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Why the micro, small and informal segment is the most underbuilt opportunity in UAE banking

SMEs already account for 94 per cent of businesses, 86 per cent of private employment and over 63.5 per cent of non-oil GDP

Kapil Chadda
Kapil Chadda

26 May, 2026

Why the micro, small and informal segment is the most underbuilt opportunity in UAE banking
Image: Getty Images/ For illustrative purposes

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Article Summary
The UAE banking system, despite its liquidity, underserves micro and small businesses crucial for the country's SME growth target. The problem isn't capital, but a lack of usable data due to outdated underwriting models.

The UAE has one of the most liquid banking systems in the region, yet one of the least served micro and small business segments.

The country’s ambition to reach one million SMEs by 2030 will be driven largely by micro and small firms. SMEs already account for 94 per cent of businesses, 86 per cent of private employment and over 63.5 per cent of non-oil GDP. Yet CBUAE data from January 2026 shows funded SME lending of Dhs92.0bn against Dhs2.6tn of gross bank credit, around 3.5 per cent, with micro and small firms capturing only a fraction. A CBUAE MSME survey found 90 per cent of micro enterprises are financially constrained.

This is not a capital problem. It is a data problem. Left unaddressed, the gap will widen under pressure. Market leadership in this segment will not be won in stability, but in volatility. The question is not whether banks will move, but which will move fast enough.

Since early 2026, regional instability has begun to test the resilience of micro and small enterprises. With limited buffers, these businesses are highly exposed to even short-term disruptions in cash flow, inventory cycles and customer demand. At the same time, regulatory support measures are creating a narrow window for banks to experiment, using flexibility to pilot new models, build relationships and become the partner of choice while businesses are actively reassessing who they trust. The crisis has not changed the thesis. It has compressed the timeline.

The system is not short of capital; it is short of usable data

The UAE banking system is liquid; funding is not the constraint. The issue is an outdated underwriting model that does not differentiate MSMEs from corporates.

Most micro and small firms lack audited financials or traditional scorecard inputs, but they are not data-poor. They generate payroll data (WPS), payment histories (POS), VAT trails and rich digital account behaviour. Open Finance will further deepen this pool.

The problem is not missing information. It is that banks are still underwriting against the wrong signals.

This shift is already visible. Wio has demonstrated a scalable digital-first model. Mashreq and RAKBANK are moving credit closer to merchant flows. POS-linked lending, cash-flow-based limits and embedded offers are becoming the core of MSME banking, not add-ons.

The next decade will favour institutions closest to transaction data and fastest at learning from it, not those with the largest balance sheets. In this segment, owning the data layer is becoming more important than owning the branch network.

Competition is heating up

Banks are not competing with fintechs; they are competing with informal finance

MSME competition is often framed as banks versus fintechs. In reality, the benchmark is informal finance, such as family and community lending.

These channels win on speed, trust and flexibility, particularly in times of stress. Decisions are fast, terms are adaptive, and relationships are embedded. Formal offerings that rely on slow, application-based processes are not competing with this reality; they are competing with a version of the market that no longer exists.

Where banks choose to start will matter more than how quickly they try to scale. The MSME segment is not homogeneous, and early choices will define long-term advantage. The first wave should not be driven by sector size alone, but by where banks can underwrite responsibly, serve efficiently and build a defensible data edge. Winning in this space demands a disciplined approach to selecting target segments, sequencing and designing the right service model. This enables the development of a winning proposition and earns the right to expand across the full SME spectrum.

What matters is not coverage, but sequencing, prioritising segments with strong transaction data, manageable AML/KYC complexity, clear cash-flow visibility and viable collection routes. Banks that get the entry point right will earn the right to expand. Those that do will not be able to scale efficiently.

The model that will matter is not a redesigned MSME desk, but a fundamentally different proposition: a digital business account combined with workflow tools that solve daily needs, invoicing, VAT, expenses, payroll, and use that data to generate fast, relevant credit offers. It must deliver both conventional and Islamic structures with the same speed and simplicity, and connect seamlessly to guarantees, government programmes and partners without adding friction. Most importantly, credit should not feel like a separate product. It should feel embedded.

