Dubai: The majority of bankers (70 per cent) who participated in a GCC Fintech survey conducted by EY (formerly Ernst & Young) said the GCC banking sector is open to integrating fintech innovations that could help enhance consumer experience and streamline their operations.
While GCC banks do not expect fintech disruptions in the short term and expect fairly limited businesses loss to stand-alone fintech firms in the medium term, a significant majority acknowledge that fintech innovations offer end customers a noticeably better value proposition. More than 60 per cent of survey the participants thought that fintech innovations could help them enhance consumer-centricity and reduce costs.
The EY survey looked at the views of conventional and Islamic banks in the GCC towards fintech-related matters and their perceptions on the impact that fintech could have on the GCC banking sector.
Two-thirds of the survey respondents believe that the GCC banking sector is highly likely to collaborate with or invest in finTech companies to work together with them to meet end consumers’ needs.
Funds transfers and brokerage services are viewed to be at high risk of disruption while wealth management is identified as a medium fintech disruption business activity.
“The pace of fintech innovation in the GCC has been extremely rapid over the past few years but still requires more work on-ground to truly revolutionise the banking industry. The variety of ways in which fintech innovations are being adopted by the banking sector is increasing and we may even see banks collaborating to build ‘shared-cost fintech solutions’ in the future,” said Gordon Bennie, Mena Financial Services Leader, EY.
Participants indicated that the leadership teams in the GCC banking sector generally support digital transformation innovations, with 57 per cent of participants stating that they agree with the statement that “digital transformation through fintech innovations is a strategic initiative that is championed by the board of directors and the senior management team.”
However, the implementation of new technologies to diversify offerings does not seem to have moved as quickly. A significant majority (79 per cent) of survey participants seemed to doubt whether fintech players could cause any noticeable disruption in the GCC banking sector over the next 1-2 years.
“The drive towards incorporating fintech into everyday banking is promising, but there is still work to be done in generating more awareness around fintech innovations and implementation. This is not surprising given that fintech is a rather recent phenomenon. Two-thirds of the survey participant banks had either not had any substantive discussions within the organisation or had just begun addressing the issue of digital transformation to prepare an actionable work plan to address the challenges and opportunities posed by fintech innovations,” said Ashar Nazim, partner at the Global Islamic Banking Centre, EY,
With the increase of mobile penetration in the region and a young population, there is a clear preference among millennials to conduct their financial services on an end-to-end digital platform.
Nearly two thirds (68 per cent) feel that the banking sector might need to evolve toward a digital ecosystem to remain at the forefront in a rapidly changing business environment because of fintech innovations.
“Bankers are noticing that a new generation of customers, one that has an increased trust in online platforms, are keen for real-time and off-site solutions. In fact, between 60 per cent and 75 per cent of the survey participants believe that fintech innovations offer end customers a noticeably better value proposition, in terms of ease of use, cost, speed of service and integration with social media,” said Ashar.