Wio Bank’s CEO on banking in an era of evolving consumer needs

With neobanks bridging the gap between the services offered by incumbent banks and the modern customer’s needs, embracing a customer-focused approach becomes essential in today’s digital era.

Over the years, the UAE has been witnessing a surge in neobanks and digital offerings from traditional banks, thanks to the country’s supportive regulatory environment.

S&P Global noted that the UAE’s tech-savvy population drives demand for neobanks, creating an attractive ecosystem for banks and fintechs. These digital native banks offer innovative services that resonate with millennials and tech-savvy customers.

On September 13, 2022, Wio Bank, the first platform of its kind in the UAE, began operations. Its aim is to shake up the country’s banking market. With its unique approach and specific characteristics, Wio Bank has the potential to redefine the banking experience in the UAE, offering a fresh perspective in a market perceived as overbanked.

The digital native bank reported a full-year profit of $544,588 (Dhs2m) and revenues of Dhs266.4 m in 2023.

Here, Wio’s CEO discusses the challenger bank’s future business strategy, its new embedded finance service for small and medium-sized enterprises (SMEs), and how innovative technologies such as the cloud and generative AI are revolutionising banking.

Q. Wio Bank became profitable in its first full year of operations, making it the first neobank to do so. What does this mean for the bank and how will it influence your future business strategies?

We are proud to be one of the few neobanks globally to achieve profitability so quickly. This success stems from several factors. Firstly, we are incredibly focused on what we want to offer our customers.

We are clear about our business objectives. Secondly, we develop solutions that our customers love. In fact, four out of five customers join us because of referrals, which is fantastic and demonstrates that we are meeting their needs.

Our profitability is rewarding for our shareholders and our team, who find great satisfaction in knowing that our customers are happy. It also reassures customers that they are investing their money in a profitable and sustainable organisation.

There is a misconception that neobanks struggle to become profitable, but our experience proves that profitability is achievable with focus and clear business objectives. Similarly, favourable interest rates have helped, but overall, profitability is crucial because customers want to invest in financially sound organisations.

Q. What steps are you taking to ensure long-term profitability and stability amidst market uncertainties?

We always say that Wio is in the business of serving customers, and it just happens to be in financial services. We follow a few key principles, such as making money when our customers make money, not when they make mistakes.

Our SME platform was developed in close collaboration with 100 customers, and our goal is to become the operating platform for businesses, similar to how iOS functions on a phone. Entrepreneurs don’t start businesses to learn banking; they want to optimise their finances with minimal effort. That is why Wio’s product offerings include multi-currency accounts, expense management, and virtual cards, among others.

These features not only provide excellent service but generate strong revenue streams for us. As customers use more of our products, our revenue grows.

We are not just reliant on interest income but we have diverse revenue streams. We’re excited to launch our SME credit card, currently in beta with 100 customers. This card provides a payment mechanism and access to credit, which is crucial for small businesses.

On the retail side, we offer fantastic savings rates and a range of products, such as international transfers, debit cards with virtual card capabilities, and investment options. Our goal is to help customers achieve their short-term and long-term financial goals while providing value and security.

Wio’s approach has led to good growth and customer adoption, and we are optimistic about the future.

What are the opportunities and main challenges facing neobanks in the GCC region?

Wio was established to build and serve the customers of tomorrow, whether they are businesses or individuals. We have a clear and focused objective. While there are many fantastic incumbent banks that drive the economy and do great work, we have a different approach to serving customers.

Traditional banks are offering better services and products than neobanks in some areas and we are also doing much better than them in some. It is important to identify these areas and focus on them.

Our strategy revolves around enhancing mobile engagement, exploring embedded finance, and offering banking as a service. By focusing on these areas, we aim to provide value to our customers and build a sustainable and profitable business.

We saw a clear opportunity to enhance customers’ interactions with mobile apps and launched Wio Business for SMEs. This has been a success, with around 4,000-5,000 new accounts being opened each month.

We invest heavily in innovative technologies, and with BaaS, our aim is to democratise finance. Financial regulators in the UAE are taking initiatives to open up finance and payments, making it easier to access financial services.

For neobanks, it’s crucial to understand what to do and what not to do. We are not a wallet or a travel card; we are a bank at our core. We focus on core banking capabilities: keeping and growing your money, providing credit when needed, offering investment opportunities, and providing payment instruments.

Q. How do you envision the future of banking and financial services, particularly in the context of digital transformation?

Going forward, there are a few fundamental elements to consider regarding how banks operate, whether they are incumbent banks or digital attackers. Traditional banks are becoming digital very quickly, and there are some key areas of change.

First, operating models need to be more adaptable. This involves serving consumers directly, leveraging other platforms to reach consumers, and allowing others to use your technology to serve customers.

Second, with stronger data and more information, financial institutions can make better real-time decisions. However, with more real-time data comes increased worries and risks. We can expect stronger and more frequent regulation, along with robust investments in risk management, compliance, and fraud prevention.

Third, innovative technologies will expand banks’ revenue pools by opening up previously hard-to-access spaces while democratising access to wealth products that were previously inaccessible to most people. This will continue to add value by providing easier access to banking services, delivered in real-time, with stronger governance and regulations to ensure safety and security.