The proliferation of smartphones and other connected devices is a worldwide phenomenon. This technology was especially beneficial during the pandemic when the physical world was literally locked up. Consumers in the Middle Eastern region displayed a readiness to embrace digitalisation across sectors.
The numbers are talking
The banking sector became one of the forerunners in digital adoption in MEA with impressive statistics. According to ResearchAndMarkets.com, 75 percent of the population in Qatar, 73 percent in the UAE, and 60 percent in Saudi Arabia, adopted digital banking.
A Kearney survey found that 70 percent of the younger generation that frequented branches and ATMs in the recent past, now upped its digital channel usage. And among the older population, almost 37 percent of consumers adopted digital usage. As a result, branch visits are expected to dip from six times a year to two visits by 2022 amongst millennials, and desktop banking will give way to mobile app usage.
With the demanding Gen Z and millennials driving this turn of events, banks and the finance sector have to work harder to give them a seamless and hassle-free digital banking experience. Experts say that if this group’s needs are fulfilled, then it’s easy to carry through to the rest of the population.
Digital-only banking gaining currency
The banking, finance, and insurance (BFSI) sectors have a tall wall to climb: they have to be right on top of the game, designing apps that provide a connected experience to the user. They have to offer a highly personalised and seamless customer experience driven by artificial intelligence, machine learning, and big data analytics. And they have to start the transformation process now.
Customers seek a ‘connected’ experience
The BFSI services sector needs to provide customers with what they want, where they want it, and with minimal effort. In other words, it’s the connected experience that will win the user over.
Connected banking means offering a seamless omnichannel customer experience with enhanced operational efficiency; product innovation; and managing risk and compliance. It can be achieved through digitalisation and the way forward is (as cited in a recent BCG report) a deep focus on customer obsession, scalable and flexible technology, and agility.
Thanks to the ‘connected experience’, banks can expand their customer base and vastly improve on providing ‘customer delight’. Customers have always prioritised security when it comes to banking, especially in this digital age, fraught with cyber frauds.
The ease of contactless payments and the convenience and customisation it offers have made the whole banking process an age-agnostic one. With a tectonic shift in consumer behaviour towards online shopping, banks too have started thinking like platform companies, connecting customers and processes with assets.
Hi-tech investments, the need of the hour
Beginning with the digital onboarding of customers all the way to transactional experiences, the banking system has to get its algorithms right. Onboarding a customer shouldn’t take more than a few minutes and a few clicks without disrupting the customer journey. If there is a channel switch, the system should seamlessly support the customer by providing them the choice to engage and transact anytime and anywhere.
It is essential for the banks not to lose context across the breadth of the customer interaction. All of these call for investments in the right digital technologies with high levels of customer intuitiveness.
The Middle East response
Banks in the Middle East have been quick on their toes in coming up with contactless solutions during the pandemic. For instance, RAKBANK introduced ‘Skiply’, a mobile payment service that allows parents to make secured fee payments to schools in the UAE with any bank card. The convenience ‘Skiply’ offers resulted in the bank onboarding 145 schools, over 2,000 parents, and about 72,000 students. This is product innovation at its best, addressing the needs of parents confined to their homes due to lockdown and other restrictions.
Visa’s ‘Stay Secure’ consumer survey in the UAE found that cash on delivery payments declined by 75 percent. In comparison, contactless cards and mobile wallets for online or delivery payments almost doubled (by 98 percent on average). This preference for contactless payments due to safety and hygiene concerns amid the pandemic will become the new norm in payment systems.
That the UAE is racing towards becoming ‘cashless’ by 2030 speaks volumes of digital adoption. Digital payments transactions in the UAE grew at an annual rate of over 9 percent between 2014 and 2019, compared to Europe’s growth of 4 to 5 percent, as per a McKinsey report.
These are clear indicators of the digital journey the banks and the customers have embarked upon, and it is for the banking and finance sector to shepherd digital immigrants to online channels.
The industry needs to make targeted investments in user education, outreach, and incentivisation to keep customers aware, create opportunities for more digital engagement, and reinvest in mobile banking. The connected banking paradigm is going to pay rich dividends, pandemic or no pandemic.
Raviteja Dodda, CEO and co-founder, MoEngage.
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