2021 Dubai: Financial Services Challenges And Digital Solutions

By Author: Wisoft Solutions
Total Articles: 15
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Countries in the Middle East are accelerating towards digitizing their financial landscape. A host of fintech companies have been entering the market to challenge the incumbent banking sector, by promoting more enhanced and efficient products. Among all Gulf Cooperation Countries (GCC), the UAE is vigorously disrupting the system with their digital adoptions. Yet such massive scale reformations come with their own set of challenges. In this article, we take a look at what concerns arise on the digital front for these countries, and how digital solutions are paving the way forward.

Legacy systems hindering modernization

Enterprises in the UAE and the Middle East have inherited many applications supported by older hardware and software, a legacy issue hampering growth. Archaic systems are obstacles because they are not flexible to adopt modern digital frameworks. Modern technology, like Robotic Process Automation (RPA), can help organizations streamline the workflow by optimizing the best of the old and new world processes. Using machine learning, RPAs quickly study rules and apply them while executing a task, all ...
... the while removing human error and making zero mistakes. This significantly reduces the cost for an organization and improves customer interactions too. Moving towards an integrated modern software approach is in the benefit of enterprises.

Reluctance to full-fledged digital transformation

Along with legacy systems, organizations in these countries also suffer from legacy leadership who are slow to accept modern methods. But a few companies that are making the move are setting an example and making heads turn. Governments are taking note of the financial inclusion and economic boost that result from digitizing financial services. The ease with which customers participate in payment services with eCommerce sites will set the standard for digital change within the financial sector. Financial services may be slow to catch on but the reality for modernizing their operations depends on digitization.

Dealing with internal resistance to change

Any technological transformation requires the entire team to be on board, for a reformation to truly be meaningful. Many employees, managers, and leaders resist change because they are skeptical of digital technology reducing the need for human participation that may lead to compromised jobs. A separate digital onboarding team can help mitigate such tension. On-boarding teams spend time understanding employee pain-points and work with key employees to implement incremental changes, all the while showing the win-win situation for all. It’s a cost-effective way to bring all employees to the same understanding.

Skills Gap in the emerging technologies

Some jobs will be automated and be replaced by technology. This means that up-skilling the workforce to perform other functions will be the new norm for enterprises. Technology is meant to free people from repetitive work, therefore giving employees the mental space to embark on creative and skillful work, that machines cannot yet perform, will improve the performance of the overall system.

The difference of Operating Models

Streamlining traditional systems with new operating models can be challenging at the start of any transformation. Though a complete makeover isn’t recommended, getting the old to work with the new requires strategic planning. Enterprises can begin by making changes in small steps. Once a strong digital foundation is built, it becomes easier to keeping making additions on top. Both the old and new work in different ways, but they can work together if intelligent changes are made.

Digital Solutions for Financial Services

GCC countries have been rapidly growing economies for the last ten years, making it one of the richest markets in the world. However, running a business in the Middle East presents a host of other problems too – political tension, security risks, war zones, lack of business etiquette, internet connectivity issues, and customs to name a few. But this won’t keep global businesses away that are looking to establish their presence in this fertile marketplace. Enterprises will adopt a spectrum of digital solutions, from digitizing old operating models as we saw above, to digital marketing tactics to engage the Gulf consumer base.

Insights into digital marketing in the GCC

· Internet: GCC countries have more internet penetration compared to any other global market

· Social Media: GCC citizens are dominating the social media scene, with the world’s highest number of active users being situated in UAE and Qatar.

· Digital Ad Spend: Big organizations are looking at Dubai as the gateway to the region because they are mostly headquartered here, therefore making ad spending the highest in the neighborhood.

· Digital transformation: Internal Data Corp estimates a total US$11 billion in UAE, and US$ 8 billion in Saudi Arabia, solely earmarked for digital transformation in the region

· Ecommerce: The UAE holds nearly 45.6% of the eCommerce market share according to a 2020 BMI study.

Let’s look at how companies can access the market effectively:

Know your audience

Before penetrating the market with all available digital marketing options, it would be wise to get to know the market first. Investing in market research can help organizations understand the ethos of the population and how the brand can add value to it. From expats to locals, the demography is diverse and each segment has a different attitude and purchasing power. Speaking to different segments of the population requires special communication tactics that only research can offer insight into.

Framing consumer persona

Behavioral economics has taught us that purchasing decisions are strongly influenced by emotions, family, community, and culture. Studies show that Arab spenders make decisions based on social norms, unlike the individual aspirations characteristic of consumers in the West. This makes trends slow to take off, but take off they do, as a collective whole.

When a company spends time understanding the psyche of the targeted audience, its digital marketing strategy becomes more refined and personal.

Approach with a localized strategy

Most people in the GCC markets are bilingual, speaking both English and Arabic. Online marketing will have to, therefore, tastefully present content in both language combinations. Beyond translations, organizations will have to start thinking like the locals to be able to genuinely connect with their tastes.

Companies will have to define their brand position in the local market before embarking on a digital marketing strategy. Arab cosmopolitans still prefer to transact in the local currency, so organizations will have to be agile to absorb these preferences.

A local identity can be created for the brand by purchasing a local domain and hosting the company content meant exclusively for the region. This can help improve conversions because the content will be localized for the average user and not the western audience.

Which channel do you choose?

While spending on digital marketing for the region, companies have to choose from an array of social media channels to engage with the consumer, but choosing wisely would save unprecedented costs. Arab consumers use different media for different purposes. It was observed that GenZ – between 6 to 24 years of age – were consuming more video formats in Saudi Arabia. This was solely for entertainment and not educational purposes. So a clear strategy can help enterprises chose which channel is best suited to build its digital repertoire.

Every channel on the internet offers several digital marketing tactics for targeting the consumer. Having a presence on Facebook and Instagram can only ensure a wide following. But a focused campaign can create brand equity by generating awareness, delivering quality products, and honing a good reputation.

From social media to email marketing, any channel that goes into the marketing mix will require constant sharpening of strategy to obtain optimised results.

In summary....

Digital disruptions can be rewarding for the economy of a country. It opens up the possibility that existing systems can work efficiently with the help of emerging technology, and have spillover effects across the globe. The possible digital solutions available for financial services make foreign investors enthusiastic about putting their money behind the sector.

Despite, the growing need for Financial services in Middle East countries, and having the right demographic with high purchasing power, the financial services available are ironically still struggling with legacy issues. Fintech companies will make their way into the picture and set a benchmark for how financial services can be delivered with new-age technology. Digital solutions like digitizing old models and digital marketing will help endorse the financial service segment among a population wishing for efficient services.