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.”