Financial institutions and the Saudi Arabia Monetary Authority (SAMA) are showing greater support for the Fintech sector, through various initiatives such as Fintech Saudi and the Sandbox regulatory environment.
Tuesday 25, June 2019 BY KUDAKWASHE MUZORIWA
The Head of Financial Services at KPMG Al Fozan & Partners said that for Saudi-based lenders to differentiate themselves in a competitive market and remain relevant, they need to continue to innovate their practises and digitise their processes.
Muhammad Tariq, the Head of Financial Services at KPMG Al Fozan & Partners, “Whether that be through their go-to-market channels or through the use of innovative technology in the back and front office, we expect increased investment in technology platforms in preference to traditional bricks-and-mortar.”
Digitalisation has the potential to lower barriers of entry into the financial services market while elevating the role of data as a key commodity to enhance the customer experience.
According to a KPMG report, Saudi Arabia's banking sector saw positive results in 2018, with an average of 11.3 per cent growth in net profit and 2.1 per cent growth in total assets.
Overall 2018 was a positive year for listed banks in the Kingdom, average net profitability improved underpinned by higher average SAIBOR rates, modest growth in assets and a slight decrease in costs, said Tariq.
Credit quality remains an area of focus for the Saudi Arabia banking sector. Loan impairment charges increased by 14.8 per cent from the prior year, reflecting new expected credit loss methodologies in accordance with IFRS 9.
Additionally, the regulatory agenda continues to evolve and accounting standards, Basel III requirements as well as an increased focus on Anti Money Laundering (AML) and Know Your Customer (KYC) requirements are not only expected to maintain regulatory pressure but will also require Saudi Arabia banks to reshape strategies to ensure compliance.