RETAIL BANKING
Girding for the headwinds The regional retail banking sector has weathered several storms over recent years, ranging from the 2008 global financial crisis, the plunge in oil prices in 2014 and now the COVID-19 crisis. How will this key banking sector fare in the near future?
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he outbreak of the COVID-19 pandemic two years ago was the ultimate gut punch that tested GCC banks’ resilience in unforeseen ways and yet, they have emerged even stronger. According to Deloitte, to fully utilize the newfound resilient energy to scale greater heights, banks should take account of the tectonic shifts reconfiguring the global financial services sector such as the growth in digitalisation and evolving customer demands and expectations. The emergence of the omicron variant of the coronavirus pandemic last November has increased growth risks and policymaking challenges globally. However, the general business
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and operating environment for banks in the Gulf region are expected to remain broadly the same this year as in 2021. It is worth noting that growth in GCC banking assets is linked to regional GDP, which moves largely in tandem with oil prices. Gulf states are still reliant on oil which accounts for three-quarters of the six-nation bloc’s spending but the new lockdown measures that are being implemented globally to curb new mutations of the virus are blunting oil demand growth. “Credit growth will remain soft and below pre-pandemic levels in most countries with the exceptions of Saudi Arabia and Qatar,” said Fitch. Though profitability pressures and strong liquidity will continue across the Gulf
Banking and Finance news in the MEA market
financial services market, capital buffers are expected to remain adequate to avert any risks that may emerge due to the pandemic. Digital transformation has been a key battleground for banks in the Middle East region; a competition that is intensifying as incumbent banks are being challenged from all sides for market share by a combination of neo banks and nontraditional participants. Banks across the globe are spending hundreds of millions of dollars (more than most industries) on their digital transformation agenda but will these digitalisation strategies translate into a true return on investment (ROI)? McKinsey & Co. in a report said that since digital transformation is never-ending and the window of change is dwindling, leaders across the financial services sector need to escape the technology trap mindset and have clear, actionable plans. The GCC bankin g sector h as weathered several storms over recent years ranging from the 2008 global financial crisis to a plunge in oil prices in 2014 and now the coronavirus crisis. The second wave of deal-making across
