Marmore MENA Intelligence, a subsidiary of Kuwait Financial Centre “Markaz”, recently released a report titled ‘Demographics & Kuwait Banking’, analysing the impact of evolving demographics on Kuwait Banking.
The report stated that it is always a challenge to link a slow moving big factor like demographics to the fortune of a particular industry. However, if there is one sector that will be visibly impacted in the medium to long-term, it is the banking sector. Mega trends like demographics will affect product ideas and uptake. The objective of this report is to highlight some of the prominent demographic factors that are at play in Kuwait and how it impacts the Banking industry. This report also discusses how the banking industry can use these evolving demographics for the development of the products, services and marketing channels.
Age, income, ethnicity, gender, level of education, etc., are all valuable pieces of information for a bank to consider when developing new products, creating marketing campaigns or deciding on the distribution channel. Banking penetration levels, gender-wise exposure to the system, type of employment are other key data points that are covered in the report which provide insights into the sector. Based on the demographic characteristics of different age groups, it is evident that the financial priorities, usage of technology and factors influencing the financial decision vary across the generation. Banks would need to tailor their banking products and the communication channels to meet these varied requirements.
Kuwait’s banking infrastructure is well developed compared to most of its regional peers. However, there are several avenues, such as credit cards, mortgage and fewer women being part of the financial system compared to men which would require banks’ focus. Banks should also develop attractive savings and investment products aimed at the large expat population which form a major part of the workforce. With the ongoing debate of imposing additional taxes on expatriates, it is imperative that banks foster attractive products, which would encourage them to invest or save their money within Kuwait rather than sending them to their home country.
Apart from the influence of the demographics, decoding the change in banking behaviour in response to the critical variables - oil price, interest rate & geopolitical risks is important. These variables largely influence the savings, credit and investments behaviour of the consumers. The report analyses potential scenarios and the products that could necessitate the opening up of new opportunities for the sector.
Along with the changing demographics, the banking industry is also facing a fast-paced evolution in the technology and customer behaviour, making its current operating business models less effective. New banking business models will be needed to serve both the aging, and increasingly tech savvy youth demographic. The emergence of the Fintech companies cannot be undermined and do-nothing response would be self-destructive to the banks. The tech-savvy millennials are likely to prefer these alternative-banking options to the conventional ones. Banks can look to synergize with the Fintech players, or develop similar in-house alternatives or acquire Fintech players in order to avoid the loss of business. Additionally, since digital banking is going to be the way forward, the banks also need to prepare themselves for the cyber assault threats. It is without doubt that a thorough demographic analysis on banking customers could provide strategic ideas for the future of banking industry.
Established in 2010, Marmore is a research subsidiary of Markaz, an Investment Bank and Asset Management Company with more than 40 years of experience. Marmore caters to the growing research and information needs of organizations in the MENA region.