Building a mobile-first greenfield bank is ranked as the top innovation strategy by 37 per cent of MEA banking executives, according to a global retail banking survey released by Temenos, the banking software company
Six in 10 banking executives in the Middle East and Africa (MEA) think cash will dip below five per cent of retail transactions in the next five years, compared to 48 per cent globally.
The global coronavirus pandemic is likely to reinforce this trend; MEA retail banks believe delaying digitalisation poses genuine threats to their business models; Changing customer demands are cited as the highest-impact trend in the near term (35 per cent by 2020), with new technologies predicted to be the most impactful development in the medium term (43 per cent by 2025).
The in-depth survey conducted in 2019 by the Economist Intelligence Unit (EIU) on behalf of Temenos entitled “A Whole New World: How technology is driving the evolution of intelligent banking in the Middle East and Africa.”
In order to capitalize on these trends, MEA retail banks recognise the need to sharpen digital marketing skills to bring excluded customers into the banking sphere. As such, mastering digital marketing and engagement is considered the top strategic priority for retail banks in the near term (35 per cent by 2020), and in the medium term (35 per cent by 2025).
The survey reveals that the Middle East, in particular, is poised to encourage digital financial inclusion, with young populations and smartphone use predicted to hit 74 per cent by 2025. Governments across the entire MEA region are increasingly embracing digital agendas to encourage financial inclusion and accelerate digital banking and a cashless economy.
The affordability of smartphones is a major driver in the new development of building mobile-only and mobile-first greenfield banks, the top innovation strategy chosen by 37 per cent of MEA-based respondents alongside investing in fintech start-ups (37 per cent). Nearly one in three respondents (29 per cent) is innovating by building a greenfield fintech firm, also a top five pick among global respondents (25 per cent).
Jean-Paul Mergeai, managing director for the Middle East and Africa, Temenos, commented, “This retail banking report outlines the opportunity for MEA banks who adopt modern technology to accelerate financial inclusion and digital banking, to support economic and social development.”
Katya Kocourek, managing editor for financial services, The Economist Intelligence Unit, said, “The significant impact of the ongoing Coronavirus pandemic is likely to accelerate the cultural and institutional shift towards digital banking that is already taking place in the MEA region.”
