Six in ten banking executives in Africa and Middle East think cash will dip below 5 per cent of retail transactions in the next five years, compared to 48 per cent globally.

The global Coronavirus pandemic is likely to reinforce this trend; Africa and Middle East retail banks believe delaying digitalization poses genuine threats to their business models; Changing customer demands are cited as the highest-impact trend in the near term (35 per cent by 2020), with new technologies predicted to be the most impactful development in the medium term (43 per cent by 2025); Building a mobile-first greenfield bank is ranked as the top innovation strategy by 37 per cent of Africa and Middle East banking executives.

Banks in Africa and Middle East are the strongest believers in a cashless society, according to a global retail banking survey released by Temenos, a banking software company.

The in-depth survey conducted in 2019 by the Economist Intelligence Unit (EIU) on behalf of Temenos reveals that 6 in 10 Middle East and African banking executives think cash will dip below 5 per cent of retail transactions in the next five years, compared to a global average of 48 per cent who think the same. The lockdown measures imposed by governments worldwide in light of the evolving Coronavirus pandemic are also expected to increase the need for and use of digital banking and payment solutions globally.

The EIU report entitled "A Whole New World: How technology is driving the evolution of intelligent banking in the Middle East and Africa” indicates that Middle East and Africa retail banks are highly conscious of the threats financial exclusion and delaying digitalization pose to their business models. Respondents acknowledge consumer demands for accessible, hyper-personalized digital banking experiences, ranking changing customer demands as the highest-impact trend by 2020 (35 per cent).

A plurality of Africa and Middle East banking executives – 43 per cent of respondents – identify new technologies, including AI, as the most impactful trend in their sector by 2025.

In order to capitalize on these trends, Africa and Middle East retail banks recognize the need to sharpen digital marketing skills to bring excluded customers into the banking sphere.

 As such, mastering digital marketing and engagement is considered the top strategic priority for retail banks in the near term 35 per cent by 2020 and in the medium term. Notably, higher numbers of MEA respondents believe digital marketing is also the most valuable use for new technologies 23 per cent versus 13 per cent globally). These findings indicate that Africa and Middle East retail banks believe investing in digital technologies to target and attract the un- and underbanked is crucial.

Jean-Paul Mergeai, Managing Director – Middle-East & Africa, Temenos, said; "Even in the most uncertain times, the power and opportunities of digital banking remain the same. This retail banking report outlines the opportunity for MEA banks who adopt modern technology to accelerate financial inclusion and digital banking, to support economic and social development.”

Katya Kocourek, Managing Editor - Financial Services, The Economist Intelligence Unit, said: "The significant impact of the ongoing Coronavirus pandemic is likely to accelerate the cultural and institutional shift towards digital banking that is already taking place in the MEA region.”