Kyndryl, the world’s largest provider of IT infrastructure services, has released a new study conducted by the International Data Corporation (IDC), the study reveals that 70% of IT managers surveyed in financial institutions in the Gulf Cooperation Council (GCC) countries plan to transform their organizations into a digital model to ensure future flexibility.
According to the survey, the majority of institutions intend to adopt a digital model covering products, services, and internal processes, in the current year 2023 and the following year 2024, 67% of IT managers in the GCC countries surveyed will prioritize the development of innovative products by launching new products and services or digitizing their existing services.
Meanwhile, 61% of them will prioritize operational transformation to achieve efficiency by improving costs and redesigning processes.
The survey included the opinions of IT managers in financial services institutions in Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates, who focused on evaluating the trends affecting the sector in light of economic diversification initiatives aligned with national vision programs.
Current efforts in the region are focused on developing strong digital economies, with particular attention to the growth of financial technology (fintech) and comprehensive digital transformation of the financial services sector. Andreas Bick, Vice President and General Manager at Kyndryl Middle East and Africa, stated, “National initiatives in the GCC countries aim to help institutions in various sectors achieve long-term digital transformation. However, there is a clear trend toward transformation in various businesses, including the financial services sector. Our responsibility at Kyndryl is to assist institutions and provide support so they can smoothly adopt a digital business model, focusing on improving their resources and investments to enhance their operations and ensure continuity.”
Challenges of Digital Business Model Adoption:
1. Skills Gap:
The study found that over half of the surveyed IT managers face challenges due to skill gaps, which slow down the pace of digital transformation. Transitioning to a digital enterprise requires using various technologies, including cloud computing, data analytics, artificial intelligence, machine learning, blockchain, the Internet of Things, and metaverse, making acquiring and developing these skills difficult.
2. Speed and Wide-Scale Transformation:
The ability to achieve rapid and wide-scale transformation is a distinguishing factor for IT leaders. However, nearly half of the senior executives surveyed believe that accomplishing this is one of the most challenging aspects of adopting a digital approach. Only a few financial institutions in the region have managed this transformation, often limited to specific departments or initiatives. To make digital transformation a differentiating and competitive factor, institutions need to progress from isolated innovation initiatives to comprehensive enterprise-wide efforts.
3. Legacy Systems:
Financial institutions in the GCC region face obstacles due to legacy systems. The study noted that over a third of the surveyed financial institutions consider the complex IT landscape to be a major hurdle in their technology journey. Many institutions still use core or standalone applications to manage their operations, rather than leveraging modern, integrated software with advanced features in data analytics, AI, and machine learning.
Strategic Technology Capabilities for Digital Solution Providers:
The study showed that 55% of IT managers in financial institutions in the GCC plan to increase investments in cybersecurity, data, and analytics in the next eighteen months. This will be followed by process automation (52%), cloud computing (48%), and application modernization (39%).
Jebin George, Program and Cloud Industrial Solutions Lead at IDC, commented, “Financial institutions in the GCC are digitally reinventing themselves, therefore, IT managers need new foundations when deciding to adopt a digital model for product development and process transformation, to succeed in the digital age, IT managers must focus on harnessing the value of data, ensuring digital trustworthiness, and embracing automation and integration on a wide scale.”
