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Gulf banks warned over social media backlash

 Middle Eastern banks face potential reputational damage and an impact to their bottom lines if they do not move swiftly to combat changing consumer behaviors including the growth of social media.

According to a report commissioned by Sungard, the high degree of internet connectivity in the region means that both good and bad experiences with lenders are being shared more widely than ever before. Around 46 percent of Middle Eastern banking customers said they would be likely to post a remark about their good or bad experience with their lender on Facebook, with that figure dropping to 21 percent for Twitter. More positively, 54 percent said their bank offered them “very good value”, while 59 percent said that they trusted their banks. However, less than half of consumers (47 percent) felt that their bank understood them or their needs, while just over a half (56 percent) saw their lender as a ‘technology innovator’.

“Banks, post-crisis, are faced with a deluge of challenges when it comes to customer engagement and retention,” WissamKhoury, Middle East managing director for Sungard, told Arabian Business. “Advances in technology have given today’s consumer more freedom to shop around and, coupled with lower loyalty levels born out of the crisis, this poses greater threats to banks across the world.” The report, entitled the Bank Readiness Index, also showed how regional banks were coping with more internet-savvy consumers. “Whilst each country/sub-region has strengths and weaknesses, all Middle Eastern banks surveyed were classified using SunGard’s Bank Readiness Index as ‘Technology Laggards’,” said Khoury.

“This illustrates that there is a significant opportunity for banks in the region to improve their ability to address today’s changing customer requirements.” Only 21 percent have a “comprehensive social media plan”, while just 13 percent think their bank uses social media to its fullest potential. Furthermore, while online banking capability is prevalent in the Middle East – with 95 percent of respondents to the survey indicating that they offered this service – most mobile offerings were described as “basic”.

Only 17 percent of Middle Eastern banks have tablet offerings. “Consumers are now actively using social media channels to tell others about their banking experiences; if banks are not able to hear what is being said, this not only prevents them from being responsive to customer needs, but also carries potentially damaging reputational risks,” added Khoury. “Banks that do not implement the necessary practices and technology infrastructures to better understand their customers, could suffer from subsequent customer retention and acquisition issues, which could impact future top line and profitability.”

Internet Usage in the Middle East

Middle East Internet Usage

  • Even though 2009 was a year of hardship, its widely believed that 2010 will be a year of economic recovery. Over the past year, Internet advertising spending in the Middle East increased, as spending through traditional  advertising venues, such as newspaper, radio and television shrank. For more on Internet usage and Internet users in Oman and the Middle East.

  • The trends indicate that the Internet remained strong in 2010. The #1 fastest growing advertising channel is the Internet, and businesses need to re-invent their marketing strategies and capitalise on this medium in  order to rise above the economic challenges.

  • Internet Marketing Trends Report is a brief synopsis of the current online marketing activities in the Middle East, as well as the projected trends for the coming years. Specifically, the report covers Internet usage and  penetration, total advertising spending, Internet marketing spending and social media trends.

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