Mobile banking in GCC surges due to Covid-19

MANAMA: Five years of mobile banking growth in the GCC have been compressed into a single year thanks to an explosion in app use brought on by local stay-in-place orders.

That is the key finding of a study commissioned by US technology company Avaya.

The qualitative survey, conducted by research firm Davies Hickman Partners, and comprising in-depth interviews with 12 banking executives from across the GCC, found that many of the trends changing the face of regional banking have accelerated as a result of the Covid-19 pandemic.

The banking executives interviewed remain bullish, however – unanimous in their view that the uncertain banking outlook of the day provides an opportunity to reconfigure working practices, customer experiences and physical spaces.

Many said that countering the effects of a subdued global economy gives new impetus for digitisation and could see GCC banks move faster than their peers in other regions – despite regulatory challenges or legacy processes.


“Gulf banks faced a tough year and the pandemic is spurring this industry to roll out digital services at an accelerated speed. This means that five years plans are now characteristic shifting into 12- and 18-month windows,” said Avaya International president Nidal Abou Ltaif.

“The findings of this study illustrate how regional banking leaders are pursuing parallel tracks – innovation and digital services, and the development of traditional banking and business services. Both motions need to eventually meet through a well-crafted transformation strategy that keeps the customer at the core of any new technology roll-out.”

The research identified six major trends where GCC banking modernisation is progressing at speed. Covid-19 has accelerated a migration from cash payments and this move is predicted to be permanent.

Contactless payment methods have seen huge growth, and paying with smartphones is overtaking paying via debit card as the preferred option among consumers.

Nine out of the 12 bankers interviewed see branches as cost centres and 10 out of 12 executives surveyed believe that banking branches can be replaced by digital banking services as the world migrates towards digital payments.

They predict a reduction in the branch footprint but a retention of high-specification sites.

“The bank branch is dead in its current guise; bricks and mortar are okay but not on a distributed footprint,” said one chief digital officer in Saudi Arabia.

Most executives say their banks are pursuing an app-centric banking relationship with both the SME and consumer segments, and that they have seen substantial increases in mobile banking interactions as a result of Covid-19.

However, 10 out of the 12 executives highlighted the importance of providing customer support through contact centres, claiming that omnichannel strategies would help them meet users’ digital demands.

The research shows that GCC banks are collecting more and more data as improving customer insight in a time of great change becomes a priority.

Ten out of 12 executives surveyed expect to increase their collection of, and use, of customer data to drive sales.

Data rules enabling the marketing of personalised products and proactive messaging to drive sales in the consumer segment, the research found, with all respondents looking to develop the ability to anticipate customer needs through more complete pictures of them.

Seven out of the 12 executives surveyed for the research confirmed that they are pursuing flexible working models, with employees working from the office part of the time.

All the GCC banking executives interviewed acknowledged that, to realise these hybrid working ambitions, unified communications will be the key contributor to their success.

Eight out of the 12 executives surveyed support cloud migration as a key enabler for agility, but some are wary of the security risks and required approvals from regulators across GCC countries.

Nine out of the 12 executives surveyed value the benefits of cooperating with fintech (financial technology) providers, being attracted to their ability to deliver innovative services at low costs, with high agility and compelling ease of use.

However, some view fintech companies as a threat, and would prefer to build their own solutions in-house – to stay on the right side of regulations, if nothing else.

Talking about Bahrain specifically, which has been named one of the region’s best fintech ecosystems by Startup Genome’s 2020 Global Fintech Ecosystem Report, Mr Ltaif said the banking sector in Bahrain has long been a cornerstone of the kingdom’s stature and success.

“With the close collaboration of the major banks and financial institutions and a visionary regulator, we believe that the Bahraini banking sector will continue on its transformational journey and retain position as a major regional financial hub,” he added.

In October last year, Bahrain became the first in the world to launch open banking guidelines that include Islamic finance, setting the stage for the practice of sharing financial information electronically, securely, and only under conditions that customers agree to.

It opens the way to new products and services that could help customers and businesses get a better deal.




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