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Dr. Islam Azzam, Chairman of the Financial Regulatory Authority (FRA), has issued a new directive requiring licensed consumer finance companies to incorporate behavioral credit scoring based on alternative data when evaluating clients. The mandate, formalized under Decree No. 2863 of 2026, aims to enhance credit decision-making by utilizing analytics provided by the Egyptian Credit Bureau (I-Score).

Key Regulatory Mandates

The new directive strengthens existing credit underwriting frameworks by introducing advanced digital evaluation tools:

Behavioral Scoring & Alternative Data: Companies must now factor in behavioral analytics—derived from non-traditional or alternative data sources—when approving or declining consumer finance applications.

Digital Verification Requirement: The decree mandates the strict digital verification of applicant data, building upon earlier digital identity guidelines (Decrees No. 140/2023 and 186/2024).

Implementation Timeline: Consumer finance providers are required to begin querying these new behavioral scores starting April 1, 2027, allowing time for I-Score to finalize and launch the dedicated scoring system.

These requirements supplement existing obligations under the Consumer Finance Law (No. 18 of 2020), which already mandates querying a client's historical credit exposure across both banking and non-banking financial sectors.

Strategic Objectives and Market Stability

Dr. Azzam emphasized that integrating behavioral scoring and digital verification will significantly elevate the efficiency of assessing a borrower's true creditworthiness. By gaining deeper insights into consumer financial behavior, lenders can better ensure the integrity of the credit-granting process and tangibly reduce default probabilities.

The decree is the culmination of extensive consultative meetings between the FRA, consumer finance companies, and I-Score. The regulatory objective is to strike a sustainable balance between encouraging sector growth and mitigating the operational risks of rising client defaults, which directly threaten the financial stability of lending institutions.

Dr. Azzam added that this move—alongside previous directives enforcing real-time data linking with I-Score and the accelerated adoption of OTP-based identity verification—represents a clear, continuous path toward modernizing the regulatory framework for non-banking financial services to keep pace with rapid market and technological shifts.