Gillian Sarah Duncan | Special to Reach by Gulf News
We live in a digital world. Technology is impacting every industry and banking is no exception. One of the areas where change is most apparent within the sector is retail banking, where experts say customer behaviour – and expectations – are driving innovation.
“We are now living in an economy of experience,” says Amr Al Saadani, Managing Director, Financial Services Middle East at Accenture Consulting.
Al Saadani says a group of companies he calls the Gafas – the Googles, the Amazons, and Facebooks of this world – are driving this economy-of-experience trend, where people judge everything by the quality and speed of their experience.
As a result, customers expect the same instant and seamless service in all areas including banking.
“Banks that hope to prevail must urgently pursue digital simplicity,” says Aref Al Ramli, Regional Head of Digital Banking for Mashreq (pictured). “They must invest in digital and data capabilities that radically simplify their businesses while dramatically improving the customer experience.”
Digital innovators such as Amazon, Airbnb and Uber have raised the bar for consumer expectations regarding service, speed and convenience and have created the expectation that banks will interact seamlessly with customers through digital channels while offering human interaction at moments that matter, said the Global Retail Banking 2016: Banking on Digital Simplicity report by Boston Consulting Group.
Some in the industry have risen to the challenge, like Mashreq, which has invested in both digital services and brick-and-mortar branches to meet people's expectations of speed and convenience.
“Our digital expenditure is increasing 250 per cent year-on-year,” says Al Ramli. “And our investments are based on] the ability to foresee what is going to work in the future. This is a critical area for our future and our sustainability, so we invest in it.”
The bank launched Mashreq Neo, a full-fledged digital bank, which gives customers their account number within seven minutes of signing up and delivers their cards and cheque books within 24 hours. Customers use the app to scan their passport and Emirates ID.
The availability of numerous digital platforms such as smartphones, tablets and mobile applications means customers’ expectations of how they interact with the bank is changing, says Al Ramli.
Customers' expectation of how they interact with the bank is changing
A decade ago, an average Mashreq customer would visit their branch about 15 times a year. Today, it is down to an average of one or two annual visits. Almost 91 per cent of transactions are done via electronic channels.
To drive operational efficiency and reap financial rewards, Mashreq has invested significant resources on digital technology in both the front line and back end within its branches to satisfy customer expectations about instant results.
“It is not only the front end or the mobile app - it is the change we’ve carried out in the back end that has given us the capability to make these processes faster and seamless,” says Al Ramli.
“Customers want things much quicker, much easier and more convenient. We had to change a lot of our systems and processes to cater to these new customer expectations.”
Future of branches
The lender, which sees technology as a key area of innovation, is not rushing to downsize its branch network as their clients continue to value human interaction. Experts agree there will still be an important role for branches in the future.
The best way to look at retail banking in the future is from what Al Saadani calls a “phygital perspective”, which strikes a balance between digital and physical needs.
Some simple requirements can be dealt with digitally such as a customer’s application for a credit card. But more complex needs and products will require a personalised approach.
“I see [physical branches] playing a very important role, especially in complex structured products wherein the human element is required to explain to the customer,” says Al Ramli.
“The less complex transactions will all become digital. So you will have the more sophisticated financial products that require human advice catered through branches. This is probably how it will look.”
Digital banking will continue to be at the core of Mashreq’s future investments.
“We have taken a bold step with Mashreq Neo,” says Al Ramli. “We have probably launched one of the most advanced digital banks in the world, however, we will continue to evolve and invest in our proposition and technology.”
“And this is where we are going to keep on investing to adapt to the change in customer behavior and provide some of the best experiences in the world.”