Online banking is one of many areas where coronavirus has accelerated a budding trend and while some advisory or high-margin banking services will continue to need a physical touch, consumers are finding their financial needs met online, said Matthijs Eijpe, regional vice president EMEA of fintech software provider Backbase.
With physical bank branches around the world closed for months last year to curb the spread of the pandemic, consumers had to familiarise themselves with a mobile app or go online to interact with their bank, said Eijpe.
“In a lot of places, including the GCC, it accelerated initiatives to better service customers via digital channels. From simple things such as talking to a bank representative online to more complex things like buying a product, banks are trying to fully digitally enable these processes,” explained Eijpe.
“To a large degree, and especially when it comes to simple transactions, you will see those more and more move to the online channel,” he continued.
High-value transactions or advisory types of services still need human interaction, although that does not need to be in a traditional physical branch, according to Eijpe.
“However, when it comes to the high margin transactions or the more advisory types of service in wealth management or private banking or dealing with large corporations, I feel there is a need for a physical touchpoint – whether that is in an actual branch or through other means is debatable,” he explained.
Other means could include temporary locations in high-density areas such as malls or advisory visits to a customer’s home.
“This would be subject to the complexity of the product and what the cost-to-serve associated with the journey is,” said Eijpe.
Matthijs Eijpe, regional vice president EMEA of fintech software provider Backbase.
“If the cost-to-serve is high, but the margin on the particular product is low, then it is probably not very viable. But, on the other side of the spectrum, if there is longevity or a high-margin on a specific product, then it makes sense to have that more human touch in the journey itself,” he continued.
Backbase has had a regional hub in Dubai for three years now and recently launched a Riyadh branch “primarily driven by the fact that the kingdom is a large potential market and there is a lot of movement in the financial space, especially with the government pushing its Vision 2030”, said Eijpe, adding that the company plans to build on its existing presence in the region for the mid-term.
Although global banking executives believe branch-based banking will be “dead” within five years, bricks-and-mortar banking branches are likely to survive in the UAE, a global report written by the Economist Intelligence Unit (EIU) and published by banking software company Temenos in July revealed.
But banks in the UAE say a combination of bricks-and-mortar and digital solutions is a more realistic forecast.
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