It is no secret that the banking industry has undergone major change over the past decade, fuelled by the rise of the internet and the decline of the global economy.
One of the biggest changes brought on by the events of the past four years has been the increased focus of banks to diversify their product offerings within the powerful growth engine of retail banking.
According to McKinsey, retail banking accounted for more than half of the world's banks' annual revenue in 2010 - estimated at about US$3.4 trillion (Dh12.49tn). This shows that retail banking remains one of the most basic and universal services provided to consumers as well as a reliable generator of consistent profit and high return on equity. So what does the future hold for it?
We have seen an evolution in the way banks are approaching retail banking as they look beyond the traditional product offerings of retail banking in order to compete in increasingly important areas such as wealth management advisory including for customers' retirement and protection needs.
HSBC's 2012 Expat Explorer survey showed that many expatriates in the Middle East have reported being better off financially than in their home countries, and having more disposable income. In fact roughly two-thirds of expats in UAE (69 per cent), Qatar (67 per cent), Bahrain (66 per cent), and Oman (65 per cent) have reported higher disposable income since relocating to their current country, compared with only 52 per cent of expats globally.
With this growth in wealth there is usually a need for increased assistance in managing these finances. The survey shows that globally more than half of expats (62 per cent) have experienced their finances becoming more complicated since moving abroad.
Two thirds reported that they had more investment options open to them since relocating; this in turn made their financial situation harder to manage, highlighting a need for more or better financial planning and advice.
The HSBC survey also shows that expats earning $200,000-250,000 per annum have moved over time from a higher proportion of cash investments to a relatively even mix of cash, property and equities, seeking a greater diversified portfolio of investments.
Perhaps the most significant key towards unlocking retail banking's vast potential in still-volatile times is the ability to monitor shifting consumer trends due to developing technologies, and adapting to these shifts fast enough both by embracing new technological platforms and ensuring relevance of products.
If we look at the way retail banking has evolved over the years, we can see there was a clear evolution from focusing on speed (more tellers, more ATM machines) to convenience (ATMs in shopping malls/town centres, phone banking, online banking) - the key is to pinpoint what the next step in this evolution will be, and the signs are pointing to efficiency as the game-changer.
What do we mean by efficiency? It means that banks need to make their day-to-day workings more efficient, and ensure that everyday retail banking activities can be handled by online banking, applications and automated tellers in order to avoid making customers drive somewhere or make a call for simple front-desk activities.
Efficiency also means standardisation of the customer experience. Globalisation means that banks need to offer the same quality banking experience across the world. This can include the ability to withdraw money from an ATM in any country in that local currency using one card, or getting the same quality of financial advice in the Middle East that you would in Europe or North America.
Efficiency also means utilising your global network to make international transactions easier for customers.
Finally, efficiency means embracing technology. An example of this is smartphone banking, which may soon replace traditional banking methods and needs to be fully integrated and embraced by banks. Like all forms of electronic banking, it saves significant amounts of paperwork by taking statements online, which in turn is a big cost-saver for the bank.
Francesca McDonagh is the regional head of retail banking and wealth management, Mena, HSBC