GCC banks will be ready for serious e-finance by 2004: Accenture

A study conducted by Accenture into the future of the Gulf’s financial services finds that 82% of GCC banks will have launched e-finance capabilities within two years.

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By  Vijaya George Published  February 14, 2002

The Gulf region has got its first insight into how soon banks in the GCC countries will be ready to offer serious e-finance to their customers. According to a survey conducted by Accenture, banks are aggressively working towards developing the infrastructure necessary for customers to carry out financial transactions online. Of the executives from the 52 financial organisations in the GCC interviewed, 82% of the respondents expected their banks to launch e-finance services within two years.

“This is good news for the financial services sector in the Gulf. Typically the banking industry is cautious about adopting new technologies or business models until they are proven. The Accenture survey points to a banking sector that is about to embark on a massive transformation that will advance the traditional ways of providing financial services into the new Internet paradigm,” said Maher Kaddoura, partner and managing director of Accenture Middle East. “That the organisations are so aggressively investigating and implementing online services clearly demonstrates the urgency with which they regard their ability to provide services online. GCC banks recognise that to win in the new global economy, they need to seize the initiative.”

The survey revealed that a significant driving factor for local banks to move online was the competition they experienced from foreign banks. Customer retention was another reason for planning e-finance offerings. Most rated Customer service as the top “Value Capturing Opportunity” for e-finance, while others mentioned cost reduction and revenue generation.

Almost 25% of the banks felt that the slow uptake of e-finance services among consumers and customers will present the biggest hurdle to the success of initiatives. With the Internet penetration rate being as low as 4% in countries like Saudi Arabia and only as high as 12% in others, the first challenge for GCC institutions, according to Kaddoura “was to convert their customers to the new way of doing business.” A second major challenge is perceived to be the lack of an “e-finance vision” among senior management.

But all this is slated to change gradually according to the report. By the end of 2001, although only 3.6% of their customers will transact online, that number will ramp up rapidly over the next five years, with a third of customers doing at least some of their banking online by 2006. The challenges — converting customers to the online world, developing the technology and organisational systems, ensuring that customers are serviced better though the Internet, not distanced by it — are significant, but the study suggests that e-finance will become a reality sooner than most (even in the banking industry) predict.

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