Mustafa-Bosca-MD-Partner-BCG - Digital-Only Accounts - Banking Experiences - KSA Customers -techxmedia

88% Of KSA customers willing to open digital-only accounts and share their data to improve banking experiences, reveals study

Banking & Insurance Industries

88% Of KSA customers willing to open digital-only accounts and share their data to improve banking experiences, revealed study. According to recent data from Boston Consulting Group, competition in the banking sector in the Kingdom of Saudi Arabia (KSA) is growing as customer needs and expectations continue to rise (BCG). The results of BCG‘s “2021 Consumer Sentiment Study in Banking,” which polled over 2,000 Saudi Arabians, provide a better insight of the changing retail banking industry. According to the Study, 52 percent of clients would have no trouble transferring banks, and 63 percent actively seek out fresh offers.

“With digital capabilities introducing consumers to new possibilities, the Saudi banking sector is witnessing more and more people proactively engage in multiple banking relationships. Demands and expectations are evolving, and we see that it is easier to switch banks with the simplicity of digital onboarding,” explained Mustafa Bosca, Managing Director and Partner, BCG.

He also noted, “This trend is substantiated by our latest research, which confirms almost two-thirds of respondents now search for alternative offers and over half would have no problems switching to another bank. Together, these highlight the increasing level of competition across the national retail banking landscape, with many changing banks within the past year alone.”

According to the Study, only one in every two Saudi banking customers has been with their bank for more than five years, which can be ascribed to people seeking better banking services. Increased interest rates, products that don’t meet personal needs, and bad customer service were identified as the top reasons for changing banks by the 49 percent of respondents who did so over the last five years. Customers have recommended their banks to friends and family because of their strong brand name, outstanding digital experience, and excellent customer service.

Bhavya-Kumar-MD-Partner-BCG - Digital-Only Accounts - Banking Experiences - KSA Customers -techxmedia

“Respondents have cited several prominent reasons behind their decision to change whom they bank with, and these include previous institutions offering limited products for individual needs, poor customer service, increased rates, charges, and minimum balance. Therefore, retail banking players losing customers due to such factors should reevaluate and ultimately improve the services they provide,” said Bhavya Kumar, Managing Director, and Partner, BCG.

He also noted, “There are many components that the modern consumer finds appealing, with strong brand status and excellent digital service and experience among those setting new standards in the industry.”

Current accounts and credit cards have seen an increase in purchases over the past year, according to the data, but all other banking products, such as personal loans and fixed deposits, have remained below 2020 levels. This is due to the fact that current accounts and credit cards already had digitalized journeys, making it easier for users to obtain them online during the epidemic when branches were temporarily closed. The poll demonstrates that there is a growing need for innovative savings products in the retail market, which is a factor backed up by national priorities.

The BCG report also backed up the emergence of digital as a significant channel for banks, with 88 percent of customers preferring to open a digital-only bank account, putting more pressure on traditional banking firms. Expectations for digital channels are rising, and most customers expect to conduct all transactions on their smartphones. Instant account opening, loans, and payments are the most essential and enticing elements of digital-only banks, however, interest in creative savings and investment continues to grow.

Martin-Blechta-Project-Leader-BCG- Digital-Only Accounts - Banking Experiences - KSA Customers -techxmedia

“Digital transformation acceleration has unquestionably set a new benchmark for retail banking incumbents. Customers seek convenience and personalized experiences through digital, and the majority will pursue alternatives should they encounter more attractive propositions,” added Martin Blechta, Project Leader, BCG. “Considerable willingness among respondents to open digital-only accounts reaffirms this. Moreover, the widespread appetite for digital banking services in the Saudi market is a trend almost certain to continue expanding. With these considerations in mind, the onus is on every bank to continue accelerating digital transformation and reimagine the customer journey.”

Furthermore, there is a growing desire to exchange data on the internet and to experiment with new digital assets and cryptocurrencies. These ambitions were bolstered by the fact that 44% of respondents said they had invested in cryptocurrencies or were planned to do so in the near future. The impending implementation of open banking was also brought up. 79 percent of Saudi respondents are now willing to reveal their data in exchange for better banking services, which is greater than the 66 percent of European customers who made similar disclosure.

“Open banking is something that appeals to a majority of today’s customers nationwide. As such, many are prepared to share their data to avail open banking benefits, and the arrival of emerging asset classes and widescale open banking is certain to transpire sooner rather than later,” concluded Blechta.

Further said, “With this reality looming, banks can position themselves to remain competitive and accommodate consumer demands and expectations through numerous actions in the near-term future, such as embedding new asset classes within investment portfolios and building new and innovative open banking use cases.”

Key Implications for KSA Banks and Areas of Focus in the Next 12 Months

According to the findings of this year’s poll, banks must focus on five critical areas in the future year:

1. Continue to drive digital transformation and rethink the customer journey to meet customers’ ever-increasing demands.

2. Launch new savings and digital lending products to take advantage of rising demand and a more efficient go-to-market process.

3. Use data to personalize marketing based on a customer’s financial lifestyle, such as spending habits and favored products.

4. Integrate new asset classes to capitalize on rising customer demand.

5. Create new novel use cases by integrating external APIs and account integrations.


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