Banks seeking to retain their customers must court the Middle East's young and tech-savvy population with innovative payments methods or risk profits, a top banker has warned.
Speaking at the Middle East Retail Banking Forum in Dubai, Sanjoy Sen, regional head of consumer banking at Citibank, said that banks should heed the growth of new card payment methods such as Visa payWave and mobile phone payment applications like Square and Zong,
"The battlefield for payments is expanding, and we need to watch this space," Mr Sen said. "The day and age of just physical infrastructure is going away."
Regulatory changes, such as the UAE Central Bank's recent circular limiting the size and fees of personal loans, would drive banks towards embracing new means of attracting customers as margins are driven downwards, he said.
However, he added that simply adding new lists of apps and payment methods to a bank's roster of services would not suffice, without improving service too.
"It's very important that we have a customer-centric approach and not a product-centric approach," he added.
He added that banks should look towards "embedding" themselves in cities via collaboration with eGovernment initiatives and other processes.
As banks' customers can be fickle and not especially loyal to one institution, developing tech-based payments would be an important means of keeping customers hooked, according to Salmaan Jaffery, head of advisory services for the Mena retail banking sector at Ernst and Young.
Banks that invest in these technologies would be well-placed to target young customers in the Gulf, where half of the population is under 45, he added.
"They're very savvy with online usage, as well as mobile banking. It's a very important thing [for them]," he said. "[The services] are all new, peer-to-peer or wireless, online-based and very cool or innovative."
He added that while innovation had been driven by international banks, local competitors were starting to catch up.
"There's definitely a gap, because a lot of it is capital intensive. And a lot of it is happening in the west and cascading downwards … But some of the bigger, more well-funded banks here are doing it.