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Almost half (49 per cent) of Middle Eastern institutions are somewhat or highly confident of hitting growth targets in the next 12 months, but more than a quarter (28 per cent) are pessimistic about prospects, a report said.
This shows that they are less bullish than counterparts in other developing regions such as Latin America and Africa, added the “Middle East Readiness Report” released by FIS, a global leader in financial services technology.
The report includes insights and projections from senior-level decision makers across the UAE, Saudi Arabia and Kuwait. The report found a mixed picture in terms of confidence about the year ahead, with plans to expand into new developed or emerging markets amongst the priorities for regional firms.
• Acquiring new customers is the most important focus for institutions, with 50 per cent citing this as one of their top three growth objectives. Other key objectives were expanding into new developed markets (44 per cent), expanding into new emerging markets (42 per cent) and improving customer retention rates (37 per cent).
• Just 31 per cent are prioritizing improved operating margins over the next twelve months, a lower rate than in geographies such as Europe and North America.
• Fifty-one per cent see economic growth in their key markets as one of their three biggest opportunities over the next three to five years. Other opportunities included divergence in central bank interest rates (44 per cent) and countries implementing protectionist policies (42 per cent).
• Some of the biggest threats were concern over new market entrants (31 per cent), tax policy in key markets (38 per cent) and political outlook in key markets (31 per cent).
• Some issues generated mixed responses in terms of threat or opportunity. For example, whereas 35 per cent saw government spending policy in key markets as an opportunity, 27 per cent viewed it as a threat. Also, whilst 31 per cent were concerned over new market entrants (as outlined above), 28 per cent actually saw it as an opportunity.
Commenting on the report, Nasser Khodri, president of Middle East and APAC, FIS said: “This report is evidence that Middle East financial services firms are cautiously optimistic about their prospects over the next year. They recognize opportunities but are also aware of the potentially significant challenges they face.”
“It is a crucial time for financial institutions in the Middle East region and as they pursue new customers and contemplate entering new markets – the top two growth objectives from our pool of respondents – they also need the agility to respond to disruptive competitors and changing political or regulatory environments.
“Those firms who are investing for the future by taking a lead in automation, data and emerging technology are outperforming their peers in revenue growth, pointing to a ‘tech readiness dividend’ for forward looking buy-side and sell-side firms,” Khodri added.-
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