By Marwan Elnakat*

WITH over 21 million Saudis and 10.4 million expats, Saudi banks are looking at ways in which they can cater to this growing customer base. Alternative delivery channels and finding new ways of doing business have been key for traditional banks to expand their horizons and reach new customers. Several banks in the Kingdom have already adopted digital banking solutions as a core strategy to cater to constantly changing consumer behaviors. With the support of the government through its National Plan for Telecommunication and IT approved in 2007 and the National Transformation Program under Vision 2030, Saudi banks have been able to transform their transactions to ‘e-transactions’ to make banking seamless and convenient for millions of people in their everyday lives.

With 69.6% of the total population using the Internet, it is no surprise that Saudi residents expect to make speedy transactions anywhere, anytime, on any device. Banks must keep up to meet the ever-evolving needs of their customers – by going digital. Millennials, who make up approximately 50% of the total population, expect their banks to be at the forefront of the economy’s technological transformation.

The country consequently has a high level of digital banking usage, which is only set to increase over the years. We recently surveyed 900 global IT and business decision-makers from the banking sector and 11,000 consumers across 14 markets, including Saudi Arabia, on the topic of ebanking. The findings of our study underpinned the notion that eBanking is on the rise in the region, as results showed that 66% of Saudi consumers currently use online and mobile banking.

While banks continue to focus on digitalization, our research shows that one of the main benefits of digital banking is customer convenience, especially when compared to traditional banking. In fact, 69% of Saudi respondents said that it is easier to use eBanking 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 or a couple of touches on your smartphone. Customers rely less on physical branches for routine transactions such as transfers and balance enquiries. However, branches will still play an important role for more complex transactions, loans and investment plans. It is very clear that banks need to adjust their offer so branches offer higher-value consultancy services to remain relevant.

On the back of expanding digitalization, there is an increased concern over security, which proves to be one of the main concerns around digital banking. The key to enable the success of eBanking services depends on the ability of banks to combine convenience and simplicity for customers with security and trust. Although leading banks in the region are keen to invest in security, our study found that the traditional password remains the main security feature for eBanking solutions (81%) with more sophisticated security features, such as encryption (25%) and biometrics (17%) much further down the list. Security threats can affect banks through numerous vulnerabilities.

We also found that 50% of Saudi consumers think that there are security gaps in eBanking solutions, and 29% are concerned that using banking applications and websites put them and their personal information at risk. A bigger worry for decision makers is that 69% of Saudi consumers use the same password across multiple accounts. With so many consumers still feeling this way, it is clear that Saudi banks need to optimize their security without compromising on convenience and strike a perfect balance between the two, in order to ensure that digital banking continues to evolve and achieves its full potential. If this isn’t achieved, banks risk losing their customers’ trust, with many (51%) taking their business elsewhere where they feel their valuable personal information is more secure.

Fortunately, Saudi decision-makers are aware that security features must be improved even further and are planning to implement changes, with two-factor authentication at the top of their list. A lot of banks are now considering biometric solutions, such as fingerprint scanning, facial recognition and iris recognition, which are seen as key technologies of the future and planned to be implemented over the next five years. It is heartening to note that biometrics are front of mind for Saudi consumers with 43% keen to use the technology for mobile banking, of which 75% believe that it is more secure than usernames and passwords, while 41% believe that they are more convenient than traditional methods.

The strong uptake of digital banking in Saudi Arabia 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.

* The writer is Digital Banking Director for the CISMEA region at Gemalto