Digitisation wave set to continue in UAE banking

Covid-19 and the resulting lockdowns and social distancing measures have spurred rapid adoption of digital banking — a trend that is expected to continue as new technologies and products improve options for customers, say UAE bank executives.

While 2020 has been a difficult year for all banks on the business front, it’s also been a chance for them to demonstrate the resilience, safety and continuity of service that customers expect from institutions that safeguard their wealth.

It comes as technology advancements and country-wide initiatives have improved the convenience and functionality of digital ecosystem — including payments, with the long-awaited launch of the Emirates Digital Wallet with its klip digital cash, which is set to grow cashless transactions and boost financial inclusion.

Given the rapid shifts in customer expectations during the pandemic, “digitisation is an imperative, not an option, for the entire industry,” says Ahmed Abdelaal, Group CEO at Mashreq Bank.

Efficient business Continuity

He notes that the bank’s focus on digitisation predates the pandemic and has long been a cornerstone of its strategy. “Fortunately, this meant that when the pandemic struck, there was no operational disruption to our customers, and we were able to continue offering them digital and virtual solutions to meet their needs uninterruptedly, safely and effectively.”

This year they saw clients to begin to use digital options more widely, says Abdelaal. “Even those [clients] who have been historically resistant to getting onboarded to digital, [are] adopting these solutions and enjoying the convenience they bring.”

Similarly, Philip King, Global Head of Retail Banking at Abu Dhabi Islamic Bank (ADIB), says that the bank has invested heavily over the past few years to develop innovative solutions, tools and platforms to enhance their customers’ digital banking experiences.

“At the onset of the pandemic, ADIB was quick to adapt to changes and challenges with minimal disruption, thanks to our robust business continuity plans and progressive digital transformation strategy. [This] allowed our customers have 24/7 access to accounts and convenient self-service banking without having to leave their homes,” says King.

He points to new services launched this year, including AI-enabled Chat Banking, ApplePay, a digital booking service to schedule branch visits, the option to update personal information without visiting a branch, and new tools for corporate customers. That’s coupled with high adoption and usage rates of digital services — this year 97 per cent of ADIB’s banking transactions, including fund transfers, were conducted digitally, while over 80 per cent of ADIB’s Global Transaction Banking business was generated digitally.

King believes the pandemic has resulted in “a fundamental shift in customer behaviour marked by an increased preference for remote and contactless banking experience”.

He adds, “In a post-pandemic era, we expect this trend to continue as banking preferences evolve and more customers grow accustomed to using online and mobile banking channels.”

SME, business focus

Businesses are also set to benefit from digitisation, such as greater information sharing between organisations to reduce paperwork. Some banks are also offering value-added solutions for business customers, such as platforms to connect them with new clients. Earlier this year National Bank of Fujairah launched SME Connect for small and medium enterprises, in the UAE.

Technology also facilitates information sharing — last year Mashreq partnered with the Dubai International Financial Centre (DIFC) to launch the Middle East and North Africa (Mena) region’s first blockchain data sharing platform, which now supports businesses and corporates in opening digital bank accounts almost instantly.

Digitisation can also help SMEs with their financing requirements, says Abdelaal. At NEOBiz, Mashreq’s digital bank for SMEs, technologies including artificial intelligence and data analytics have streamlined lengthy documentation practices and cumbersome paper-based Know Your Customer (KYC) procedures, he says.

Overall, Abdelaal sees digitisation as a huge opportunity for SMEs and the economy more broadly. Businesses this year have seen rapid growth in online sales, and e-commerce volumes in the GCC are set to more than double over the next five years, from $24 billion (Dh88.1 billion) in 2020 to $50 billion by 2025, according to a recent report from Kearney.

“If SMEs successfully adapt to a more online-led business model, they can effectively bring their services closer to people — as well as enable greater visibility across all processes to manage demand, distribution, and deliveries,” says Abdelaal.

Still a long way to go

Despite progress by banks in the UAE in recent years and in 2020, overall the sector still has a long way to go to complete its digital journey, cautions Jorge Camarate, a partner with Strategy&, a consultancy firm that is part of PwC. “When you look at [customer] feedback about digital propositions it is quite mixed — there’s good things but there’s still lots of gaps, especially compared with more mature markets,” says Camarate, who believes that some banks are performing better than others.

While most banks in the UAE have had solid efforts at digitisation underway for a number of years, 2020 will be the year that will have convinced the laggards to actually get a move on, he says.

An additional impact of the disruption to office work was the realisation of the importance of the ability to work remotely — something that had not previously been a priority. Due to the high standards of security required for bank workers, this made it difficult for workers.

Apart from the customer experience, developing digitally can be a way for banks to shave off costs and improve their bottom lines, though typically the bulk of the cost savings will come once that process is largely complete, Camarate says.

Much of the efforts that banks are making takes place behind the scenes. Mashreq’s Abdelaal says that advancements such as digital document processing, robotic process automation, trade document preparation, digital bill of lading, tracking solutions, and e-signature solutions can simplify the customer experience and achieve operational efficiencies and reduce costs.

Emerging technologies such as robotics, AI, data-driven models and digital or cloud-based servicing technology solutions are becoming increasingly important, says Abdelaal.

“As we look to the future, banks will have to adapt to new realities and find new ways to operate; by keeping in mind the entire end-to-end customer journey and being flexible to change,” he explains.