Kuwaiti banks need to adopt modern trends: KIBS report
KUWAIT: The Kuwait Institute of Banking Studies (KIBS) underlined the importance of adopting modern trends in the banking sector, especially in the post-COVID-19 pandemic era, considering that the responsibility lies in this regard on the executive authorities. The institute said in a study it released Sunday entitled “The Impact of Competitiveness on the Size of Risk and Profitability in Kuwaiti Banks” that adopting these trends contributes to shaping the future of the banking industry, especially monetary policies, digital transformation, and economic growth.
The study addressed several major topics. The most important of which is the impact of competition on profitability and risks in the Kuwaiti banking sector and the impact of the COVID-19 pandemic and the geopolitical environment on banking competition. It explained that the results of the study concluded that competition between Kuwaiti banks generally affects profitability and the size of risks and does not conflict with the concentration rate in the Kuwaiti banking sector. In addition, concentration in the sector has a positive impact on profitability and the size of risks. It stated that the results of the study confirmed that the average interest rates lead to an increase in the profitability of Kuwaiti banks, while it leads to a slight increase in credit risks, but it has no impact on liquidity and capital risks, in addition to income diversification.
To increase exposure to risks slightly due to the difficulty of dealing with the various risks related to each sector in which Kuwaiti banks participate. The Institute stated that banks need further development in training programs and the work environment to maintain the activity and productivity of their employees, in addition to giving them appropriate appreciation, providing growth opportunities, and providing them with a flexible workplace.
It is healthy to maintain their commitment and improve their performance to confront what is known as the talent war and attract it. He recommended establishing various partnerships with financial technology companies in order to further enable banks to enhance profits based on financial services fees and achieve the maximum possible benefit for both sides by taking advantage of the ability of financial technology companies to pump money.
To enhance new investments on the one hand and benefit from the public’s confidence in Bank and its reputation on the other hand. The study stressed the need for banks to adopt digital transformation plans to contribute to maintaining their competitiveness in the face of digital service providers, improving customer well-being and providing distinguished digital solutions on an ongoing basis.