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The banking sector is confronting fundamental structural changes and challenges that are going to shape its future and ability to serve the financial needs of individuals & businesses. Banks must move towards developing digitally advanced products and customer engagement practices that seamlessly integrate with people’s connected lives

Digital transactions have continued to grow at a rapid pace, where MENA's online payments penetration reached 76% in 2021 and it's expected to keep growing

What Are the Structural Changes that The Banking Sector Is Currently Facing?

Waves of Digital Disruption

Digital disruption is occurring at every level of the banking sector industry; new competitors, new channels, new processes, and new consumer expectations. The digital giants are posing a long-term disruptive threat that banks cannot afford to overlook given their strong capabilities in analytics and AI, wider customer reach, and seemingly infinite quantities of data. Banks need to respond to such digital disruption that is happening on both the supply & demand sides.

Business Model Disruption

Recent global trends show that traditional banks have realized the power and potential of digital disruption, especially with the rise of digital-only (neo) and bionic banks that challenged age-old business models. Business models are under scrutiny in the banking industry. Traditional banks need to evolve from reliance on a single, vertically integrated business model to multiple non-linear models and roles in the value chain.

According to Pwc, “61% of bank executives say that a customer-centric business model is ‘very important,’ and 75% of banks are making investments in this area”

New Customer Expectations & Dynamics

Customers are redefining their expectations, taking their cues from other industries that offer multichannel access, product simplicity, and seamless integration. It is becoming clear that consumers are looking for new solutions and are open to working with more providers to meet their evolving needs. Consumers no longer expect one financial firm to meet all their needs, which is why they are willing to maintain multiple financial services relationships.

Increased Pressure from Competition

In the banking industry, technologies are breaking down barriers to entry and allowing for new financial service providers. Competition from startups, internet giants, and industries outside of banking is forcing banks to undergo huge structural changes.

In a recent survey of global banking executives by IBM, almost 60% of respondents said that the boundaries between industries are blurring and more than 60% see competition coming from new and unexpected places.

News Laws & Governmental Initiatives

The central bank of Egypt has been drafting, changing, and releasing new laws aiming at enhancing the digital transformation of Egypt’s financial industry.

Other technology-based initiatives included:

1-  Launching the prepaid Meeza electronic cards

2-  CBE launched the regulatory laboratory

3-  Technology and Innovation Support Fund

4-  A plan to launch a system to identify customers electronically (EKYC)

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