Riyadh : Banks in Saudi Arabia should revisit their digital transformation plans and attempt to launch new channels that may maintain supply of services and products amid the Covid-19 pandemic, in keeping with the findings of a brand new report launched KPMG Al Fozan & Companions (KPMG in Saudi Arabia), the main supplier of audit, tax and advisory providers within the Kingdom.
Covid-19 state of affairs has created a dynamic shift in buyer expectations and subsequently instigated a stay take a look at to the present digital platforms, omnichannel functionalities and cell capabilities. Banks should be delicate to this chance and create mechanisms to gather, analyze and establish all the development alternatives that outcomes from intensive use of digital banking.
KPMG in Saudi Arabia, has revealed its evaluation of Covid-19 impression on the banking sector and the potential countermeasures to deal with the brand new regular, based mostly on the outcomes of a high-level survey and discussions with C-suit executives within the sector.
The train revealed that the impression of the virus outbreak on general enterprise to be at medium to excessive ranges and will final for 3 to 9 months. Probably the most impacted phase is SME financing, adopted by sure merchandise in client finance.
All of the banks thought of the Saudi Arabian Financial Authority’s (SAMA) plan as very complete, well timed and centered on masking most important segments of enterprise; greater than half of the respondents to the survey forecast 10-20% of the loan books to endure restructuring.
It was encouraging to verify that enterprise continuity administration (BCM) measures had been discovered efficient within the first two weeks of the outbreak, although nearly all of the BCM situations didn’t embrace a pandemic such the Covid-19.
On the retail banking facet, the survey revealed that the closure of journey, hospitality and leisure actions immediately impacted bank card utilization. On the identical time, volatility in rates of interest, deterioration in actual property costs and uncertainties regarding lockdown length and ensuing unemployment led to a big slowdown in mortgage financing that has reported progress within the first three months of the present monetary 12 months.
The KPMG report additional supplied a set of instruments and tips to navigate in turbulent occasions and run a threat evaluation of the financial institution within the present, quickly evolving atmosphere.
Commenting on the report, Ovais Shahab, Head of Monetary Companies Sector at KPMG Saudi Arabia, mentioned: ” Drastic measures of containment are severely impacting SME and client financing. The financial stimulus packages are supplied to melt as a lot as attainable financial impacts and stimulate financial restoration. Nonetheless, the important thing query for the banking sector is how to answer its operational and regulatory challenges whereas contributing in a constructive option to the financial restoration.
The principle challenges for the banking sector are credit score portfolio deterioration, capital impacts, liquidity repercussions, cyber threat, contingency plan activation and continuation of banking providers, he acknowledged.
Since banks play a vital function in implementing the SAMA and authorities’s stimulus packages, KPMG really helpful a six-step motion plan that features figuring out potential dangerous counterparties, make changes to provisions protection, replace liquidity plans, handle recoveries plans, shield the financial institution and purchasers from cyber-attacks, and observe a transparent and robust communication plan with all stakeholders.
“Banks need to perform a customer-specific assessment in order to offer customized solutions; assess systems and organizational capabilities and proactively revisit the digital transformation plan,” Shahab concluded.
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