The other day I was talking to a high-ranking professional working for a top UAE bank about the challenges Islamic banks have been facing due to the rise of the fintech sector. He seemed to agree with me that the turmoil these banks have been facing is unprecedented. Forbes has recently published an article on the same topic. You may be able to read it on this link.
Does it mean that we are looking at a banking sector crisis that may take a lot of time and effort on the parts of Islamic banks to handle?
Islamic banks have expanded their services because consumers trusted them due to their Shariah-compliant product offerings. But, due to the rise and rise of Islamic fintech companies in all parts of the world, they have been facing an existential threat in every aspect of their business.
For Islamic banks, the business transformation may not be that easy due to the relatively smaller size.
By going through the said article it looks the writer seems to be asking banks to act as mega fintechs in their own right. But, can they do that easily. Probably yes if they have the will to commit resources to compete with the challenges arising due to the rise of the Islamic fintech sector in all the markets where these Islamic banks have operations.
In the following lines, we will list up the strategies banks can adopt to survive and thrive in the age of the rising fintech sector. These strategies are recommended by Forbes. However, banks may have to have to choose which strategies they can use in which sequence.
Strategies For Banks To Survive
- Become Nimble And Decentralized
- Incentivize Culture Change
- Combine Security With Blockchain Technology
- Lean Into People-Centric Customer Service
- Provide Improved Transparency In Lending
- Expand Mobile Banking Capabilities
- Divert Resources To Enhance Digital Banking
- Enable Better Connectivity Between Various Services And Tools
- Partner With Transformative Fintechs
- Allow Direct, Secure Connections Between Merchants And Customers’ Bank Accounts
- Switch To Microservices And Third-Party Tech Vendors
- Speed Up Transactions And Lower Transaction Costs
- Leverage Direct Financial Data And Automation
- Switch To An All-Virtual Interface
- Create More Customer-Intimate Services
- Embrace 24/7 Customer Service