The Role of Geopolitical Tensions in Shaping Digital Banking’s Future in Emerging Markets

By Anoop Gala, Head of Financial Services at Orion Innovation

An unexpected force is driving the digital transformation of the banking sector, especially in emerging markets: geopolitical tensions. Political instability and military conflicts are proving to be catalysts for rapid advancements in digital banking, compelling financial institutions to innovate and adapt to meet the evolving needs of their customers. Similar to the lessons learned from the global pandemic – the best response to disruptions and crises is building digital resilience.

The need for digital transformation in banking has never been more acute than in regions experiencing political and social upheavals. In times of conflict, tragedies, and uncertainty, traditional banking infrastructures often struggle to meet the demands of the day, hampered by instability and physical barriers. However, digital banking emerges as a beacon of resilience, offering uninterrupted access to financial services for communities in flux.

A Strategic Pivot to Digital-First Banking

In response to the challenges posed by geopolitical strife, banks in developing countries are increasingly adopting a digital-first strategy. Pivoting toward technology-enabled financial services is a strategic imperative to ensure continuity of service. Digital banking platforms, with their cloud-based infrastructure, offer a flexible and scalable solution that can adapt to changing economic, political, and social conditions. This includes the ability to respond to global regulatory actions and develop new product offerings and customer service initiatives to support vulnerable customers in need.

Overcoming Traditional Barriers with Innovation

The journey towards digital banking in volatile regions is marked by innovative approaches to overcome traditional barriers. One of the most significant hurdles has been ensuring that banking services remain accessible to all, especially to those displaced by conflict or residing in the diaspora. Digital banking transcends geographical and political barriers, enabling banks to serve a wider audience without compromising service quality or security. Africa and Gulf Bank (“AGB”) recently announced an initiative to modernize the bank’s banking products and services to allow AGB to develop robust banking services for Sudanese people both at home and in the diaspora. During times of conflict, having access to banking services anywhere and anytime is a lifeline for desperate customers.

Security and Compliance in a Digital Age

Security and compliance are paramount in geopolitically sensitive areas. Digital banking platforms are designed with advanced security features and robust compliance mechanisms to protect against cyber threats and ensure data integrity. These features build trust among users, who are increasingly concerned about the safety of their financial transactions in times of turmoil and tragedy.

Banking in Unstable Markets: The Path Forward

As we look towards the future, it’s clear that digital banking will continue to play a critical role in emerging markets. The pressures of geopolitical tensions, far from stifling growth, have spurred a wave of innovation in the banking sector, setting new standards for financial inclusivity, security, and service delivery. The lessons learned from navigating these challenges highlight the resilience of the banking sector and point towards a future where digital banking is the norm, offering a blueprint for financial institutions worldwide to follow.

Unfortunately, geopolitical tensions and conflicts are on the rise. Yet, the digital transformation of banking should be viewed as a narrative of resilience and innovation. As financial institutions in emerging markets continue to navigate these turbulent waters, their journey offers invaluable insights into the power of digital solutions to address some of the most pressing challenges of our time, heralding a new era of banking that is more inclusive, secure, and responsive to the needs of a global customer base.