The way forward for digital banking in the UAE

The Covid-19 pandemic has undoubtedly accelerated digital transformation measures across industries – and the banking sector is no exception.

According to a recent Digital Banking Adoption Report, 17 per cent of Emirati adults currently have a digital bank account while an additional 13 per cent plan to open one in the next five years.

At those projections, an estimated 31 per cent of Emiratis will have a digital bank account by 2026.

To spur the growth of digital banking robust regulatory frameworks are also being established. The Central Bank of the UAE (CBUAE) announced its 2023-2026 strategy, which includes issuing a digital currency and driving digital transformation in the nation’s financial services sector by utilising AI and big data solutions and developing secure financial cloud infrastructure.

Banks in the Middle East are increasingly using blockchain, optical character recognition (OCR) and AI to improve their client offerings. OCR can for example convert images of typed or handwritten text into machine-encoded text, with content auto-populated into the required fields.

Earlier this month, the CBUAE granted an in-principle approval to launch Wio, a new digital banking platform. Headquartered in Abu Dhabi, Wio will offer customers in the UAE a fully digital banking choice with customised products and services. The digital banking platform’s primary shareholders ADQ and Alpha Dhabi own a combined stake of 65 per cent. Additionally, Etisalat holds 25 per cent, and First Abu Dhabi Bank (FAB), holds 10 per cent.

Eventually, it is the customer that will dictate the pace with which digital banking grows with the region. A recent study by Arthur D. Little and M2P Solutions revealed 61 per cent of 2,000 customers surveyed were ready to turn to their primary bank for a ‘beyond banking’ proposition, and 70 per cent of customers are aged 25-44. With a young demographic, it is more likely that they will eagerly adopt digital payments with the UAE’s digital payments sector forecast to grow to $14bn by 2030.

Furthermore, the region has one of the world’s highest smartphone penetrations rates at 97 per cent. Ultimately, the ease with which online account openings are facilitated, and the intuitiveness with which mobile banking apps are designed, will determine the rate at which digital banking is adopted within the UAE.