Markus Massi | Partner and managing director at BCG Middle East.(Right) Alessandro Scortecci | Project manager and co-author of the report Image Credit: Supplied

Dubai: The Middle East’s banking sector has been slow to adopt deep, transformative digitisation that other international players have started to embrace, according to recent survey of corporate banking customers worldwide by the Boston Consulting Group (BCG).

Globally, a growing number of corporate banks are expanding their digital offerings well beyond a basic web presence, according to the BCG.

The study shows that over the next five years, corporate banks that remain digitally laggard could see profits drop by as much as 15-30 per cent relative to their digitally fast-moving competitors

As part of the study, BCG surveyed 660 companies in 13 developed and emerging markets and 23 industries.

A total of 1,112 respondents from 14 countries — including the UAE, Saudi Arabia, France, Germany, Poland, the UK and the US — were surveyed.

The responses revealed that banks in the Middle East fall significantly behind their global counterparts.

“Already, globally, a handful of banks and non-traditional players with advanced digital platforms are gaining share with real-time, low-cost cross-border payments, pre-approved credit and superior foreign exchange rates. In the process, they are generating 3-6 per cent more in annual cross-selling revenues than their peers.” said Markus Massi, a partner and managing director at BCG Middle East.

The momentum and experience gained by being early movers will make it significantly more difficult for slow-moving peers — such as Middle East banks — to acquire the talent and resources to catch up. To close that gap, corporate bank management needs to coalesce quickly around a clear digital strategy and move decisively to build critical skills and capabilities.

“Three digital value propositions show particular promise: seamless online banking, enhanced digital advice and real-time decision-making support. Our models suggest that over a five-year period, these strategies can enhance revenues by 15-40 per cent and improve cost-income ratios by 7-15 percentage points for Middle East banks,” said Alessandro Scortecci, project manager and co-author of the report said

While a few banks in the Middle East offer basic services, such as invoicing, payment approval and cash management, no bank in the region — that was surveyed by BCG — currently provides online customer service chat capabilities or online business intelligence and analytics tools — services that have become widely prevalent in other markets.

The survey results showed that there is a higher penetration of non-banking services in the Middle East, compared with other regions.

The study highlighted that, globally, only 34 per cent of companies are using non-banking services (such as Amazon, Ripple, etc.) — in the Middle East, however, that figure stands at 56 per cent.

Overall, the study also found that, when it comes to communicating with their bank, customers in the UAE and Saudi Arabia still mostly rely on traditional media.

“BCG’s analysis revealed that one third of respondents in the UAE and Saudi Arabia (33 per cent) last interacted with their Relationship Manager (RM) for advice via email, 30 per cent did it over the phone, and 26 per cent did it in person. In addition, 30 per cent of respondents had an in-person meeting with their RM just to complete a form,” said Scortecci.

The study comes at a time there has been a big surge in demand for digital services.

BCG’s data shows that more than 80 per cent of respondents are willing to pay for access to the services offered.

“The truth is, to achieve even the most basic level of digitisation, Middle East banks must lay out a clear vision predicated on their current level of digital maturity,” said Mohammad Turra, senior principal and digital expert.

“It also requires a sustained commitment to redesigning systems and processes. Simply adapting technologies to today’s banking environment will not work.”