The problem is not adoption but use of technology

According to the Saudi Arabia Monetary Authority Financial Stability Report 2015 (the report), banks in Saudi Arabia comprise the largest segment of the kingdom’s financial services system. There were 24 banks operating in Saudi Arabia at the end of 2014, which among themselves have a network of 1,912 branches and 15,516 ATMs. The report also indicated the potential for digitisation in Saudi Arabia by stating that there were 17.4 million internet users in 2014, made up mainly of the burgeoning youth population in the country.

Banks are looking to the high performing players in the retail industry for innovative business ideas. Despite strong risk management and sustainability, retail banks in Saudi Arabia need to embrace digitisation to flourish in areas such as franchise, processes, technology and sales. They are investing in technology, particularly in the mobile and data analytics space. Banks are also striving to bring innovation to online account opening, instant credit cards, mobile banking and virtual ATM services to create greater customer mobility.

To capture a 360 degree view of customers and to segment the market, banks are now implementing big data integration, real-time performance management, and integration of sales and service business lines and functions. Moreover based on advanced analytics, CRM systems are also being established to enable retail customers to access banking services through multiple channels. However, branch banking is still considered a significant channel through which to assist customers with their private and wealth banking needs.

Today, bank customers are demanding hyper-connectivity, which requires a more personalised and customised product set across all channels. In response, banks are beginning to segment themselves across multiple channels with different products for different targeted markets. Mobile banking in Saudi Arabia is still growing and its development is contingent upon the need of customers, as the actual number of mobile transactions is low and mostly used to check bank balances.

There is much space for development in mobile banking in Saudi Arabia. A recent report indicates that out of those not currently participating in mobile banking, 67% showed intention to use mobile banking in the future. In addition, with their high rates of internet usage, Saudis are avid consumers of social media. This could be due to the fact that the largest segment of the population is within the 18–26 years age bracket—the same generation that is increasingly impacting the retail banks businesses.

Saudi Arabia can leverage its large youth segment and the growing demand for digital to grow its retail banking business. The biggest challenge faced by the retail banking industry today is not the adoption of technology but use of technology. A proactive strategy is needed at every stage for both parties to benefit: banks to save costs and customers to enjoy better customer experience. As customers become more sophisticated banks have to grow more innovative in order to engage them across their digital platforms.