Building a smart bank in the UAE

In an increasingly digital age, it comes as no surprise that more consumers are looking for the convenience of online and on-the-go banking through websites and mobile apps.

 

According to a survey by advisory EY, which polled 2,000 customers across the UAE, Saudi Arabia, Qatar and Kuwait for its new GCC Digital Banking Report 2015, 81 per cent of UAE customers say they will ditch their current bank if another one meets their desire for a bank in pocket — in other words, one that offers them the option of complete smartphone-based banking.

 

As the number of mobile users rise in the country — last year a study led by Google showed the UAE has the highest usage of smartphones in the world — more financial institutions are taking note, realising the work banks and their tech teams do in developing web-based and mobile apps is important to keep pace with a new generation of digital consumers. 

 

Changing habits

“There is a definitive shift taking place in the way that consumers in the UAE are banking and we are investing heavily in the infrastructure to allow our customers to bank the way that they want to,” says Philip King, Head of Retail Banking, Abu Dhabi Islamic Bank (ADIB).

 

 “While internet banking remains the platform of choice for service requests such as statements, applications for new products and information requests, mobile banking is becoming the platform of choice for transactions. 

 

“Our research shows that customers still value the human touch from branch transactions, but want to complement it with the efficiency of digital transactions.”

 

The figures for web and mobile apps are promising. King says new users for ADIB’s internet banking platform increased by more than a quarter in 2015, while ADIB’s mobile banking app saw a 54 per cent rise in new users in the first nine months of 2015. ADIB has also witnessed a 71 per cent increase in transactions conducted on the mobile app during the year. 

 

Although major financial institutions in the UAE have mobile apps, not all apps are limited to finance, as banks turn to innovative digital ways to gain the competitive edge. Emirates NBD, Dubai’s biggest bank, recently announced the launch of its Emirates NBD Fitness Account — a digital incentive through a new savings account that links health to a customer’s wealth. The mobile-based savings account allows customers to earn interest based on the number of steps that they walk or run daily using a compatible fitness devices linked to the Fitness App. 

 

“Our fitness account heralds a new phase in digital banking as it effectively combines customers’ health and lifestyle goals with their banking needs,” says Suvo Sarkar, the bank’s Senior Executive Vice-President and Group Head of Retail Banking and Wealth Management. 

 

Sarkar sees online and mobile banking as the future of banking. “Customers today demand frictionless banking solutions and when it comes to offering 24/7 on-the-go capabilities, mobile remains unmatched,” he says.

 

Emirates NBD has witnessed increasing adoption across its customer base, with online and mobile transactions growing at 30 per cent year-on-year and one third of active customers using mobile and online banking regularly. “Apps are definitely the way forward and there is an entire generation of banking customers that are comfortable with banking via apps,” says Sarkar.

 

Investment in digital channels is paying off in an age where bank branches are disappearing and customers are embracing a less personalised but a more round-the-clock type of service. “While we have customers that prefer branch banking and we have invested in this area as well to create a seamless in-branch experience, for the first time more than 85 per cent of retail customer transactions are now done outside our brick-and-mortar channels,” says Sarkar. “Online and mobile banking offer higher cross-sell opportunities and we are beginning to see our investment in digitisation pay dividends.” 

 

Some way to go

However, Paul Sommerin, MENA Financial Services Technology and Transformation Leader at EY, says mobile banking is still in the infancy stage of growth due to some local banks not evolving as quick as their customer’s tastes. 

 

“EY’s report revealed that consumers are wanting more from banks around mobile functionality, so it’s actually the industry that needs to catch up to digitally savvy consumers,” he says. “A large number of transactions are still made on home computers or ATMs, or through traditional channels involving human interaction, such as branches or call centres.  Only a limited number of banking transactions are mobile. This is surprising given the high number of banking customers that use smartphones.”

 

The EY report said the overwhelming majority of customers asked for an improved banking experience, says Sommerin. “Mobile-first is the future of retail banking, but it is not enough for banks to just introduce new digital channels. They must reinvent customer processes to offer technology-enabled, simple, end-to-end banking experiences,” he says.

 

The EY report showed almost half (47 per cent) of banks in the GCC have a planned budget of between $5-$20 million over the next five years to enhance their digital capabilities. 

 

As banking moves more online, the need for branches will become more obsolete and financial institutions will continue customer service with less of a physical footprint, predicts Sommerin.