Saudi banks need to continue embracing digital agenda: KPMG

Saudi Arabian banks need to continue to innovate their practices and digitize their processes, in order for them to differentiate themselves in a competitive market and remain relevant, noted a KPMG report on Wednesday.

“Whether that be through their go-to-market channels, or through the use of innovative technology in the back and front office, we expect an increased investment in technology platforms in preference to traditional bricks-and-mortar,” Muhammad Tariq, the Head of Financial Services at KPMG Al Fozan & Partners, Saudi Arabia, said.

The report, titled "Embracing Digital", shows that Saudi Arabia's banking sector saw positive results in 2018, with an average 11.3 percent growth in net profit, and 2.1 percent growth in total assets.

The report noted overall, 2018 was a positive year for listed banks in Saudi Arabia. Average net profitability improved, underpinned by higher average SAIBOR rates, modest growth in assets and a slight decrease in costs.

“Credit quality remains an area of focus. Loan impairment charges increased by 14.8 percent from the prior year, which in part reflects new expected credit loss (ECL) methodologies in accordance with IFRS 9," the report added.

The banking regulatory agenda continues to evolve both locally and globally, the report noted.

“Accounting standards, Basel III requirements, and an increasing focus on Anti Money Laundering (AML) and Know Your Customer (KYC) requirements will not only maintain regulatory pressure, but will also require banks to reshape strategies to ensure compliance while retaining agility,” Tariq noted.