The Middle East and Africa's banking and finance industry spent US$12.68-billion on ICT in 2019, according to the latest insights from International Data Corporation (IDC).

The global technology research, consulting, and events firm forecasts this figure will reach US$13.23- billion this year and continue rising at a compound annual growth rate of 4.7% over the coming years to reach US$15.24-billion in 2023.

Nagia El Emary, IDC's senior consultant for the Middle East and Africa, said: "The banking and finance industry is becoming increasingly reliant on emerging digital technologies to attract and retain customers. The sheer magnitude of financial technology (FinTech) products and services on the market today is staggering, and financial institutions are increasingly embracing 3rd Platform technologies and innovation accelerators such as cloud, mobility, and artificial intelligence (AI) to increase their market penetration rates, enhance customer satisfaction through the delivery of personalised services, and streamline operations to cut costs and maximise efficiencies. As such, these technologies are becoming an inextricable part of the sector as a whole, and this is only the beginning."

Cloud marketplaces

According to the IDC, the increasing reliance on cloud across the industry has given rise to cloud marketplaces.

Similar to an app store for smartphones, these cloud marketplaces provide banks with access to third-party IT systems and FinTech products and services. And like any other marketplace, cloud marketplaces have the power to negotiate better terms with FinTech providers than banks alone.

Consequently, IDC expects that by 2024 around 80% of banks globally will be purchasing and integrating fintech solutions from cloud marketplaces.

The use of artificial intelligence is also becoming pervasive across the banking and financial services industry.

The IDC expects that by the end of this year, 85% of banks will have implemented AI applications to enable intelligent decisions and automated processes for corporate know-your-customer procedures, drastically reducing the time it takes to approve enrolments for new corporate accounts.

The company also forecasts that by 2023, 40% of insurers will be automating claims processes with AI technologies and conversational interfaces to improve the speed of response, efficiency, and personalisation.

It has also predicted that investments in digital transformation and innovation will account for 30% of all IT spending in the Middle East, Turkey and Africa (META) by 2024, up from 18% in 2018.

The IDC's chief research officer, Meredith Whalen, said: "The digital economy is at a critical tipping point. In just a few short years, IDC forecasts that nearly half of all GDP worldwide will come from products and services offered by digitally transformed organisations. In order to thrive, organisations must define their new role in this digital economy and proactively address new customer requirements around personalisation and trust. They must also develop new capabilities around digital innovation, work, and intelligence, and build a digital IT infrastructure that supports resilient operations and pervasive experiences."