Note from the Publisher: We read frequently about fintech advances in Africa, India, Asian, Europe and (gasp!) Canada, too, but we really don’t see much on the topic around the gulf states. That is about to change, as a number of Gulf Cooperation Council (GCC)) banks have announced plans to offer digital banking. Since their mobile penetration rate is sky high (@70%), it’s hard to understand what the hold up has been there, but one item mentioned in the story is the need to ensure against money laundering and terrorism financing (file that bit of info under “YIKES!”), and it’s also noted that the decline in oil prices are driving this diversification as well. Anyway, fintech continues to march across every corner of the planet.
“The bear oil market has placed significant pressure on the Gulf Cooperation Council (GCC) that in turn, triggered economic diversification away from oil. In this current market, GCC banks are in need of finding new ways to compete for growth.
In recent years, GCC banks went through the ‘Digital Banking 1.0’ phase in which they introduced internet and mobile banking platforms. These platforms served their original intended purpose of being alternative service channels. However, these platforms are now struggling to keep up with elevated customer expectations such as branchless experience and full end-to-end digital solutions, according to EY research.
The GCC has one of the youngest tech-savvy populations in the world. This, coupled with the increasing use of cards/cashless transactions and one of the highest mobile penetration rates globally at c. 70 per cent, means that moving to a new phase of digital banking is imperative. ‘Digital Banking 2.0’ is the next step for GCC banks: a new chapter for the industry in which fintechs and digital banks collaborate to create a more integrated approach to banking.
A number of GCC banks have announced or plan to introduce digital banks. While these digital banks will certainly shift the banking landscape, they remain confined within the ‘control’ of their incubator banks. Fintech disruption is slowly ramping up in the GCC (c. 40 fintechs) and has the potential to change the industry. Regulators, on the other hand, will aim to promote ‘safe’ Digital Banking 2.0 and alleviate two major concerns: money laundering/terrorism financing and cybersecurity. As the paradigm starts to shift, how should banks and regulators embrace disruption?…..”