BrazilMost Saudi consumers are open to switching banks, says BCG
More than half of consumers in Saudi Arabia are open to switching to another bank, according to a new study by Boston Consulting Group, as competition intensifies amid the rise of digital challenger banks.
For its analysis, strategy consulting firm Boston Consulting Group canvassed the views of over 2,000 consumers in the Kingdom to capture changing consumer behaviour, finding that banking loyalty is relatively low. 52% percent of Saudis would be comfortable making the change to another bank, and 63% are actively looking for new lending offers.
Low interest rates, limited products and poor customer service are among the main reasons why customer leave their banks. At the same time, consumers are increasingly impressed with the ease of switching, lauding the speed at which accounts can be opened through online channels, as well as the range of products (loans, savings etc) they can order through their smartphones.
“Demands and expectations are evolving, and we see that it is easier to switch banks with the simplicity of digital onboarding,” said Mustafa Bosca, a managing director at Boston Consulting Group in the Middle East.
Meanwhile, the changing landscape is motivating consumers to engage in multiple banking relationships at the same time. According to Bosca, these two trends demonstrate the “dropping loyalty of consumers and increasing level of competition across the national retail banking landscape.”
88% of customers are now willing to open a digital-only bank account, and 79% of Saudis are willing to share their data in exchange for a better banking service. This is higher than the 66% of European customers who were willing to share their data with new financial services firms, said Bosca.
In June, the Kingdom welcomed two new digital banks to its landscape in the form of STC bank (part of STC Pay) and Saudi Digital Bank (an initiative by a consortium of investors led by Abdul Rahman bin Saad Al-Rashed and Sons Company). These new lenders will attempt to eat market away share from the Kingdom’s largest banks, such as Saudi National Bank, Al Rajhi Bank and Samba.
In order to remain competitive, incumbent Saudi banks should “continue to accelerate digital transformation and reimagine the customer journey,” said Martin Blechta, a project leader at Boston Consulting Group, because “the widespread appetite for digital banking services in the Saudi market is a trend almost certain to continue expanding.”
