Consumer banking in the Middle East has recently been drawing up an interesting narrative. On one end, we have a post-pandemic new normal with customers’ financial needs evolving rapidly by the day. Combine this with dynamic digital disruptions and state-of-the-art technology – what we have is a financial landscape ripe for growth, innovation, and change.

For one, the digital payment ecosystem is at the cusp of large-scale digital transformation, with a significant uptick in the adoption of secure virtual banking initiatives. What’s more, with incredible policy-level support and regulatory nudges, the wider GCC region is exploring the potential of economic diversification by embracing a perceptible shift toward a more open economy.

To drive customer engagement, banks and financial institutions are ensuring that they remain at the top of their customer experience game by relentlessly focusing on optimizing customer experience (CX) at scale to stay relevant and digitally resilient.

In this blog, we explore a few trends that have shaped the recent trajectory of customer experience in the Middle East.

  1. Digital goes mainstream: Powered by robust digital capabilities with security and privacy at its core, financial institutions of today are looking to deliver a user-focused customer experience that places customer convenience and context as a top priority. For instance, customer onboarding that has been a tedious, paper-driven process has been simplified by an automated KYC mechanism that facilitates customers to set up an account on the fly. Legacy technologies are being integrated to work in tandem with digital technology to modernize slow and inefficient processes. A case in point would be how the Abu Dhabi Islamic Bank and the National Bank of Bahrain are embracing robust digital solutions to compete in today’s competitive tech-driven economy. Additionally, branchless banking has seen a rise, with Liv by Emirates NBD acquiring over 370,000 clients since its launch in 2017, at 20% of customer acquisition costs in traditional banks. Additionally, there’s a growing trend of neobanks and challenger banks gaining a foothold in the region. Consider these examples:
    • Commercial Bank of Dubai, in a bid to drive user-centric digital banking initiatives, partnered with a neobank called NOW Money.
    • UAE-based FinTech YAP collaborated with RAK Bank to offer digital-only banking services to its customers.
    • With Mashreq Neo, a digital-only bank, UAE-based bank Mashreq aims to target and cater to the growing demands of the recent crop of digitally-savvy banking customers.
  2. Open banking initiatives: Banks in the Middle East are headed in the direction of open banking, and for good reason. In KSA, the Central Bank announced the launch of an open banking initiative in January 2021 to aid financial industry development and enhance customer experience. Through an open banking framework that uses APIs, customers experience banking in a deregulated environment that reduces entry barriers and facilitates advanced digital disruptions. Seen as a valuable diversification of financial services, the open banking initiative in KSA underscores its commitment to enable fintech innovation, a primary objective of Saudi Vision 2030. Bahrain was the first to jump on the open banking bandwagon, and UAE and Saudi have promptly followed suit.
  3. QR Code-based transactions: Contactless payments have assumed massive significance courtesy of the pandemic-initiated social distancing. A recent survey by Statista revealed that close to 50% of global consumers have been using QR codes for contactless transactions since March 2020. A PRNewswire report of August 2021 provides insights on how consumers in the Middle East have been enthusiastic about trying out emerging trends in the realm of digital payments. A case in point is how the Saudi Arabia Monetary Authority (SAMA) has tasked the renowned payments technology and services organization HPS to build a QR-based payment system. This move seeks to facilitate banks, digital wallet service firms, and fintechs to interact “seamlessly” within an interoperable platform. Based on the joint partnership between the HPS and SAMA, it aims to drive “the continuous development of the electronic payments environment” in Saudi Arabia.
    In UAE, Cashew Payments, a buy-now-pay-later provider, has launched a comprehensive QR-code-based service offering that helps consumers to get fast-tracked credit approval, through a simple and seamless three-step registration process, done at POS.
  4. Personalized solutions for improved CX: A 2020 Deloitte survey in the Middle East identifies personal wealth and finance management solutions as a leading fintech development of the past year. Customer preferences in the wealth asset management sector are constantly evolving with a sharp leaning toward digital and voice-enabled assistants. These are not restricted to simple transactional activities but extend to receiving trustworthy and research-based wealth and financial advice. A 2020 EY report finds that 46% of clients highly value simple, intuitive digital processes for their investment activities, while 25% currently receive financial advice through mobile apps. To this end, these investors are turning towards online investing, and wealth management platforms such as Sarwa, baraka, StashAway, Saxo Bank, or AvaTrade are gaining prominence.
  5. Buy-now, pay-later model: One of the emerging trends premised on a credit-based concept is the buy-now, pay-later (BNPL). Over the past year, the Middle East registered a surge in the use of BNPL and it is expected to account for 9% of e-commerce payments by 2023. While the numbers may not tell the complete story, they indicate the potential that BNPL holds through its promise of being a solid alternative to cash payments. BNPL companies usually thrive on a monetization model driven by subsidized merchant fees. BNPL has also been instrumental in revolutionizing growth in the region’s paytech segment, with up to 53% of MENA consumers possibly becoming BNPL customers in 2022. Tamara and Tabby are a few names worth mentioning in this context.

What’s the takeaway?

The verdict is clear: The future of customer experience banking will be a heady mix of data, analytics, and technology. Customer-centricity remains top of the mind for most financial organizations’ agendas. Banks will go all out to build operational efficiency as much as they focus on delivering superior CX. Customer experience is the defining competitive differentiator in the banking industry today since they garner enough spotlight and come with increased recommendation rates while also registering greater wallet share. They also help in improved upselling and cross-selling to a large extent. Customer-centricity and personalization are the two focal points that drive today’s customer’s financial services experience.

Rafeeque M Ali

Over 19 years (15 years + in ME & North Africa) of experience in Sales/Business Development & Account Management of IT solutions - BFSI Domain. A Digital Banking Sales Specialist with excellent knowledge in the areas of Retail, SME & Corporate - Omni Channel (Internet, Mobile & Wearable Banking), Digital Onboarding, API Banking, Chatbot, Lifestyle/Social Banking, PFM, Analytics, Liquidity, Cash Management, Supply Chain, eRemittance & Insurance Solutions

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