UAE banks on a digital reboot
dubai — Amid tightening liquidity and subdued credit off-take, the UAE’s banks are stepping up their digitisation drive to tap new revenue streams and improve customer experience.
“Technology is rapidly transforming the way customers are banking in the UAE,” says Suvo Sarkar, senior executive vice-president and group head — retail banking and wealth management, Emirates NBD.
“The UAE government is taking initiatives to digitise the country’s banking and financial sector under its smart government programme,” says M.R. Raghu, managing director, Marmore Mena Intelligence, a research firm.
Marmore’s research shows the UAE’s banks have taken steps to increase digitisation, with several banks investing heavily in 2016 to keep up with the latest trends.
Abu Dhabi Islamic Bank (ADIB), for instance, has teamed up with IBM to build a studio that will work on digital innovation projects across the bank, including mobile banking iOS apps built on IBM’s Bluemix cloud platform and IBM Mobilefirst.
Dubai Islamic Bank (DIB), the largest Islamic bank in the UAE, announced the introduction of the Visa payWave cards, which allows contactless payments.
The digital steps that ther UAE’s banks are undertaking include initiatives such as the mobile wallet, regulations for digital signatures and PINs, etc. Work on the mobile wallet programme, developed by a committee of nine member banks, started in 2015. The project incorporates the facility for smartphones and other digital devices to be used
Key differentiator will be combining the best of digital fintech with a human touch Suvo Sarkar, senior executive vice-president at Emirates NBD
for cashless purchases in UAE retail outlets as well as a means to store and transfer money.
A regulatory framework, based on online standards followed in other developed nations, has been developed for the UAE’s digital payments industry.
“We are in the fast growth stage of the customer adoption curve and banks that will fail to adopt or deliver an engaging digital customer experience will lose market share rapidly,” says Emirates NBD’s Sarkar.
“As going digital becomes inevitable, the key differentiator will be combining the best of digital fintech with a human touch, complementing each other,” he adds.
Dial M for money
“We have significantly increased our investment in customer experience for mobile banking. We have adopted a mobile-first strategy,” says Dr R. Seetharaman, Group CEO, Doha Bank.
“So, whenever we design new products or services, we are now challenging ourselves to build it on mobile first. We launched our biometric mobile app, and transactions via mobile have more than doubled versus 2015. Also, in a tough environment, we had solid growth in our home loans and credit cards,” he says.
Whenever we design a new product, we are challenging ourselves to build it on mobile first Dr R. Seetharaman, Group CEO, Doha Bank
We are seeing a strong desire to improve data management through Fintech innovations Ashar Nazim, partner, Global Islamic Banking Centre, EY
The UAE is taking initiatives to digitise the country’s banking and financial sector M.R. Raghu, managing director, Marmore Mena Intelligence
According to EY’s ‘Banking in emerging markets’ report, the assets of global Islamic banking (also known as participation banking) reached $924 billion in 2015, with growth rates declining across all regions compared to previous years.
Ashar Nazim, partner, Global Islamic Banking Centre, EY, said: “The fact that almost one-third of the $3 trillion global Shariah-compliant assets are either reported as ‘informal or ‘best estimates’ demonstrates the limitation of participation banks in making sound strategic decisions. CFOs need reliable information and we are seeing a strong desire to improve data management and analytics at participation banks through FinTech innovations.”
The GCC’s share of Islamic banking increased to 72 per cent, as the size of assets in the Associa- tion of Southeast Asian Nations (Asean) countries also declined during 2015.
Largest markets
Saudi Arabia, the UAE and Malaysia are the three largest Islamic banking markets in terms of assets, representing 34.2 per cent, 17.2 per cent and 13.3 per cent of the global market share respectively.
If banks were to consolidate with fintech companies, it could propel participation banks to become mainstream across 20 promising markets by 2021, up from five markets today, representing a jump from 100 million customers to 250 million customers over the same period, the EY report added.