MEA Retail Banks are the Strongest Believers in a Cashless Society, Prioritizing Digitalization to Drive Financial Inclusion, Says Study by the Economist Intelligence Unit Released by Temenos
Middle East and Africa (MEA) retail banks believe delaying digitalization poses genuine threats to their business models
GENEVA, Switzerland, May 5, 2020/ -- 6 in 10 banking executives in the Middle East and Africa (MEA) think cash will dip below 5% of retail transactions in the next five years,
compared to 48% globally. The global Coronavirus pandemic is likely to
reinforce this trend; MEA retail banks believe delaying digitalization
poses genuine threats to their business models; Changing customer
demands are cited as the highest-impact trend in the near term (35% by
2020), with new technologies predicted to be the most impactful
development in the medium term (43% by 2025); Building a mobile-first
greenfield bank is ranked as the top innovation strategy by 37% of MEA
banking executives.
Banks in the Middle East and Africa (MEA) are the strongest believers in a cashless society, according to a global retail banking survey
released by Temenos (SIX: TEMN), the banking software company. The
in-depth survey conducted in 2019 by the Economist Intelligence Unit
(EIU) on behalf of Temenos reveals that 6 in 10 Middle East and African
banking executives think cash will dip below 5% of retail transactions
in the next five years, compared to a global average of 48% who think
the same. The lockdown measures imposed by governments worldwide in
light of the evolving Coronavirus pandemic are also expected to increase the need for and use of digital banking and payment solutions globally.
The EIU report entitled “A Whole New World: How technology is driving the evolution of intelligent banking in the Middle East and Africa” (https://bit.ly/3b7mKH0) indicates that MEA retail banks are highly conscious of the threats
financial exclusion and delaying digitalization pose to their business
models. Respondents acknowledge consumer demands for accessible,
hyper-personalized digital banking experiences, ranking changing
customer demands as the highest-impact trend by 2020 (35%). A plurality
of MEA banking executives – 43% of respondents – identify new
technologies, including AI, as the most impactful trend on their sector
by 2025.
In order to capitalize on these trends, MEA retail banks recognize the
need to sharpen digital marketing skills to bring excluded customers
into the banking sphere. As such, mastering digital marketing and
engagement is considered the top strategic priority for retail banks in
the near term (35% by 2020), and in the medium term (35% by 2025).
Notably, higher numbers of MEA respondents believe digital marketing is
also the most valuable use for new technologies (23% versus 13%
globally). These findings indicate that MEA retail banks believe
investing in digital technologies to target and attract the un- and
underbanked is crucial.
The survey reveals that the Middle East, in particular, is poised to
encourage digital financial inclusion, with young populations and
smartphone use predicted to hit 74% by 2025. Governments across the
entire MEA region are increasingly embracing digital agendas to
encourage financial inclusion and accelerate digital banking and a
cashless economy. The affordability of smartphones is a key driver in
the new development of building mobile-only and mobile-first greenfield
banks, the top innovation strategy chosen by 37% of MEA-based
respondents alongside investing in fintech start-ups (37%). Nearly one
in three respondents (29%) is innovating by building a greenfield
fintech firm, also a top five pick among global respondents (25%).
Jean-Paul Mergeai, Managing Director – Middle-East & Africa, Temenos, commented: “Even in the most uncertain times, the power and opportunities of digital
banking remain the same. This retail banking report outlines the
opportunity for MEA banks who adopt modern technology to accelerate
financial inclusion and digital banking, to support economic and social
development. At Temenos, we believe in investing in technology and
innovation and have the privilege of helping banks and their customers
to prosper by using this technology every day. We continue to
relentlessly invest 20% of our revenues into R&D, the highest in the industry, and provide to banks the winning combination of the most
advanced cloud and AI technology with the richest, broadest banking
functionality.”
Katya Kocourek, Managing Editor - Financial Services, The Economist Intelligence Unit, said: “The significant impact of the ongoing Coronavirus pandemic is likely
to accelerate the cultural and institutional shift towards digital
banking that is already taking place in the MEA region.”
About the survey
In 2019, The Economist Intelligence Unit surveyed 405 global banking executives (https://bit.ly/2YBY4DK) about the challenges retail banks expect to face between 2020 and 2025, and the strategies they are deploying in response. The survey data
consist of 51% C-Suite level respondents and 10% Board Members. The
Middle East and Africa report is based on 65 respondents from the region and was supplemented with in-depth interviews with senior executives
from leading banks in the region.
About Temenos:
Temenos AG (SIX: TEMN) (www.Temenos.com) is the world’s leader in banking software. Over 3,000 banks across the
globe, including 41 of the top 50 banks, rely on Temenos to process both the daily transactions and client interactions of more than 500 million banking customers. Temenos offers cloud-native, cloud-agnostic and
AI-driven front office, core banking, payments and fund administration
software enabling banks to deliver frictionless, omnichannel customer
experiences and gain operational excellence.
Temenos software is proven to enable its top-performing clients to
achieve cost-income ratios of 26.8% half the industry average and
returns on equity of 29%, three times the industry average. These
clients also invest 51% of their IT budget on growth and innovation
versus maintenance, which is double the industry average, proving the
banks’ IT investment is adding tangible value to their business.
For more information, please visit www.Temenos.com.
MEA Retail Banks are the Strongest Believers in a Cashless Society, Prioritizing Digitalization to Drive Financial Inclusion, Says Study by the Economist Intelligence Unit Released by Temenos
MEA Retail Banks are the Strongest Believers in a Cashless Society, Prioritizing Digitalization to Drive Financial Inclusion, Says Study by the Economist Intelligence Unit Released by Temenos
MEA Retail Banks are the Strongest Believers in a Cashless Society, Prioritizing Digitalization to Drive Financial Inclusion, Says Study by the Economist Intelligence Unit Released by Temenos
MEA Retail Banks are the Strongest Believers in a Cashless Society, Prioritizing Digitalization to Drive Financial Inclusion, Says Study by the Economist Intelligence Unit Released by Temenos
MEA Retail Banks are the Strongest Believers in a Cashless Society, Prioritizing Digitalization to Drive Financial Inclusion, Says Study by the Economist Intelligence Unit Released by Temenos
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