As tech journalists, finance professionals and others try to read the tea leaves on the rapidly advancing technology and practices of the banking industry, researchers are getting some mixed signals from consumer markets in some parts of the world, including the Gulf region.
One example is a recently announced study of smartphone users in the Gulf Coast region, the EY GCC Digital Banking Report 2015, which uncovered some interesting habits and trends among banking customers in countries such as Saudi Arabia, Qatar and the UAE.
The study found was that although 98 percent of respondents owned a smartphone, only about 14 percent used their phones for online banking. Even when broken down into age demographics, the younger groups didn't seem much more prone to online banking than their seniors.
Usage trends also differed around specific types of online banking functionality. While 22 percent of those under 35 and 23 percent of 35 to 50 year olds reported using smartphones for balance inquiries, only 15 percent of the younger group and 19 percent of the older group reported using smartphone banking services for payments and transfers. That number went down quite a bit for respondents over 50 years old.
“What we discovered is that there was very little awareness of mobile banking, which is a surprise, as it is a part of day-to-day banking in other parts of the world.” Dominique Corradi, digital banking leader at EY Middle East, said in a press release on the subject. “Enabling real time to happen within banks, which is not the case at the moment, these elements might change due to the new technology and could be a complete revolution and threaten a few intermediaries that we have right now.”
Fareed Raja is a content strategist at Kin HR Software in Chicago who travels to the Gulf area routinely.
“There are a number of reasons why people in these countries aren't using mobile banking.” Raja told the Gulf News Journal. “One reason is usability; people are more likely to use smartphones for entertainment purposes.”
Also, Raja said, people in the region often don't open a bank account until they find a job, which can be after their college years. He contrasted this trend to the habits of American demographic groups, where children may open bank accounts at 13 years old or younger, for instance, and where parents open accounts for their children in order to introduce issues around money.
“Culturally, people around here also prefer face-to-face interactions over digital.” Raja said. “This could be one reason why traditional ways of business are still more profitable than e-commerce.”
Raja said a move toward better advertised banking security would lead consumers to trust the systems more and might increase the use of smartphone online banking.
As for innovation and finance, Raja said, Bitcoin is “the name of the game.”
“It’s changing the way we think about the financial market.” Raja said. “You see a growing number of investors finally getting on board. Many big time companies like Amazon and Target have expanded into Bitcoin.”