in order to transfer the processed personal data outside of Morocco, or in order to process personal data considered as sensitive data. The rights of people whose personal data is processed are the rights to information, to access, to modification and to objection.
• Morocco ambitions to update its regulatory framework to become GDPR compliant and be considered by the EU as a country which provides a sufficient privacy protection level; banks, having already many clients with European nationality are already complying with GDPR provisions
Morocco has put in place restrictions on the location of data hosting: sensitive information systems and data must be hosted on the national territory

• Data handled by financial institutions (banks, insurance companies, payment institutions) being mostly considered as “sensitive” and thus must be hosted on the national territory
• Exceptions exist but have to first get approval from the authorities to prove that the solution proposed is secure

The banking market in Morocco is relatively concentrated

• The share of the top three banks in the sector’s total assets was 62% in 2021, and the share of the five largest banks was 77%.
• There is no independent digital bank
Insurance market is highly concentrated among 6 companies
• 20 companies exist on the market, with 6 companies concentrating 80% market share on life & non-life products
• There is a high potential for partnerships to launch new services with incumbents that have low level of digital maturity

• Players either have only a website with information on company, products, agencies or mobile application with some administrative services available online & possibility to start the buying process online and are just starting to roll out digital signature, for certain types of contracts

Bank Al Maghrib (central bank)
• Law No. 103-12 relating to credit institutions & similar bodies, as amended & completed (March 2022)
• Annual report on banking supervision

• Statistics on bank accounts
ACAPS (Insurance supervisory authority)
• Licencing process
• Insurance regulation
CNDP (National Supervisory Commission for the Protection of Personal Data)

• Law No. 09-08 on the protection of individuals with regard to the processing of personal data
• Decree 2-09-165 taken for the application of Law 09-08 on the protection of individuals with regard to the processing of personal data
DGSSI (Directorate-General for Security and Information Systems)
• Law n°43-20 on trust services for electronic transactions
• Decree No. 2-22- 687 implementing Law No. 43-20 on trust services for electronic transactions

• Law No. 09-08 on the protection of individuals with regard to the processing of personal data
• Law No. 05-20 on cybersecurity
Players list
• Click here to find the list of corporate players (banks, insurances)
• Click here to find the list of start-ups operating in the segment

Regtech

KYC & AML/CFT • Monitoring • Reporting • Risk analysis • Data Compliance

~$
0
M
Minimum suspncta februarii. Donec quis Metenda hac modo quas.

Estimated IT spending of banks & insurance cos. for software & services

Level of digital maturity of Moroccan banks is relatively low
• Most banks & insurances are currently unbundling their core platforms and building a first data layer, starting to gather their data on an integrated data platform
• Monitoring & reporting solutions will have to wait for such data platforms to be implemented before building on it
On the KYC & AML/CFT space, financial institutions & insurances in Morocco can benefit from technology innovation

• A lot of front-end & back-end procedures need to become paperless and automated but lack adapted OCR technologies for instance
• Biggest banks in the country have activities in Europe (e.g. Attijariwafa Bank, Bank of Africa, etc.) requiring to comply with strong AML/CFT requirements

Law No. 43-05 relating to anti-money laundering lists the acts which are considered as AML crimes along with the related sanctions
• This is not an exhaustive list, but it includes, among other things, the acquisition/transfer of assets in order to conceal their origin when they are the result of the following offenses: narcotic trafficking; human trafficking; immigrant trafficking; weapon trafficking; terrorism acts; corruption; fraud on monies; bill of exchanges; promissory notes; and any other means of payment.

• Fintech companies must comply with AML regulations. For starters, fintech companies should not be used to launder money. Second, as licensed entities, fintech companies must follow legal obligations, which include controlling any transactions they conduct on behalf of their clients. They must report any suspicious transactions to the appropriate authorities.
Morocco introduced in 2020 a regulatory framework for digital trust service provision, allowing for digital signature & identification/authentication
• Law No. 43-20 on trust services for electronic transactions defines the status of digital trust services providers and modifies the Commercial Code, allowing transactions carried out by credit institutions and similar bodies to be established and kept in electronic form
• The decrees implementing the law were published in the beginning of 2022
• This framework will enable client identification & KYC processes to be conducted digitally

The collection, use and transmission of personal data is governed in Morocco by Law No. 09-08 (2009) relating to the protection of natural persons with respect to processed personal data
• The obligations of any personal data processors are:
(i) to not process any personal data without the consent of the concerned person;
(ii) to declare the process of personal data to the Moroccan competent authority, the CNDP (National Supervisory Commission for Personal Data Protection);
(iii) to apply for the CNDP’s authorisation in order to transfer the processed personal data outside of Morocco, or in order to process personal data considered as sensitive data. The rights of persons whose personal data is processed are the rights to information, to access, to modification and to objection.
• Morocco ambitions to update this regulatory framework to become GDPR compliant to be considered by the EU as a country which provides a sufficient privacy protection level; banks, having already many clients with European nationality are already complying with GDPR provisions
Morocco has put in place restrictions on the location of data hosting: sensitive information systems and data must be hosted on the national territory
• Data handled by financial institutions (banks, insurance companies, payment institutions) being mostly considered as “sensitive” and thus must be hosted on the national territory

