86% of adults in the MENA region is unbanked, which equals around 386 million adults, while 3 in 4 GCC bank customers are ready to switch banks for a better digital experience.
Cost and owning an account by a family member were each mentioned by around 26% of unbanked people as reasons for why they do not have a financial institution account. And 22% of unbanked adults said that financial institutions are far in distance.
At the same time, banks are facing increased competition from a range of new market entrants, including digital banks, FinTechs, institutions offering high-touch and high-tech branch services, e-commerce and telecommunications firms, and in some markets, platform banking providers. Such challengers have emerged in response to rapidly changing customer expectations and behaviors and are forcing banks to invest in customer technology to prevent customer leakage and preserve their value chain.
Consumers are drawn to FinTech services because propositions are simpler, more convenient, more transparent and more readily personalized. This is especially the case in what have been traditionally profitable parts of the banking value chain. For example, adoption of FinTech as providers of money transfer and payment services rose from 18% in 2015 to 50% in 2017, with 65% of consumers anticipating they would use such services at some point in future.
Such disruption is not restricted to emerging markets that lack traditional banking infrastructure. Banks in developed markets are equally at risk. Critically, banks also need to realize that the competitive threat will continue to evolve and that only striving to match today’s challengers means they are not sufficiently anticipating future banking disrupters.