Data Analytics: Giving Middle East Banks An Effective Hedge Against Economic Volatility

Jonathan Charley

There’s a lot of speculation around economic volatility in local markets. With volatility comes opportunity for the most entrepreneurial banks. However, to exploit these opportunities there’s a growing need for deeper insight into both business performance and customer demands.

The use of predictive data analytics can help Middle East banks sharpen their risk assessment, drive revenue, and identify new areas of focus, depending on market conditions. It can break the cycle of relying on historical data, giving true insight into future areas of growth and decline. It’s an effective hedge for business performance, regardless of economic circumstances. Here are four ways Middle East banks can gain from data analytics.

1. Insights from Big Data mean you can design for the segment of one

As banks in the region begin to shift their retail focus from lending to saving and investments, there is a need to increasingly shift from product-centricity to customer-centricity. Real-time insight and predictive analytics enables your marketing to move from generic mass promotions to personalised offerings – driving greater revenue from existing customers by understanding individual requirements and spending patterns. The trend is towards personal financial management where the need for real-time customer insight becomes essential, particularly with self-serve models.

2. Get more value out of your existing core IT

Historically, banks in the Middle East have typically invested in packaged software solutions, compared to some of the large US and UK banks that have big internal development teams. While this has enabled quick adoption of best practices, it also means that many of these off-the-shelf technologies are now aging and unable to keep pace with current digital requirements. Replacing the core banking system can be akin to a triple heart bypass. With the smart use of analytics tools, the data locked in legacy banking systems can be used to create deep insight without having to change the core system.

3. Protect your customer base from new market entrants, such as digital disruptors

Your best source of revenue is from your existing customer base. The problem is everyone wants a slice of it. Challenger banks and fintech companies are targeting bank customers with alternative and cheaper products. Take remittances, for example, which is particularly relevant to this region. With high levels of expats working locally, remittance activity is higher than average, and it is a ripe target for third parties to undercut traditional banks. By using the insights derived from data, new ways of delivering a tailored experience and offerings can be developed to help retain the most valuable customers.

4. Serve board members who are realising data is strategic, not tactical

Increasingly, Middle East banks are appointing chief data officers. This reflects the realisation that data is not a commodity, but rather a strategic asset. The CDO is a role that requires both an understanding of the business as well as the data. As customer demographics around gender, diversity, and omnichannel expectations continue to change, it’s essential that banks understand who their customers are, and whether their needs and expectations are being met.

Middle East banks have the opportunity to become among the most tech savvy, competitive, and agile in the world. Gaining the deep customer and business insights required to navigate market volatility and achieve digital transformation can only be achieved by applying the power of data analytics.

SAP is a gold sponsor of MEFTECH 2016, 22- 23 March, in Abu Dhabi. Listen to our keynote speech on the 22 of March on Digital Banking and How Banks Need to Evolve with Customer Needs.


Jonathan Charley

About Jonathan Charley

Jonathan Charley is the EMEA North General Manager of Financial Services at SAP. He is responsible for EMEA North Financial Services sharing thought leadership and leading customers through their digital transformation