The banking industry, integral to our commercial and personal lives, has evolved with the times to embrace new challenges and cater to constantly changing consumer behaviour and attitudes. Technology has undoubtedly played an obvious and increasingly important role in the evolution of the banking industry towards digitisation. This shift to e-banking or digitisation brings with it security threats and strong competition. Banks are increasingly seeing the need to implement, and have started putting in place, new services that benefit both themselves in terms of maintaining profitability, as well as customers by way of providing a better and more convenient experience. In the Middle East, the UAE has been an early adopter of digital technology, resulting in a phase of rapid mass digital transformation in many sectors, including banking.


* Catering to constantly evolving consumer demands

In a country where internet penetration is one of the highest in the world, it is no surprise that end-users in the UAE expect to make speedy transactions anywhere, anytime, on any device. Banks must keep up to meet the ever-changing needs of their customers — by going digital. Millennials, especially expect their banks to be at the forefront of the technological transformation and this is a key growth driver for the eBanking sector.

The country consequently has a high level of e-banking usage, which is set to increase over the years. We recently conducted an e-banking study, which polled 900 global IT and business decision-makers from the banking sector and 11,000 consumers across 14 markets, including the UAE. The findings of our study underpinned the notion that e-banking is on the rise in the region, as results showed that 74 per cent of UAE consumers use online and mobile banking.

* E-banking changes the way UAE consumers transact

While banks continue to focus on digitalisation, our research shows that one of the main benefits of e-banking is customer convenience, especially over traditional banking. In fact, two-thirds of UAE consumers (67 per cent) have said that it is easier to use e-banking solutions than having to physically visit a branch. Indeed, the introduction of digital banking has given customers an easy way to interact with their bank as and when they please. Gone are the days you had to physically go to your local branch to get an update on your finances — today, all this can be done via a few clicks on your laptop (52 per cent) or a couple of touches on your smartphone (30 per cent).

It is therefore not surprising that customers prefer the new ‘instant’ experience offered by e-banking over the much slower and less convenient ways of traditional banking. They rely less on physical branches for routine transactions such as transfers (20 per cent) and balance enquiries (64 per cent). It is very likely that, as consumers discover the convenience of self-service and digital channels (74 per cent), they will visit branches less frequently. That said, branches will still play an important role for more complex transactions such as loan and credit card applications. Customers are becoming increasingly multi-channel rather than being solely digital or branch services. It is very clear that banks need to adjust their offer so branches offer higher-value consultancy services to remain relevant.

* Challenges that come with e-banking

On the back of expanding digitalisation, there is an increased concern over security, which proves to be one of the main concerns around eBanking. The key to enable the success of e-banking services depends on the ability of banks to combine convenience and simplicity for customers with security (66 per cent of banks have stated this as a challenge) and trust (62 per cent). Although (81 per cent) banking leaders are keen to invest in security, our study found that the traditional password remains the main security feature for eBanking solutions (84 per cent) with more sophisticated security features, such as encryption and biometrics much further down the list. Security threats can affect banks through numerous vulnerabilities. No single control or security device can adequately protect a system connected to a public network. Many problems concerning the security of transactions are the result of unprotected data being sent between clients and servers. eBanking platforms offer several methods to ensure a high level of security: identification and authentication, encryption, and firewalls. Banks must be responsive towards security requirements. There is no doubt that a layered protection against security threats is the only way to go and banks should approach security as a key consideration in their service offering.

We also found that 47 per cent of UAE consumers think that there are security gaps in eBanking solutions, and 39 per cent are concerned that using banking applications and websites put them and their personal information at risk. With so many consumers still feeling this way, UAE banks need to optimise their security without compromising on convenience and strike a perfect balance between the two, to ensure that e-banking continues to evolve and achieves its full potential. If this isn’t achieved, banks risk losing their customers’ trust, with many taking their business elsewhere where they feel their valuable personal information is more secure.

The strong uptake of e-banking in the region clearly presents significant opportunities for the entire financial services industry. To be successful, banks clearly need to harness the right kind of technology and processes to provide the best combination of convenience and security for their customers.

Marwan Elnakat is e-banking director for the CISMEA region at Gemalto.