Banks Go Dig­i­tal

How Are Banks Gear­ing Up for an Econ­omy Go­ing Dig­i­tal?

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An anal­y­sis of how banks are gear­ing up for a dig­i­tized econ­omy

In bank­ing, dig­i­tal trans­for­ma­tion is not im­por­tant; it is im­per­a­tive. Glob­ally, tra­di­tional busi­nesses are fac­ing dis­rup­tion through the pro­lif­er­a­tion of a dig­i­tal so­ci­ety, and bank­ing is no dif­fer­ent.” That’s ac­cord­ing to David Hor­ton, CTO at Mashreq Bank.

Re­al­iz­ing the benefits of more ef­fi­cient on­line/mo­bile bank­ing, e-pay­ment ser­vices and cash­less trans­ac­tions; lead­ing banks in the MENA re­gion are tak­ing no­tice­able steps to­ward a more dig­i­tized econ­omy.

Sev­eral banks in the re­gion in­au­gu­rated smart branches in the last few months. In Dubai, there is Mashreq Go by Mashreq, a smart branch where cus­tomers can open an ac­count and is­sue a check­book and a debit card in less than 30 min­utes. It is part of the Smart Bank­ing Ini­tia­tive im­ple­mented by Mashreq “to give our cus­tomers the most re­ward­ing bank­ing re­la­tion­ship. As such, the most im­por­tant as­pect of our dig­i­tal trans­for­ma­tion jour­ney is de­light­ing the cus­tomer with an ev­ery­day bank ex­pe­ri­ence,” said Hor­ton. And ac­cord­ing to him, “all as­pects of smart bank­ing, from our state of the art dig­i­tal branches, to our mo­bile and on­line bank­ing plat­forms, are equally im­por­tant.”

In Le­banon, Bank of Beirut opened its first Smart Branch that rec­og­nizes cus­tomers’ pho­tos and signatures and al­lows cus­tomers to open ac­counts, get a debit card on the spot, pay uni­ver­sity tu­ition fees, and trans­fer funds 24/7. Al­most two years ago, Bank Audi launched “Novo,” a smart kiosk for per­son­al­ized bank­ing. Saudi In­vest­ment Bank (SAIB) also in­tro­duced their new ATMS with video tell­ers.

Most ini­tia­tives and ef­forts, how­ever, are di­rected at mo­bile bank­ing. Sev­eral banks launched new, more com­pre­hen­sive bank­ing smart­phone apps. The list in­cludes Stan­dard Char­tered UAE, with its award win­ning “Breeze” app; Mashreq,

with the clev­erly named “Snapp, for faster and eas­ier bank­ing; and Frans­a­bank. Emi­ratesnbd ded­i­cated their “SMARTBUSINESS” IOS app to make it eas­ier for cor­po­rates and busi­nesses to make trans­ac­tions.

And while Mashreq has al­ready part­nered with Mastercard and launched “no­qodi,” an e-wal­let for eas­ier on­line pay­ments, the Cen­tral Bank of Jor­dan is plan­ning mo­bile wal­lets in an in­no­va­tive way that doesn’t re­quire users to have bank ac­counts or even smartphones; fea­ture cell phones will be enough.

Elim­i­nat­ing the need to hold a credit card seems like the next trend in dig­i­tal econ­omy, and some banks in the re­gion got to work on that. Credit Bank in Le­banon has re­cently in­tro­duced the “Mastercard Con­tact­less Sticker,” which can turn any per­sonal item, namely mo­bile phones, into a bank card. Mashreq did the same with their “Tap n Go” stick­ers.

Bank Audi, on the other hand, set out to ad­dress the “new chal­lenges and many ex­ter­nal fac­tors that are in­flu­enc­ing the bank­ing en­vi­ron­ment, mainly the chang­ing de­mo­graph­ics, con­sumer tastes, and tech­nol­ogy in­no­va­tions such as mo­bile op­er­a­tors and tech­nol­ogy ser­vices com­pa­nies,” as Randa Bdeir, Group Head of e-pay­ment So­lu­tions and Card Ser­vices at Bank Audi, ex­plains. That’s why they took it to a higher level with their “Tap2pay” ser­vice, which aims at “cre­at­ing a more com­pelling con­sumer ex­pe­ri­ence which matches the mar­ket’s new trends and an­swers con­sumers’ ev­ery need,” ac­cord­ing to Bdeir. The ser­vice also made Le­banon among the first coun­tries in the re­gion to in­tro­duce NFC based cash­less pay­ments to “turn smartphones into credit cards.” The suc­cess rate of this ser­vice is still to be known.

QUES­TIONS TO BE RAISED Those are but some of the ini­tia­tives cre­ated in the re­gion. Other new rel­e­vant ser­vices are out there, and, doubtlessly, more will sur­face soon. The ini­tia­tives vary in im­por­tance, po­ten­tial and qual­ity; how­ever, the level of in­no­va­tion is ques­tion­able. Smart branches and NFC pay­ments have been around for some time now in the world and mo­bile apps for banks should be a given, es­pe­cially with the high smart­phone pen­e­tra­tion rates in most of the re­gion.

One ob­ser­va­tion that holds true al­most all across the MENA is the di­aled down part­ner­ships. Most ser­vices are of­fered by one bank through a limited num­ber of part­ners, and mostly at a high cost, mak­ing a ser­vice more of a neat fea­ture to have fun with than a way of dig­i­tiz­ing economies and chang­ing the way peo­ple do busi­ness.

For th­ese ser­vices to make sense for con­sumers, they must be more con­ve­nient than tra­di­tional ways at a neg­li­gi­ble ex­tra cost. Will th­ese ini­tia­tives be enough to drive users to­ward dig­i­tal econ­omy? They prob­a­bly are fine as door-open­ers, but def­i­nitely far from suf­fi­cient.

Lead­ers in the in­dus­try seem to agree on that point. “Mo­bile and on­line bank­ing in the MENA re­gion is still lag­ging be­hind the West, and has only re­cently started to get more at­ten­tion from banks,” said David Hor­ton. “There are still many large banks in the re­gion that sim­ply use re­spon­sive web de­sign to act as a mo­bile bank­ing so­lu­tion, which, to­day, will not be ac­cept­able to the cus­tomer who ex­pects na­tive apps that al­low them to lever­age their smart­phone func­tion­al­ity.”

“With some of the high­est mo­bile pen­e­tra­tion num­bers in the world, banks in the re­gion should look to step up and lead the way with dig­i­tal bank­ing, not sim­ply fol­low what is al­ready be­ing done in the west,” David added.

The world is shift­ing to­ward a dig­i­tal econ­omy for a rea­son: it is eas­ier, faster, more ver­sa­tile and more prof­itable to do busi­ness on­line. Be­ing

be­hind other parts of the world in time, qual­ity and in­fra­struc­ture of ser­vices will con­tinue to af­fect busi­nesses and lo­cal economies sig­nif­i­cantly.

Randa Bdeir, Group Head of e-pay­ment So­lu­tions and Card Ser­vices at Bank Audi

David Hor­ton, CTO at Mashreq Bank.

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