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As the industry adjusts to the effects of Covid-19 and looks towards the future, the retail banking landscape has undergone considerable transformation. Banks must negotiate a multitude of shifting factors — from changing customer behavior to economic headwinds, intensifying competition, regulatory pressure and technological disruption.

But while there are challenges, change also brings opportunity. Banks that can drive a differentiated proposition—putting the customer experience at the heart of everything they do and connecting it across the enterprise—have the potential to secure a significant competitive advantage.

It is this notion of becoming a Connected Enterprise that we explore in this report, setting out the hallmarks of the future of retail banking and how this may manifest itself across what we believe will be the three dominant banking models in the new reality.

The trends we discuss are not new in most markets, including in the UAE, but they have been significantly intensified by Covid-19. Banks in the region have already been investing significant sums in AI and new technologies to improve the customer experience, as our recent KPMG UAE Customer Experience Excellence Research 2020 shows. A growing number of disruptors, including fintech firms and tech titans, have been raising the bar for customers’ experience and expectation and we see this intensifying in the near future with the plethora of neobanks entering the market.  Neobanks are direct banks that operate exclusively online without traditional physical branches.

Now though, the stakes are higher. We found that globally, as well as in the UAE, a significant gap has already opened up between leading customer-centric banks who demonstrate strength across a range of capabilities critical for enabling digital transformation against their peers. Our research indicates this gap in capability may widen further, and more dramatically, due to the acceleration of changes brought on by the Covid-19 crisis.  

To be successful, UAE organizations would do well to recognize that solutions and architectures will require more focus, flexibility and finesse than simply bolting on new pieces of technology. Prioritization of effort in certain areas will make a difference, including designing optimal experiences for customers, putting innovation at the heart of product development and servicing, and creating an ecosystem of partners that can be used to accelerate solutions and increase agility.

Becoming a connected bank takes commitment and determination. Achieving it has become more important than ever; it is the key to providing consumers with the enhanced customer experience that is fundamental to future success.

We hope you find this report valuable in illustrating the future of retail banking. Please contact us if you would like to discuss how we can help you evaluate and make progress on your bank’s connected path.