A new report by consultancy firm A.T. Kearney has highlighted that the e-banking services in Gulf region offer enormous opportunity for growth as currently only one third of bank customers use online services.
Compared to the developed markets, the online banking market in Gulf is yet to mature and become customer’s channel of choice. In the developed countries, online banking has been recording a growth of 10 per cent each year over the past decade. It has a 50 per cent penetration rate in these countries, while only 33 per cent of all customers avail online banking in the Gulf. However, only 18 per cent of these customers actively bank online.
According to Dr. Alexander von Pock, partner at A.T. Kearney Middle East, “the main challenges faced by Gulf Cooperation Council (GCC) banks are customer awareness and trust. Customers can be reluctant to use e-banking because they are not aware of its advantages or are afraid of fraud. The banks, however, should address the various risks and challenges head-on, to tap into the huge opportunities on offer”.
The banks need to adopt new strategies to lure customers towards online banking. This would require developing innovative marketing solutions that are customized to the needs of each customer. By offering unique online banking services, banks have a significant opportunity to increase their customer base and gain market share in the region.
The Gulf offers a lucrative market opportunity because of demographics of the region’s internet users and growing internet penetration among the population. Qatar leads the region with 82 per cent internet penetration rate, while the UAE (78 percent) penetration and Oman (62 per cent) also remain key markets.
As most GCC bank customers over the age of 40 years fear falling victim to online fraud, they prefer traditional face-to-face banking. However, an increasing number of young customers are likely to displace this population and create a greater market for internet-based banking.
A.T. Kearney’s ‘Online Banking in the GCC‘ report states that although banking is relatively untapped in the GCC countries and therefore holds immense potential —but only for institutions willing to rethink the way they do business.