The next 500,000 UAE businesses will be mostly micro and small. They will not wait for banks to modernise. They will choose whoever meets their need for speed, trust and flexible working capital, especially in times of uncertainty. The direction is clear. The only question is who moves first, and who is left reacting. Banks that act now will not just gain share. They will define MSME banking in the decade ahead.

Kapil Chadda is a partner in the Financial Services practice at Arthur D. Little Middle East.

Read: Secure.com’s Uzair Gadit on why hackers are targeting SMEs this Eid

Hajj 2026: Saudi Arabia announces Rawdah Sharif visiting times for pilgrims

The Ministry of Interior confirmed that a fine of up to SAR20,000 will be imposed on anyone found performing or attempting to perform Hajj without a permit on Monday

Gulf Business
Gulf Business

25 May, 2026

Hajj 2026: Saudi Arabia announces Rawdah Sharif visiting times for pilgrims

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Saudi Arabia has announced designated visiting times for Al-Rawdah Al-Sharif at the Prophet’s Mosque in Madinah during the 1447 AH Hajj season, setting specific daily time slots for men and women, according to the state news agency, SPA.

The General Authority for the Care of the Affairs of the Grand Mosque and the Prophet’s Mosque said visits will be managed through bookings via the Nusuk application to ensure crowd control and a smooth flow of worshippers.

According to the announcement, men will be allowed to visit during two daily windows, from 2 am until Fajr prayer, and from 11:20 am until Isha prayer. Women’s visiting hours will run from after Fajr until 11 am, and again from after Isha until 2 am.

On Fridays, men’s hours run from 2 am until Fajr prayer, and from 9 am until Isha prayer, while women’s hours run from after Fajr prayer until 9 am, and from after Isha prayer until 2 am.

The authority said the system is designed to organise access to one of Islam’s most visited sites within the Prophet’s Mosque, particularly during the Hajj season when pilgrim numbers increase significantly.

The announcement comes as Saudi Arabia continues to manage large inflows of pilgrims to the holy cities of Makkah and Madinah during the annual Hajj period, one of the largest religious gatherings in the world.

Authorities have, in recent years, introduced stricter booking systems and digital permit requirements to regulate access and reduce overcrowding at key religious sites.

Read: Hajj 2026: Saudi Arabia’s metro system to transport over two million pilgrims

Strict penalty for those who perform Hajj without a permit

In other news, SPA reported today that the Ministry of Interior confirmed that a fine of up to SAR20,000 will be imposed on anyone found performing or attempting to perform Hajj without a permit.

Residents and visa overstayers attempting to perform Hajj illegally will also be deported to their home countries and barred from re-entering the kingdom for 10 years.

The penalties take effect from day one of Dhu Al-Qi’dah through the end of Dhu Al-Hijjah 14.

The ministry urged everyone to comply with the regulations governing this year’s Hajj season and to cooperate with the relevant authorities to ensure the safety and security of pilgrims, noting that violations will subject offenders to legal penalties.

It also called on the public to report violations by calling 911 in the regions of Makkah, Madinah, Riyadh, and the Eastern regions, and 999 in all other regions of the kingdom.

Hajj 2026: Saudi Arabia’s metro system to transport over two million pilgrims

Authorities said the metro has significantly reduced reliance on buses during Hajj, replacing an estimated 50,000 bus trips and helping ease road congestion across the holy sites

Neesha Salian
Neesha Salian

25 May, 2026

Hajj 2026: Saudi Arabia’s metro system to transport over two million pilgrims
Image: SPA

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Saudi Arabia Railways is preparing to transport more than two million pilgrims during the 1447 AH Hajj season through its Al-Mashaaer Al-Mugaddassah Metro, a high-capacity electric transport system linking the holy sites of Mina, Muzdalifah and Arafat, state news agency SPA reported.

The metro, one of the kingdom’s flagship infrastructure projects for the Hajj season, is designed to ease congestion, improve crowd management and support the movement of pilgrims during peak ritual periods.

According to SAR, the system connects the three holy sites via an 18-kilometre rail line with nine stations, including three stations each in Mina, Muzdalifah and Arafat, as well as a station at Jamarat.

The electric train, which can reach speeds of up to 80 km/h, is capable of transporting around 72,000 passengers per hour.

Each of its 17 trains can carry up to 3,000 passengers, enabling rapid movement between sites during peak Hajj schedules.

Authorities said the metro has significantly reduced reliance on buses during Hajj, replacing an estimated 50,000 bus trips and helping ease road congestion across the holy sites.

