Saudi banks must accelerate digital transformation to improve customer experience

Modern consumerism is radically changing the way businesses operate today. As digital transformation accelerates, technologies evolve and industries adapt, consumers today demand rediscovered convenience and autonomy, the organizations involved who follow their competitors in the digital migration and face challenges. increasing pressure to meet expectations.

And this is especially true for the banking sector in the Kingdom of Saudi Arabia, with institutions more compelled than ever to improve experiences and present new value to end users.

Customers shape the future of banks

Even before the pandemic, technological capabilities presented new possibilities for consumers, with many getting used to greater ease and simplicity through digitally-driven banking. However, the post-epidemic events sparked unprecedented reform, leading to a level of intensity never seen before in terms of competition.

Inspired by efforts to better understand the evolution of the retail banking segment in Saudi Arabia, recent research undertaken by the Boston Consulting Group (BCG) has shed light on this reality, supporting the view that consumers dictate, even inadvertently, the direction that local banks should take. and will continue.

The numbers are expected to rise further in due course, with 88% of Saudi consumers now willing to open digital-only bank accounts, and 79% reportedly sharing their data to improve their experience.

Additionally, 63% are actively looking for new offers and only 51% have been at their current bank for five years or more. More than half of respondents (52%) would choose a new bank without hesitating to acquire the services and experiences they are looking for.

Feelings today are shared by the masses rather than a minority. Such widespread customer demands and expectations have already laid the groundwork for increased competition in the banking industry, and banks that do not respond to consumer wishes risk losing customers, failing to compete and ultimately account, to strive to ensure a sustainable level of business continuity.

Importantly, there are several important reasons behind these statistics, and banks behind in their digital migration journeys must appreciate them and act accordingly to avoid these eventualities.

Financial factors influencing behavior

Improved banking experiences are increasingly attracting Saudi customers, but it is the rationale behind this trend that needs to be taken into account by industry players. Those who have changed banks in recent years have cited increased interest rates, substandard customer service, and products that do not match the personal demands behind their decisions, all of which need to be improved as soon as possible.

At the same time, a strong brand reputation, superb digital experience, and excellent customer service have been identified as the main factors leading customers to recommend their banks to friends and family, which collectively represents another reason to rethink and reconstruct the service offerings if necessary.

It’s also important to note that most customers now expect to transact on their smartphones, tablets, or other such devices. This expectation, along with the increase in the number of digital channels available, puts additional pressure on traditional banks.

Specifically, customers are looking for features like instant account openings, loans, and payments at a digital-only bank.

The BCG study found that 44% of Saudi consumers plan to, at the very least, invest in cryptocurrencies, and 79% are willing to share their data for enhanced experiences, significantly higher than the 66% of customers. in Europe who reaffirmed the same intention. .

With the arrival of new emerging asset classes and the likelihood of an open banking concept, Saudi banks must act quickly to remain competitive and meet end-user demands, positioning themselves to meet these demands through five actions. priority:

  1. Continue to accelerate digital transformation and reinvent customer journeys to meet increasingly demanding customer needs.

  2. Launch innovative digital savings and lending proposals to capitalize on increased demand and better time to market.

  3. Personalize marketing based on customers’ financial lifestyles using analytics, such as spending habits and preferred brands.

  4. Integrate new asset classes to take advantage of growing customer demands.

  5. Create external APIs and account integrations to create innovative new use cases enabled by open banking.

With new customer service benchmarks firmly established, Saudi banks must take proactive steps in the present to ensure they deliver the digital convenience and personalized experiences that customers seek in the future.

After all, the appetite for digital banking will only increase, and failure to meet this growing mandate will push customers to seek other alternatives. Therefore, accelerating digital transformation and reinventing customer journeys is essential.

– This article is written by Mustafa Bosca, Managing Director and Partner, BCG, Bhavya Kumar, Managing Director and Partner, BCG, & Martin Blechta, Project Manager, BCG.

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