Business | General

Bank loyalty low among UAE customers

Strong competition tempts clients to switch providers easily and maintain multiple accounts

  • By Cleofe Maceda, Senior Reporter
  • Published: 20:46 May 4, 2013
  • Gulf News

  • Image Credit: Pankaj Sharma/Gulf News Archive
  • A view of Bank Street in Bur Dubai.

Dubai: When it comes to banking, customers in the UAE are a pretty dynamic bunch.

Residents in this part of the world are less likely to stick it out with one bank compared to their peers in other markets due to stiff competition in the banking industry.

The UAE, home to at least 50 banks with more than 800 branches that are actively competing for customer attention, is considered the most competitive banking market in the GCC. Analysts say it is due to strong competition that customers are tempted to switch banks easily and maintain multiple accounts.

In comparison, banking customers in the UK, where a huge proportion of the market is concentrated with only five banking groups, tend to stick to one bank longer than they stick to a spouse or partner.

New research from Spanish bank Santander showed that more than half (58 per cent) of the respondents have been with their current account provider for more than a decade, with the average bank relationship lasting just over 16 years and one month.

According to Santander, one out of six people (17 per cent) have stayed with their bank for more than three decades, while nearly one third said the main reason they stayed is simply out of habit. In comparison, the average UK couple stays together for only 14 years and four months.

“Majority of the UAE banking customers do not have the same level of high loyalty compared to depositors in the UK,” noted Jad Rammal, director of measurement solutions at Ethos Consultancy. “[Customers tend to] look for better services and offers from the banks and there are many tempting offers and choices in the market today. There is stiff competition among the banks and it is easy to change [providers],” Rammal told Gulf News.

The low levels of inertia can also be attributed to the fact that majority of the retail banking customers, the expatriates, are transitory in nature and banks impose less stringent rules for switching banks.

“Unlike in the UK or Europe, it is so much easier and more convenient to change banks in the UAE. In Europe, all your monthly bills (telephone, electricity, insurance, even taxes) are automatically debited from your account and it is very inconvenient to change your bank. Practically, you are stuck with your bank. But here, most people can easily open and close their bank accounts and they can have as much accounts as they want,” Rammal added.

Rammal noted that the average lifespan of a bank account in the UAE is often tied to a customer’s employment contract, which normally lasts two or three years if not renewed.

“After they finish their contract, they will leave the country and bring whatever savings they have. The sudden loss of job will sometimes force the depositor to close their bank account especially if the salary is automatically transferred to the bank,” he said.

“Transferring to another company is another reason to switch banks as different companies have different banking facilities for their employees,” he added.

Comments (12)

  1. Added 18:04 May 5, 2013

    Nether Bank’s loyal to customers, Banks are ripping of its’ customers. Banks are not helpful to provide the service and sort out banking issues that comes up due to various reasons. Bank always charges various charges to customers which are not reasonable. In short Dubai Banking experience is not pleasant at all, thereof customers not been loyal to banks is normal and should not expect it.

    Pumal, Dubai, United Arab Emirates

  2. Added 17:58 May 5, 2013

    Why we call these finance companies as banks.These are operating in UAE for a certain category of peoples,who are earning 5000 dhs or above.If u are earning below that u cant get any service from these so called banks.but they will charge everything month for salary transfer.

    SAJID, DUBAI, United Arab Emirates

  3. Added 16:56 May 5, 2013

    I found that this is a common phenomenon in countries where a large community of expatriates have settled. But when it comes to the permanent residents or the citizen, the reasons may vary. The main reason most customers switch banks is "face to face service" because customer loyalty mostly depends on this kind of service rather than due to the other monetary perks & benefits given by the banks. Rather than switching from one bank to another bank, it would be wiser to choose one bank which has good credibility and good customer service no matter you are new or old customers and stick to it; because basically all banks are having somehow similar interests and administration charges as they are not independent bodies, they are regulated by the central bank.

    Lilly, Kabul, Afghanistan

  4. Added 14:56 May 5, 2013

    I have applied to a bank for a Credit Card - and they simply cannot be bothered to update me on the status of my application - even after 4 weeks of reminder calls and e-mails and numerous promises of call backs in 24 hrs. If they donot want my business why are they bothering me on the phone day in and day out to take their card ???? Banks come on get your act in order and decide what you want ??? Our business or not ????

    Prasanth Nair, Dubai, United Arab Emirates

  5. Added 14:37 May 5, 2013

    There are quite a few inaccuracies in this article. Changing a bank account is easy in the UK and a new bank will move all direct debits across very simply. The automatic direct debit is fantastic and I wish it was more readily available here and supported. The banks in the UK work considerably harder to retain customer for this very reason, which I would argue, is why people change less. The other points re the difficult visa system here and transitory nature are probably the biggest reason people move banks, combined of course with the culture of poor service.

    swilliams, Dubai, United Arab Emirates

  6. Added 13:11 May 5, 2013

    When I see promotions from my bank that are valid only for new customers - I believe the bank does not want loyalty. So why blame the customers!

    MAH, Abu Dhabi, United Arab Emirates

  7. Added 12:03 May 5, 2013

    When someone is applying for a loan that has a salary of less than AED 10K, he/she should not keep his/her hopes up anymore in getting any loan from any bank as they require this minimum amount for the salary now. That's very unfair. Just saying.

    Maria, Dubai, United Arab Emirates

  8. Added 11:01 May 5, 2013

    One reason for multiple bank accounts is the availability of so many banks and so many different product propositions. The other being poor customer service to over charges, unreasonable policies and in my case one bank not having cash, and other limiting daily withdrawal limits.The other reason is multiple borrowing relationships.

    mushtaq, dubai, United Arab Emirates

  9. Added 10:23 May 5, 2013

    I would also add that there is no perceived benefit in being loyal to a bank when the banks here show no loyalty to long-term customers in return. You are evaluated unsympathetically with a check box form whether you've been a customer for years or just walked into the door. In fact, the new customer gets far more benefits, offers and options than any existing customer.

    Bruce Dauphin, Dubai, United Arab Emirates

  10. Added 10:21 May 5, 2013

    Why should a customer be 'loyal' to any bank, when the loyalty is not quite respected? Almost all banks behave as if they are doing a favour to the customer. You can feel this attitude anytime we walk into a bank for even a minor transaction. The banks and their employees seem to forget they are in business and work because of customers, and not the other way around.

    R.Vasudevan, Dubai, United Arab Emirates

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