The system, which entered service in 2010 after two years of construction, is part of Saudi Arabia’s broader efforts to modernise Hajj logistics and improve operational efficiency in line with Vision 2030.

Officials said the fully electric network also supports environmental sustainability goals by reducing emissions and improving traffic flow in one of the world’s most densely crowded seasonal events.

The metro will enable safe pilgrim movement throughout the Hajj season

The metro will operate as part of an integrated transport plan aimed at ensuring safe and efficient pilgrim movement throughout the Hajj season.

In other news, the Roads General Authority recorded more than 79,000 vehicles travelling on roads leading to Makkah on Dhu Al-Hijjah 7 as part of operational and regulatory efforts aimed at facilitating pilgrims’ movement during the 1447 AH Hajj season and improving travel efficiency across the road network leading to Makkah from various directions.

The authority affirmed continued field and operational readiness on roads leading to the holy sites through traffic monitoring and enhanced safety measures and services provided to pilgrims.

Read: Hajj 2026: UAE reveals rules every pilgrim must follow

Dubai Police warns against fireworks use ahead of Eid Al Adha

The authority also highlighted the legal consequences associated with the trade and distribution of fireworks under UAE law

Rajiv Pillai
Rajiv Pillai

25 May, 2026

Dubai Police warns against fireworks use ahead of Eid Al Adha
Image: Getty Images

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Dubai Police has issued a public safety warning ahead of Eid Al Adha, urging residents to avoid the use, sale or trade of fireworks during the holiday period due to the risks posed to individuals, property and public safety.

The authority called on community members to comply with UAE laws and avoid engaging with unlicensed fireworks traders, stressing that fireworks can quickly escalate from festive items into serious safety hazards.

Dubai Police said fireworks-related incidents can result in severe injuries and permanent disabilities.

“The danger of fireworks lies in the fact that they can cause permanent disabilities, including loss, amputation, and burning of body parts,” the force said.

The authority also highlighted the legal consequences associated with the trade and distribution of fireworks under UAE law.

Dubai Police noted that Federal Decree Law No. 17 of 2019 on weapons, ammunition, explosives and hazardous materials imposes strict penalties on individuals involved in unlicensed fireworks activities.

“Article 54 of the decree stipulates imprisonment for no less than one year and a fine of no less than Dhs100,000 – or either penalty – for anyone who, without a licence, trades in, imports, exports, manufactures, or brings fireworks into or out of the country,” the statement added.

The warning comes as authorities across the UAE typically intensify public safety campaigns during major holidays and festive periods, when the use of fireworks tends to increase.

Dubai Police urged residents to prioritise safety and support efforts aimed at protecting communities and reducing avoidable accidents during Eid celebrations.

Trump calls for Saudi Arabia, Qatar to join Abraham Accords amid Iran deal negotiations

Trump further stated that several leaders had indicated they would welcome Iran into the Abraham Accords framework if Tehran ultimately signs a deal with the US

Rajiv Pillai
Rajiv Pillai

25 May, 2026

Trump calls for Saudi Arabia, Qatar to join Abraham Accords amid Iran deal negotiations
Image: Getty Images

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US President Donald Trump has called for a broad expansion of the Abraham Accords, linking the initiative directly to ongoing negotiations with Iran and positioning it as a potential catalyst for deeper economic and geopolitical integration across the Middle East.

In a lengthy post published on Truth Social, Trump said negotiations with the Islamic Republic of Iran were “proceeding nicely”, while warning that failure to reach an agreement could result in a return “to the Battlefront and shooting, but bigger and stronger than ever before”.

Trump said he held discussions on Saturday with a number of regional leaders, including Crown Prince and Prime Minister Mohammed bin Salman, UAE President Mohammed bin Zayed Al Nahyan, Qatar’s Emir Tamim bin Hamad Al Thani, Turkish President Recep Tayyip Erdoğan, Egyptian President Abdel Fattah el-Sisi and Jordan’s King Abdullah II of Jordan, among others.

According to Trump, the discussions centred on making participation in the Abraham Accords a key component of any future agreement involving Iran.

The original Abraham Accords, brokered during Trump’s first administration in 2020, normalised diplomatic relations between Israel and several Arab states, including the United Arab Emirates and Bahrain. Morocco and Sudan later joined the framework.

