Bahrain’s retail banking revenues are expected to grow at a compound annual growth rate (CAGR) of 6.8% between 2021 to 2026, up 3.6% from 2016 to 2021, while the GCC economies (UAE, Saudi Arabia, Kuwait, and Qatar as well as Bahrain) expect to see an 8.8% CAGR within the same period, according to a new report by Boston Consulting Group (BCG).

 

The report, titled Global Retail Banking 2022: Sense and Sustainability,' also reveals that one-quarter of retail banks surveyed globally report that ESG is a primary focus area for their digital transformation, and another 38% say that ESG is a key criterion in selecting and prioritizing digital transformation initiatives. 

 

In addition to ESG, through the five years from 2021 to 2026, payments, mortgages, and deposit products are likely to drive banking revenue growth in the GCC retail banking sector. 

 

An accelerated pace of digital payments and e-commerce adoption in the wake of Covid-19 will further benefit payment revenue growth.

 

"Sustainability is and will continue to act as a long-term differentiator across industries. Combined with ESG principles, sustainability can address a greater number of stakeholders, expand on a green outreach and strengthen capabilities," remarked Bhavya Kumar, Managing Director & Partner, BCG. 

 

"The banking sector, in particular, can play a decisive role in driving ESG strategies, from catalyzing sustainable markets to advancing broader targets under Bahrain’s Economic Vision 2030. Through ESG-related products, banks will shape the sector and the country’s leap forward," he stated.

 

Key Consumer Sentiments and Insights

 

•Increased trust in their bank during the Covid crisis than at the start of the pandemic in 2020. Customers want their banks to feel like a 'good friend' that they it can turn to for honest advice and a 'school' where they can obtain financial guidance. 

•When it comes to keeping personal data secure, customers trust their banks even more than their doctors. Furthermore, customers are willing to disclose more data to their banks if they value a new service or feature.

•Banks have many opportunities to innovate sustainable practices and products along the customer lifecycle and to practice good business in the process. Banks can also use the daily banking relationship as well as their personalized engagement capabilities to support customers in environmentally friendly and ethical living. 

 

Martin Blechta, Principal, BCG, said: "Bahrain is taking great leaps towards green financing as part of its long-term national ambitions, which are all aligned with GRI standards and the UN SDGs to ensure transparent and comprehensive reporting on Economic, Social, and Governance principles." 

 

"ESG in banking is very much a credit portfolio review and there is a significant first mover’s advantage – whereby, banks that start this activity ahead of competitors have more choice to prioritize the right clients," noted Blechta.

 

"Moving forward, retail banks must adapt to changing consumer preferences and utilize digital tools and technology to craft solutions that will fulfill customers’ needs in new and sustainable ways while advancing the overall ESG agenda," he added.-TradeArabia News Service