• Exceptions exist but have to first get approval from the authorities to prove that the solution proposed is secure

The banking market in Morocco is relatively concentrated
• The share of the top three banks in the sector’s total assets was 62% in 2021, and the share of the five largest banks was 77%.
• There is no independent digital bank

Insurance market is highly concentrated among 6 companies
• 20 companies exist on the market, with 6 companies concentrating 80% market share on life & non-life products
• There is a high potential for partnerships to launch new services with incumbents that have low level of digital maturity
Several start-ups have developed technologies in Morocco, for eKYC, AML & digital trust
• For instance, ShareID is a start-up that enable real-time, on-demand verification of user identities through AI-based facial recognition, incubated by 212 Founders and raised in the beginning of 2023 $2M, including from CDG Invest

DGSSI (Directorate-General for Security and Information Systems)
• Law No. 43-20 on trust services for electronic transactions
• Decree No. 2-22- 687 implementing Law No. 43-20 on trust services for electronic transactions
Law No. 09-08 on the protection of individuals with regard to the processing of personal data
• Law No. 05-20 on cybersecurity

Players list
• Click here to find the list of corporate players (banks, insurances)
• Click here to find the list of start-ups operating in the segment

Trading & investment

Trading platforms • Robo-Advisor • Portfolio Management • Market Analytics • Crypto-trading

$
0
B
Minimum suspncta februarii. Donec quis Metenda hac modo quas.

AUM by UCITS

BkAM – Rapport sur la stabilité financière (2021)

$
0
B
Minimum suspncta februarii. Donec quis Metenda hac modo quas.

Households financial wealth

BkAM – Rapport sur la stabilité financière (2021)

0
M
Minimum suspncta februarii. Donec quis Metenda hac modo quas.

Individuals with >$5K/y income

Economist Intelligence Unit (CGIDD, 2022)

Morocco has an expanding affluent segment who are looking for opportunities and mechanisms to make investments

• The household financial wealth in 2022 was $92B in 2021, with significant upper & middle classes population (2.5M individuals with >$5K/y income)
• This wealth’s structure has not changed much for more than 10 years, being composed of bank deposits by 82%, while life insurance represents only 11% and financial securities 7%.
• Finally, individuals only hold 7% of the assets in UCITS directly
Lack of investment platforms pushes Moroccans to invest in risky & forbidden assets: despite the ban of cryptoassets trading, Moroccans were among the biggest investors in crypto
• The ban of crypto assets trading did little to curb the appetite of consumers as crypto ownership continued to rise, with Morocco becoming the fastest-growing crypto market in Northern Africa. The latest data suggest that the number of crypto holders in the country reached 1.15 million in 2022 (according to the Policy Center for the New South). Cryptocurrency trading reached $6M in Morocco in 2021, 4th in Africa behind Nigeria, South Africa, and Kenya, outperforming Egypt (according to Local Bitcoins)

AMMC is the authority regulating the capital markets activities
Vehicles of investment are limited in Morocco, especially because of strict exchange control, but a new law is expected to open the market
• A new law on UCITS, which has been awaited for several years, is expected to introduce several new features for the asset management market: AMMC announced that it should be completed in 2023

• Among other things, it allows UCITS to expand internationally (Morocco has strict foreign exchange control), marks the start of Sharia Compliant UCITS and offers the possibility for funds to be listed, which will make it possible to launch the much awaited ETFs
Trading in cryptocurrencies is currently outlawed in Morocco
• The country’s market watchdogs did not acknowledge the existence of digital assets until 2017, when the country announced a nationwide ban on trading and holding crypto. The Moroccan exchange authority (“Office des Changes”) informed the public in 2017 that any cryptocurrency transaction is considered a violation of Moroccan exchange laws and will result in sanctions and penalties. Indeed, any funds transfer to or from Morocco should be made through a licensed intermediary, such as a bank, and only in legal foreign currencies listed by BAM. A second joint media announcement, dated November 21, 2017, and issued by BAM and the AMMC in collaboration with the Moroccan finance ministry, warned the public that using cryptocurrencies as a method of payment would be a clear violation of the applicable laws, as no protection is provided to customers. The two announcements made no distinction between the various types of cryptocurrencies
• Nevertheless, in Dec. 2022, the central bank governor announced that “the draft law regulating the crypto market in Morocco is ready”: the draft legislation offers a definition for cryptocurrency that is adapted to the Moroccan context, the governor explained, adding that the piece of legislation does not aim to constrain innovation, but rather to protect individuals from risks associated with dealing in the highly-speculative market.
In order to support FinTech players in their projects and encourage the development of new technologies that contribute to the digital transformation of the financial sector, the AMMC (capital markets authority) has created a special FinTech portal on its website

• Through this portal, Moroccan financial technology companies can get in touch with the AMMC for an exchange of information.

The asset management ecosystem in Morocco comprises various players, including the central depository, the Casablanca Stock Exchange, brokerage firms, trading rooms, investors, counterparties and auditors.
• 19 brokerage firms & 559 UCITS were registered end of 2022