How the UAE financial sector is adapting to a post-pandemic world
The use of technology during COVID-19 means digital solutions are increasingly important
In Dubai Future Foundation’s recent Life After COVID-19: Financial Technologies report, it said that the cornoavirus, “is an important opportunity for private sector entities to accelerate the digitisation of financial services”.
While most sectors such as aviation and retail have been significantly impacted by the coronavirus, DFF says that fintech remains largely unaffected. “The financial technologies industry – fintech – not only appears to be resilient to the risks of the pandemic, but is widely expected to emerge stronger as people turn to digital-only services.
“Finance apps have seen downloads shoot up since the start of coronavirus lockdowns. According to data from financial advisory firm deVere, fintech apps saw a 72 per cent spike in usage in the final week of March.”
We believe that the shift to digital is not a temporary phenomenon, but marks a new normal in consumer behaviour in the post COVID-19 world.
Sridhar Iyer, Head of Mashreq Neo (digital bank), says that the organisation’s full-service digital bank, which was the UAE’s first when it launched in October 2017, has gained significant traction during COVID-19. “The fact that customer acquisition for Neo grew by more than 50 per cent during this period is a testament to the success of Neo’s digital proposition.”
Iyer says that while Mashreq was transitioning to digital prior to the pandemic, there have been distinct changes in customers’ behaviour and that these new habits are likely to remain following the outbreak. “In banking, the transition to digital that had begun even before COVID-19 is accelerating to make digital the preferred choice of consumers, as they become more comfortable and confident going online.
“We believe that the shift to digital is not a temporary phenomenon, but marks a new normal in consumer behaviour in the post COVID-19 world as consumers experience and become more comfortable with the ease and security of digital banking.”
In the past two months, Mashreq has seen an increase in digital remittances of 50 per cent and says that consumers spending habits are evolving as a result of the virus. “The shift away from cash and the move to contactless or digital payments is becoming more pronounced as people avoid dealing with paper. We saw a 40 per cent dip in cash transactions in April. Furthermore, the way consumers spend, both in terms of the category of spend as well as the mode of spending, is also undergoing a change,” says Iyer.
“Generally, spending is low across all industries as avenues to spend have been limited, but there has been growth in certain spend categories like home entertainment and online groceries. As the trend towards digital gathers momentum, we will see organisations accelerating their digital transformation agendas and designing digital customer journeys to offer superior customer experience.”
We have noticed a significant increase in customers adopting digital products and services at CBD strongly aligned with the bank’s default digital strategy.
Amit Malhotra, General Manager – Personal Banking Group, Commercial Bank of Dubai (CBD), says that he has also seen a notable change in customers’ behaviour during the pandemic. “We have noticed a significant increase in customers adopting digital products and services at CBD strongly aligned with the bank’s default digital strategy. We have also witnessed an increase in contactless payments, online remittances and e-commerce transactions during this period.”
He refers to how the bank has accommodated this increase in digital banking with products, such as the CBD Digi Account. “It allows customers to conveniently and seamlessly get onboarded and open a bank account in minutes in just three steps, only using their Emirates ID. The account gets opened immediately with an IBAN for customers to use and transact. The account is a zero balance account, doesn’t mandate any salary transfers, allows you to also open up to 11 multi-currency accounts, including a Gold account and is loaded with benefits such as free remittances, free cheque books and rewards in terms of welcome bonus, air tickets, mobile phones and much more.”
Financial services entities can take advantage to broaden the scope for their digitisation process rather than looking it through the prism of customer touchpoint.
New digital opportunities
Abhishek Jajoo, Founding Partner & CEO, AJMS Global Consulting, says that financial institutions should look to work with start-ups to meet their customers’ needs in a post-COVID market. “There is an opportunity for existing players to leverage fintech technology through strategic tie-ups, which can be a win-win situation for all stakeholders,” he says.
Jajoo describes digitisation as the “new normal in 2020”, and says that this offers financial institutions significant opportunities.
“Financial services entities can take advantage to broaden the scope for their digitisation process rather than looking it through the prism of customer touchpoint. One such example would be the customer onboarding cost, which can be reduced with the effective use of digital KYC platforms, thereby enhancing customer experience and reducing cost associated with the same.”
He says that digitaisation can be expensive, but describes his own digital platform (Digi KYC) as a cost-effective way for financial institutions to evolve digitally. “Our business model is completely transparent and generates revenue based on the usage, thereby eliminating the upfront investment. In addition to the same, our pay as you go model is a unique proposition which shall reduce the client cost by at least 50 per cent.”
Cutting edge solutions to fight cybercrime
In April, the UAE Banks Federation launched a Fight Fraud awareness campaign in response to people’s increasing reliance on online services during the coronavirus. In April, cybersecurity firm Trend Micro said that during COVID-19, almost half of cybercrime in the GCC was directed at the UAE. Recognising this, the Commercial Bank of Dubai has robust systems in place to safeguard customer data.
“We have strong multi-layered state-of- the-art security controls in place with 24/7 monitoring to ensure protection for our customers and we continually assess these security controls to adapt to new challenges and ensure adherence to UAE regulatory standards. All our cards have EMV level encryption and we have also enabled tokenisation on our cards to provide a higher level of security,” says Amit Malhotra, General Manager – Personal Banking Group, CBD.