Financial
institutions in the Gulf Cooperation Council (GCC) are fast upgrading
themselves to become more technology-friendly. They are focusing on
digitizing their services so that they can attract the tech-friendly
young customer base towards their bank.
In
the report, ‘Tech Disruption In Retail Banking: GCC Banks Are
Catching Up As Clients Become More Demanding’ published by S&P
Global Ratings firm, they have mentioned that “The conclusion we
drew from our four-factor analysis of a banking system’s
technology, regulation, industry, and preferences (TRIP), which we
are incorporating in our ratings on banks in the region.” It
clearly states the changing preferences of customers. In this report,
the rating firm has also stated that “The adoption of big data,
artificial intelligence analytics, as well as voice and facial
recognition tools could enable a more effective and cost-efficient
provision of customer (banking) services.”
According
to the Statistical Centre for the Cooperation Council for the Arab
Countries of the Gulf, about 40% of the GCC population is under 30
years of age, which shows the demand for digitization of the banking
sector.
A
decline in the number of bank branches is being seen; whereas, on the
other hand, there has been a drastic increase in banking through
mobile apps and online banking. The National Commercial Bank of Saudi
Arabia saw 36.6% of financial transactions being performed through
its mobile application or net banking service by the end of last
year.
S&P
also states in its report that the change in banking services can be
brought about by customer preference rather than regulatory bodies.
As customer’s demand for any time and anywhere banking is
increasing, a surge in the collaboration of banks with FinTech firms
is being seen. Authorities and regulatory bodies in the GCC are
welcoming this move and also encouraging such firms by setting up
‘sandbox’ regimes, allowing FinTechs to try out technologies in a
flexible environment.
Gulf
Cooperation Council is a political and economic council of all the
Arab states of the Persian Gulf except Iraq. The member countries of
the council are as follows: Bahrain, Kuwait, Oman, Qatar, Saudi
Arabia, and the United Arab Emirates. The charter was signed on May
25, 1981.
