The penetration of different financial products and services is lower in Saudi Arabia than in some other neighboring markets in the Gulf. The current ownership of a credit card is at 22 percent, while only 11 percent currently have a personal bank loan/financing. While the number of consumers with investments is low, at four percent, this is in line with other markets in the Gulf region, according to the findings of a recent NFO Merac study.
The study concludes that customer banking needs and expectations in Saudi Arabia have evolved and increased competition will force banks to discriminate between customer needs.
Credit card ownership was far higher in main cities as compared to provincial towns, reflecting the needs of urban consumers and bank marketing efforts. In Saudi however, it must be remembered that customers have an alternative to cash payment in the form of ATM/SPAN debit cards. Around two-thirds of customers prefer to use such cards for purchases. These cards are the more dominant payment method for low-value purchases, such as supermarket purchases.
Customers attributed their choice of main bank to their involvement with various banking services. Customers who had not progressed beyond basic banking services—i.e. a current account relationship—were still led by proximity of bank, network of branches and ATMs, while customers who used other products, such as credit cards and mutual funds, were led by other factors such as international banking or advisory services.
Despite low use of banking products and services, the study did identify different market segments with differing banking needs and attitudes. NFO Merac identified four segments with varied needs and profiles in terms of income, products/services and banks used. Understanding the driving factors behind each segment showed that banks could compete more effectively by adapting their products and services and by customizing their communication strategy to the needs of each segment.
The four segments identified were: Traditional/Conservative, Islamic, Active and Islamic Assurance Seekers. Banks in Saudi need to identify what proportion of their customer base is comprised of each of these segments and adapt their marketing initiatives accordingly. For example, the Traditional/Conservative segment was more or less indifferent to searching for financial products, more face-to-face interaction oriented and less likely to deal with foreign banks.
Overall, the segmentation exercise identified tremendous scope for banks in Saudi to offer differentiated products & services to different consumer segments. For example, some segments were more local bank orientated, some more foreign/joint venture bank orientated, some more service oriented, and some expected banks to provide advisory services.
The study was carried out among working male Saudi and expatriate Arabs, 20 years or older. A total sample of 4,500 individuals was surveyed from the cities of Jeddah, Riyadh and Dammam and six provincial towns.
NFO Merac, a regional custom marketing research company, has recently completed a study on the use of banking products and services in Saudi Arabia, giving marketers baseline findings on which to guide future marketing strategies, it also helps banks to better appreciate customer attitudes and their relationships with banking institutions. An NFO WorldGroup company, NFO Merac has a specialized knowledge of the Arabian culture and markets, providing added value research solutions to a wide range of international clients. — (Mena Report)
© 2001 Mena Report (www.menareport.com)
