Financial Institutions across Middle East and Africa will adopt latest technologies and communication trends in 2012 to improve customer experience, brace for competition with global players on the region’s markets, and to comply with increasingly stringent regulatory requirements. This according to top 10 finance industry predictions published by market research and advisory company IDC.
Middle East and Africa saw similar economic growth levels in 2011 as in the previous year, with an average gross domestic product (GDP) of 4.6%.
The finance vertical has experienced healthy growth in technology adoption since 2010, and IDC estimates the IT expenditure totaled $7.5 billion across MEA as a whole in 2011, representing 6.0% year-on-year increase. Strong growth rates were seen especially in Saudi Arabia (13.7%), and the United Arab Emirates (8.8%).
“IT budgets are forecast to continue growing in 2012. However, the uncertain economic, political, and regulatory environments will affect spending initiatives among financial institutions across the region,” says Bijen Ramdas, Senior Research Analyst – MEA, IDC Financial Insights, IDC. “The expansion of alternative digital channels and the adoption of cloud computing for storage purposes, for example, will positively influence cost efficiency. In an increasingly competitive landscape, financial institutions will need to pay careful attention to improving customer service levels. The utilization of social media, development of remote-access services, implementation or expansion of loyalty programs, and improvement of customer security will thus all be critical in retaining customers and attracting new ones.”
As the competitive landscape changes at an accelerating pace, financial institutions will come up with new and attractive products to capture market share. A few financial institutions have taken already advantage of increasing tablet PC sales in the region and have released applications for these devices. A similar trend can be noted for mobile phones, with mobile banking no longer being viewed as an alternative channel. With the penetration of banking services across the entire Middle East and African population estimated at under 35% and a mobile phone market of around 800 million subscribers in the region.
“We predict that the provision of transactional services on a mobile banking platform will expand to offer a wider range of more sophisticated services,” says Ramdas. “This technology will be pivotal in capturing a large unbanked market and adding to the mobility experience for current banking customers.”
The number of people using social media networks has been growing tremendously over the last few years. For instance, Facebook and LinkedIn combined have an estimated 15 million users in the Middle East and 22 million in Africa. IDC expects financial institutions to increasingly embrace these platforms and use them as means of interaction with end users which will help them understand customer behavior and develop better customer service practices.
Complete list of IDC’s top 10 predictions for the financial sector in the MEA region for 2012:
1. Financial institutions will introduce more innovative technologies to increase their competitive advantages.
2. Mobile banking will be a key technology in capturing the unbanked market across the MEA region.
3. Financial institutions will consider upgrading their existing IT platforms to achieve systems integration and a single view of each customer.
4. Financial institutions will leverage business intelligence tools to extract maximum value from high volumes of data.
5. The adoption of stronger end-user security practices will be critical to customer protection.
6. Regulatory changes in the finance industry will impact IT budgets and expansion plans, which can impede technology initiatives.
7. The uncertain economic and political outlook in 2012 will impact the adoption of new technologies in the finance
industry.
8. Financial institutions will utilize social media to engage existing or prospective customers.
9. Financial institutions will consider implementing or developing their loyalty programs through electronic channels to improve the customer experience.
10. Islamic finance will continue its healthy growth in 2012, and technology development must cater to it.
