Digital Transformation Brings Forth Positive Change in the Jordanian Banking Sector

The banking sector witnessed a huge transformation in the past years due to the vast development of business models by its institutions. The COVID-19 pandemic has increased the use of technology by the sector, bringing in profound changes in administrative, banking, and financial operations.

The total amount invested by Jordanian banks and financial institutions in information technology was estimated at 151.491 million JOD by the end of 2020, showcasing an increase of 107% compared to 73.139 million JOD in 2011, according to Business Perspective magazine. This percentage continued to rise in the following years.

The Banking Sector’s Impact on the Jordanian Economy Despite the challenges the world faced over the last several years, the banking sector was able to maintain its sustainability and financial robustness, supported by efficient regulatory measures. By the end of 2023, it recorded an 8% contribution to the growth domestic product (GDP). This contribution played a vital role in the Jordanian economy, which now relies on banks constituting more than 97% of the financial sector. The financial sector is thriving in the Kingdom and has become a driving force in creating job opportunities for Jordanians. According to Statista for global statistics, the Jordanian financial market is expected to show an annual growth between 2024-2028 of 5.12%, resulting in a market volume of $2.5 billion by 2028.?

Additionally, Statista for global statistics , forecasts for Jordan in 2024 indicate an increase in the adoption rates of online banking services, credit cards, bank accounts, as well as direct payment cards, resulting in greater financial inclusion coverage.?

Achieving these numbers wasn't made possible by chance, but rather because of a combination of operational flexibility and digital leadership based on the digital transformation approach. Jordanian banks were at the forefront of adopting this approach. Experts believe this is more than a typical digital application by companies, but rather a comprehensive program that integrates information and business technology, improve banking systems and infrastructure, and, as a result, enhance all business foundation models.

The Impact of Digital Transformation in the Banking Sector?

Digital transformation provides integrated capabilities that enrich what is offered to customers and elevate their experience within a framework of speed, ease, flexibility, and modernity. It also enhances performance efficiency, transparency, and accountability, and increases competitiveness, thus, pushing forward market share while diversifying income sources. This is achieved alongside effective management of costs, risks, compliance, and data protection.?

Housing Bank had a large share in the advancement of the banking sector system for its innovative and investment efforts. These efforts were a part of its digital transformation journey, with projects and initiatives that employ the latest of technologies, including the Internet of Things (IoT), cloud computing, and others. As part of these efforts, the bank has worked on redesigning its technological infrastructure, engineering, and automating operations, as well as simplifying procedures, aiming to provide all banking needs to its clients. In addition to that, the bank focused on developing data analysis systems for better utilization of data, alongside enhancements to electronic channels and applications such as the website and mobile banking app. Moreover, there has been restructuring of solutions, services, and products to provide digital options, improve their quality, make them customizable, and ensure smooth delivery within clients’ daily routines, meeting the evolving needs of larger segments, with a focus on the youth segment.

Furthermore, the bank launched the Digital Hub, which oversees initiatives related to digital transformation and automation, amidst increasing collaboration with technology and financial services companies both within and outside Jordan. As a result of implementing its pioneering projects and initiatives, the bank has made significant strides towards achieving its digital strategy goals, with numerous achievements, awards, and accolades for excellence and leadership in various fields.

Housing Bank’s Digital Strategy and Impactful Initiatives

As a result of implementing its projects and initiatives, Housing bank is stepping closer to achieving the goals of its digital strategy. It has been able to record many achievements and obtain significant awards and certificates for attaining excellence and precedence in several fields. Perhaps the most prominent thing that the bank did is launching “Iskan Chat” and opening its modern branch, “Iskan Young” dedicated for the age group between 7-17 years old, in line with the world of banking technology. The bank also launched its digital branch for self-service, “Iskan Engage” as well as the launch of its virtual site in the popular metaverse platforms “Decentral and” and “Spatial” making it the first bank to enter the metaverse world in the Kingdom and amongst the first banks in the region to adopt this technology.

? Future Trends in Banking Technology

The question here is: Has technology-based banking development reached its peak? Indicators show that new financial and banking technology innovations are on the horizon, as the trend is moving towards virtual banks, which have become a growing global phenomenon, and whose number of customers in 2022 reached about 188 million customers.

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Given the tendency of virtual banks in many markets to operate as secondary banks due to the need for legislation regulating them and the increase of customers’ knowledge of virtual banks, the opportunity will be to focus on launching a new generation of virtual branches equipped with the latest technological solutions, leading to the launch of new models of digital financial and commercial services and transactions.

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In all cases, the most prominent feature of the next phase (by 2030), circles around open banking services, which focuses on the customer journey while considering advanced technology as a method of interaction with customers and provides customized financial services that serves the needs and preferences of the customer.

The Future Landscape of Banking Technology

The future is moving towards financial safety platforms that provide the tools and resources necessary to manage financial, savings, and investment affairs, in addition to further integration of services, simplifying cross border transactions by using “Blockchain” technologies, and strengthening collaborative ecosystems between banks, Fintech, and technology companies to ensure further innovation, expand product offerings, and improve customer experience.

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Worldwide banking and investment services information technology is projected to reach a substantial $652.1 billion USD in 2023, making an impressive 8.1% increase from the previous year, as reported by Gartner, with an increase of 13.5% on program spending. These numbers are likely to grow in 2024 and in the years to come around the world, with the Kingdom not being an exception. To conclude, banks have a golden opportunity to advance the economic wheel, with their progression towards sustainability and technical development.

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