IT firms profit from banking sector's increasing demand for risk assessment

"Worldwide [the economic crisis] did affect us like anything else, even if you are selling clothing you were affected so imagine if you are in the middle of this crisis and the financial market is your primary target," states Wissam Khoury, managing director, Middle East, Sungard. "Having said that, in certain areas we have grown and in other areas we have been affected," he adds.

SAP was another firm to witness growth during the tough financial times. "We were able to address some key needs and trends," says Gerhard Hafner, vice president, business solutions, financial services EMEA, SAP. "We were surprised, we were expecting a flat development but in the end we had a double digit increase. The main points were banks were forced to become more efficient and decrease costs on the one hand and then there is a huge demand for a better insight into their own business."

Hafner adds that there were many lessons to be learnt by banks, and this is where the IT firms can capitalise. "If there was one thing to learn from this crisis, it was that banks are obviously not able to understand their own business, if they could they wouldn't have ended up in this problem. So they need to better understand their risk, their profitability and their accounting," he reports.

Risk management more important than ever

Part of this understanding comes through risk management, which as an IT tool, has increased in demand since the crisis hit so hard. "If you look at risk and performance, risk management, this is in growing demand because everyone now wants to have the best risk management tools to manage their business. On top of that the regulations have been more strict and imposing them is now a must have rather than a like to have. This starts all the way from the international standards down to the physical mangers of the banks.

"Banks were forced to become more efficient and decrease costs on the one hand and there is a huge demand for a better insight into their own business. So to understand the business from a profitability perspective and a risk perspective and there is a big trend to do business with the right customers because it's clear they need to discontinue business which end up in default. The art now is to continue the business with the right customers," says Hafner.

Middle East region reflects global trends

This trend can be seen in the Middle East just as clearly as in the global market. "The trends hold quite true for the MENA regions as well, if I look at reports, financial services is one of the top growing areas, it's probably the fourth fastest growing sector in the market. We from a regional perspective see that the growth is continuing significantly the banks and the insurance companies are continuing to invest," says Dave Marzouk, head of strategic industries, MENA, SAP.

In terms of regional growth, Marzouk adds that while Saudi Arabia and the UAE are the biggest markets, but the fastest growing market is Egypt, followed by the Levant region. SAP has seen double digit growth in the banking and insurance sector in all of Saudi, Egypt and the UAE in recent times.

Khoury believes the main driver behind this type of growth is the changing attitudes of banks in the aftermath of what was a crippling economic situation. "In order to compete as a financial institution after the financial crisis, if you really want to grow, you have to be more innovative, you have to be more efficient, i.e. manage your costs better and you have to be more transparent because of the regulations. Finally you have to expand your network. For all of this, you need IT solutions," Khoury concludes.