In his latest remarks, Trump argued that the accords had delivered a “Financial, Economic, and Social BOOM” for participating countries, despite ongoing regional instability and conflict.

He also suggested that countries including Saudi Arabia, Qatar, Pakistan and Türkiye should join the agreement framework as part of a broader regional settlement.

Trump further stated that several leaders had indicated they would welcome Iran into the Abraham Accords framework if Tehran ultimately signs a deal with the US.

The comments come at a time of heightened geopolitical uncertainty across the Middle East, with markets and businesses closely monitoring the direction of US-Iran negotiations and their implications for regional trade, investment flows, energy markets and cross-border economic cooperation.

An expanded Abraham Accords framework involving major Gulf economies could potentially accelerate regional integration across sectors including infrastructure, tourism, logistics, technology and financial services, while also reshaping diplomatic and commercial ties throughout the region.

However, Trump’s proposal would likely face significant political and diplomatic complexities, particularly given longstanding tensions involving Israel, Iran and several regional actors.

Inside Etihad Rail’s new look: First passenger staff uniforms unveiled ahead of launch

The design reflects Etihad Rail’s broader brand values, combining professionalism, warmth, safety, and modern Emirati hospitality

Nida Sohail
Nida Sohail

25 May, 2026

Inside Etihad Rail’s new look: First passenger staff uniforms unveiled ahead of launch

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Etihad Rail has unveiled the official uniforms that will be worn by its passenger-facing teams, giving the public an early glimpse of one of the most visible elements of the UAE’s national railway network ahead of the launch of passenger services.

The new uniforms, presented in a contemporary grey colour palette with distinctive red accents, will be worn by onboard hosts, station staff, and customer-facing employees across the passenger network. The design reflects Etihad Rail’s broader brand values, combining professionalism, warmth, safety, and modern Emirati hospitality.

Read more-Etihad Rail’s details revealed: 7 new stations announced

The announcement marks another key milestone in the development of the national railway as it moves closer to introducing passenger operations designed to connect communities across the UAE and transform mobility options in the country.

Design rooted in function and identity

Developed specifically for the UAE’s climate and the operational demands of modern rail travel, the uniforms prioritise comfort, durability, and ease of movement while maintaining a refined and consistent visual identity.

Etihad Rail said subtle design detailing and structured tailoring were incorporated to ensure the uniforms remain both practical and visually distinctive, creating a look that is contemporary, approachable, and premium in feel.

Although intended as operational attire, the uniforms have also been positioned as an extension of the wider passenger experience. They represent the frontline staff who will greet travellers, assist journeys, and help shape the culture of rail travel in the UAE for years to come.

The colour scheme carries symbolic meaning: grey tones were chosen to represent confidence, calmness, and reliability, while red accents draw inspiration from the energy and ambition associated with the Etihad Rail brand and the UAE’s wider vision for connectivity and progress.

Shaping the passenger experience

Beyond aesthetics, Etihad Rail said the uniforms form part of its broader effort to define a cohesive passenger experience ahead of launch. The design is intended to reinforce trust, recognition, and service consistency across stations and onboard services.

As the network prepares for rollout, the uniforms are being introduced as part of a wider operational readiness programme aimed at ensuring that every aspect of the passenger journey reflects high standards of safety, reliability, and customer care.

Leadership perspective

Adhraa Almansoori, executive director of Commercial at Etihad Rail Mobility, said:

“The unveiling of our official uniforms marks an important moment in the journey towards the introduction of passenger rail services in the UAE. These uniforms are part of our visual identity, but more importantly they represent the people who will become the face of the Etihad Rail experience for thousands of new rail passengers in the years ahead.

“Every detail has been carefully considered to reflect the values that sit at the heart of Etihad Rail: safety, professionalism, hospitality and national pride. As we prepare to welcome passengers onboard for the very first time, these uniforms help tell the story of a modern railway designed around people, connection and experience.”

The uniform reveal is part of Etihad Rail’s wider preparations ahead of the introduction of passenger services, which will initially connect key stations through a phased rollout designed to ensure safety, reliability, and strong customer experience from the outset.

Further announcements on stations, routes, and passenger services are expected in the coming weeks.

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Why the micro, small and informal segment is the most underbuilt opportunity in UAE banking