KT Network

Rising to the digital banking challenge in the Middle East

Filed on September 1, 2021

Over the last several months, Covid-19 has undoubtedly emerged as the biggest disrupter, forcing customers and banks to embrace digital banking channels. However, the popularity of digital banking had been growing steadily even prior to the pandemic, driven by factors such as growing smartphone penetration and a tech-savvy population. Even prior to the pandemic, Liv., the digital-only lifestyle bank from Emirates NBD emerged as the fastest growing bank in the UAE by customer acquisition - attracting more than 370,000 customers at 20 per cent of the acquisition costs of a traditional institution. Remarkably, more than 80 per cent of its new customers came via referrals.

Rising to the digital banking challenge in the Middle East (https://images.khaleejtimes.com/assets/jpg/KT3003291.JPG)

Sriranga N Sampathkumar, VP and General Manager MEA, Infosys

But what the pandemic has done is that it has rapidly accelerated the pace of this transformation, exposing the gap between progressive banks offering full-fledged digital services and the digital laggards. With newer competitors such as Neo banks and digital-native fintechs offering superior customer experience through innovative digital solutions, the banking landscape is set to become extremely competitive in the post COVID world. The Abu Dhabi Global Market (ADGM), an International Financial Centre (IFC) has a Digital Banking Framework that focuses on banks seeking to establish digital banks or branches of digital banks, as well as for firms with innovative value propositions.

Customers, especially millennials, have grown accustomed to experiencing the very best of what technology has to offer, with the likes of Google, Netflix, or Amazon being a prominent part of their daily lives. Smartphone penetration in the Gulf Cooperation Council (GCC) region is at 96 per cent. The digital payments market in Middle East & North Africa Digital is expected to grow at a CAGR of 15.39 per cent between 2021-26 as per Mordor Intelligence. Saudi Arabia expects that 70 per cent of its payment transactions will be digital by 2030. For banks to survive this shift, digitization is the only answer.

Preparing for a Digital-only Future

As banks evolve towards a digital future, here are the primary considerations that they must keep in mind as they plan their transformation journey:

End-to-end Digitisation

The key to success for any digital bank is a faster go-to-market strategy and innovative offerings. A trusted technology partner can help create the market place and enable them to meet these demands. A robust digital backbone that extends end-to-end across people, products, processes, and technology landscape is absolutely essential to building and scaling a truly digital offering. A reliable, robust, cloud agnostic platform like Finacle enables easy handling of large transaction volumes with the flexibility to cater to occasional seasonal spikes.

Enabling end-to-end digitisation means providing the right setup and tools for remote working and adding digital capabilities to every step of the banking process – right from origination to closure. In addition, judicious use of automation to allow for straight-through processing of requests with minimal manual intervention is important to scale digital services effectively.

Reimagining Processes

Designing a superior digital experience isn’t about taking existing processes to the cloud or building a digital equivalent of legacy processes. Instead, it calls for a complete overhaul of the process – reimagining the journey through a digital-only lens. The transformation must encompass every aspect right from customer interactions and employee transactions all the way to risk management and cybersecurity. The impact extends across the entire gamut of operations, including the front, middle and back offices.


Given that customer experience and satisfaction are the chief drivers for all digitization efforts, customer preferences and convenience need to be at the heart of all decision-making around building digital banking experiences. For instance, are your customers ready for a completely digital banking experience? Do you need to augment digital services with an offline, personal element by either retaining certain branches or offering at-home servicing for a certain period of time?

At the same time, digital services must be aligned with the needs of your business customers too. For instance, as retail outlets get automated, how will this impact digital payments at the store? How can the bank design a payment mechanism that can help retailers offer a truly contactless experience?

Security and Compliance

The banking industry is already one of the most regulated, with a host of compliance requirements. However, digital banking adds a new layer of threats around cyber security, identity theft etc. For instance, statistics suggest that financial malware in the UAE jumped 42.5 per cent jump in the first half of 2020 compared to the previous year. Therefore, ensuring the security of banking operations is one of the topmost concerns for digital-only banks.

Irrespective of the current stage of digital readiness, the future of banking in the Middle East is clear. Progressive banks will need to keep evolving their digital offerings in line with customers’ expectations, and traditional banks must ramp up their digitisation efforts rapidly if they hope to survive and thrive in the new normal.

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