Middle Eastern banking market has invested heavily in digital technology over recent years.
Both the Middle East and African banks are reviewing their digital strategies this will enable them to lower costs, attract the young populations and increase access for the unbanked populations.
According to a report Temenos, banks across both regions prioritise customer demands (68%), new technologies (48%) and the impact from new competitors (40%).
The report emphasises the need for Middle Eastern and African banks to further develop their digital banking efforts. This will ultimately lead to improved products and services that will entice new customers.
Furthermore, it will enhance the overall customer experience for those banking in those regions. Convenience in digital developments is key for consumers who want quick and easy banking.
The report also noted that Middle Eastern regional governments are establishing technology hubs and African regulators are improving consumer protection.
Renee Friedman, the editor of the report from the Economist Intelligence Unit, stated:
“The markets of the Middle East and Africa are very different in terms of their development. But, given their common features of young and growing populations and high smartphone penetration rates, the opportunity for banks and fintechs to collaborate to bring digital and mobile banking services to the unbanked and the under-banked is enormous.”
Middle East banking market focuses on customer migration
Some of the key highlights from the Temenos report include:
- Middle East and Africa bankers remain more focused on migrating client usage to digital from physical channels with 63% citing this as their top strategic priority.
- Retail banks across these regions are focusing their digital investment mostly on two areas: individual delivery capabilities (through internet, mobile devices, etc) and improving performance and scalability through cloud-based technologies, both cited by 57% of bankers.
- Furthermore, fewer Middle East and Africa regional bankers think more payments will flow outside traditional banking networks (66% vs. 76% of global respondents).
- Only 31% of see open hub initiatives as part of their innovation strategy; this may be a mistake as global experience shows banks can compete with fintechs if they collaborate on the underlying open banking technology.
Jean-Paul Mergeai, Temenos managing director, Middle East and Africa, said:
“The Middle East and Africa banks are embarking on digital transformation cycles to meet rapidly evolving consumer demands and fight off competition from new market entrants such as payments players. The banks realise that an end-to-end digital renovation is required to offer frictionless customer experiences, gain operational excellence and innovate at scale.”