- Middle East banking customers are willing to start using FinTech products, per the new Deloitte study.
- Of those unwilling to do so, almost half the firms said concerns preventing them include security and privacy.
- Firms reluctant to optimize fintech solutions said they will wait and watch before embracing financial technologies in everyday operations.
It’s no secret that the entire world is evolving rapidly when it comes to implementing innovative solutions which involve modern technologies such as AI, automation and blockchain. In the past few months, the Coronavirus-induced lockdown has catapulted a slew of tech solutions in all arenas including banking to healthcare in people’s everyday lives.
As a result, banking companies are becoming more receptive towards deploying fintech solutions for its customers. In specific, 81% of 1,500 banking firms surveyed which also included more than 50 digital leaders from KSA, UAE, Qatar, Kuwait, Bahrain, Oman, Egypt, Lebanon and Jordan said they were willing to use fintech solutions, according to a report released by Deloitte.
However, most are hesitant to fully integrate fintech products into their networks, citing insufficient financing needed to “boost its footprint.” Consequently, banking institutions prefer to implement the “wait and watch” approach before taking the plunge into fintech. Furthermore, 18% are not open to inculcating fintech products. Of those, 40% cited security and privacy as their biggest concerns.
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The report further said that there is a huge gap between client expectations and bank services. In fact, customer behaviour is rather conducive towards adopting solutions for smoother “peer-to-peer money transfers, account aggregation and automated investment advice.” The report therefore deduced that the fintech ecosystem in the Middle East is “characterized by a certain degree of contradiction and dichotomy.”
Currently, only 22% admitted capitalizing on fintech solutions. This is testament that there is indeed a potential for significant growth in the sector, it said in the report.
Despite companies being willing, the Middle East region has attracted only 1% of $45bn of global funding in fintechs, Deloitte said. However, there is “significant potential” to grow the sector.
“The way forward for the Middle East FinTech Ecosystem to reach its full potential goes through regulatory harmonization and development of strategic partnership between Banks and FinTechs,” concluded Anthony Yazitzis, Financial Services and FinTech Partner, Deloitte Middle East.
While banks and financial firms are opening to the idea of tech solutions in a sector which has largely been managed traditionally, time will tell the degree of fintech solutions being used in the region going forward.