Saudi banks must accelerate digital transformation to improve customer experiences

November 21, 2021

Modern consumerism is drastically changing how businesses today operate. As digital transformation accelerates, technologies evolve, and industries adapt, consumers today demand newfound convenience and empowerment — with implicated organizations that trail competitors in digital migration facing mounting pressures to deliver on expectations.

And this is especially true for the Kingdom of Saudi Arabia’s banking sector, with institutions more compelled than ever to improve experiences and present new value to end-users.

Customers Are Shaping Banks' Futures

Even before the pandemic, tech-based capabilities were introducing consumers to new possibilities, with many becoming accustomed to greater ease and simplicity through digital-first banking services. However, post-outbreak events have instigated unprecedented reform, leading to a level of intensity never before seen in terms of competition.

Inspired by efforts to ascertain a further understanding of Saudi Arabia's evolving retail banking segment, recent research undertaken by Boston Consulting Group (BCG) has shed light on this reality, substantiating the view that consumers are, however inadvertently, dictating the direction that local banks must and will pursue.

Figures are set to increase further in due course with 88% of Saudi consumers are now willing to open digital-only bank accounts, and 79% would share their data to improve their experiences.

Moreover, 63% actively search for new offers and only 51% have been with their current bank for five years or more. More than half of the respondents (52%) would opt for a new bank without hesitating to acquire the services and experiences they seek.

Today's sentiments are shared by the masses rather than a minority. Such widespread customer demands and expectations have already laid the foundations for intensified banking sector competition, and banks that fail to address consumer wishes risk losing customers, failing to compete, and ultimately struggling to ascertain a sustainable level of business continuity.

Crucially, there are several prominent reasons behind these statistics, and banks behind in their digital migration journeys must appreciate them and act accordingly to avoid these eventualities.

Financial Factors Influencing Behaviors

Improved banking experiences are growing in appeal among Saudi customer bases, yet it's the reasoning behind this trend that must be considered by industry players. Those who have changed banks in recent years have cited increased interest rates, substandard customer services, and products unbefitting of personal requirements behind their decisions, all aspects that must be improved sooner rather than later.

At the same time, a strong brand reputation, superb digital experience, and excellent customer service have been identified as the main drivers for customers recommending their banks to friends and family members, which collectively represents another reason to redesign and rebuild service offerings if necessary.

It's also important to note that most customers now expect to complete transactions on their smartphones, tablet, or other such devices. This expectation, together with more digital channels becoming available, is placing additional pressure on traditional banks.

More specifically, customers seek features such as instant account openings, loans, and payments in a digital-only bank.

BCG’s study found that 44% of Saudi consumers were, at the very least, planning to invest in cryptocurrencies, and 79% are willing to share their data for improved experiences, notably higher than the 66% of customers in Europe who reaffirmed the same intent.

With the arrival of new emerging asset classes and the likelihood of an open banking concept, Saudi banks must act with haste to remain competitive and accommodate end-user demands, positioning themselves to fulfill these requirements through five priority actions:

  1. Continue accelerating digital transformation and reimagining customer journeys to meet increasingly demanding customer needs.

  2. Launch innovative savings and digital lending propositions to capitalize on increased demand and optimized go-to-market.

  3. Personalize marketing around customers' financial lifestyles using analytics, such as spending habits and favorite brands.

  4. Embed new asset classes to leverage increasing customer demands.

  5. Build external APIs and account integrations to build new innovative use cases allowed by open banking.

With new customer service benchmarks firmly established, Saudi banks must take proactive action in the present to ensure they provide the digital convenience and personalized experiences customers seek in the future.

After all, the appetite for digital banking will only increase, and failure to meet this growing mandate will result in customers opting for other alternatives. Hence, accelerating digital transformation and reimagining customer journeys is paramount.

— This article is written by Mustafa Bosca, managing director and partner, BCG, Bhavya Kumar, managing director and partner, BCG, & Martin Blechta, project leader, BCG.

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