African and Middle Eastern retail banking sectors believe cash is no longer king
12 May 2020
Six out of ten banks in Africa and the Middle East forecast cash to account for less than 5% of all retail transactions over the next five years, compared to 48% worldwide.
The coronavirus pandemic will likely strengthen this trend further, as less and less people make use of coins and banknotes in order to curb the spread of the virus.
Retail banks in Africa and the Middle East believe that postponing the digitalization of transactions can threaten their business models.
African and Middle East lenders are campaigning strongly for their societies to go completely cashless, according to a global retail banking survey published by banking software company Temenos.
The in-depth survey, conducted by the Economist Intelligence Unit (EIU) in 2019 on behalf of Temenos shows that six in ten Middle Eastern and African banking executives believe that cash will account for less than 5% of retail transactions over the next five years, compared to a global average of 48% who also think the same.
The lockdown measures imposed in several countries are also expected to limit the number of cash transactions, as people opt for contactless and digital payments.
The EIU report entitled “A Whole New World: How technology is driving the evolution of intelligent banking in the Middle East and Africa” reveals that retail banks both in Africa and the Middle East are very aware of the risks financial exclusions and delaying digitization pose to their business models.
Of all the participants in the survey, 43% recognize new technologies such as artificial intelligence (AI), as the trend which will impact the retail banking sector the most by 2025.
In order to gain profits on these trends, African and Middle Eastern retail banks identify the need to develop digital marketing skills in order to attract all customers to the banking sector.
Jean-Paul Mergeai, Managing Director – Middle-East & Africa, Temenos, said; “Even in the most uncertain times, the power and opportunities of digital banking remain the same. This retail banking report outlines the opportunity for MEA banks who adopt modern technology to accelerate financial inclusion and digital banking, to support economic and social development.”
Katya Kocourek, Managing Editor - Financial Services, The Economist Intelligence Unit, said: “The significant impact of the ongoing Coronavirus pandemic is likely to accelerate the cultural and institutional shift towards digital banking that is already taking place in the MEA region.”
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