Stock Etisalat latest 2020
The Etisalat push into digital banking comes just as the telecom giant ventured into the financial services space, by selling insurance policies. Image Credit: Courtesy Etisalat

Dubai: The Etisalat Group in alliance with Abu Dhabi mega-corporations ADQ, Alpha Dhabi Holding and First Abu Dhabi Bank (FAB) will launch a new digital banking platform - Wio. The new bank will be headquartered in Abu Dhabi. It will have a total invested capital of Dh2.3 billion plus in-kind contribution.

It was in October 2020 that ADQ confirmed it had acquired a digital banking license from FAB. 

According to Mohamed Hassan Alsuwaidi, CEO of ADQ, “As part of our efforts to future-proof Abu Dhabi’s economy, we are committed to enhancing the financial services sector. By delivering secure, transparent and seamless access to a cutting-edge, customer-centric digital banking platform, Wio’s unique business model will further strengthen the UAE’s digital economy that is already supported by robust infrastructure and progressive regulations.”

Stock - Wio
Wio wants to reshape the way UAE’s consumers do their banking. And digital is the way Wio will do it, with the Beta version to be deployed shortly.

Pronounced 'wee-oh', the name describes the company’s purpose of ‘opening new paths so you can go further’. The ‘W’ is the shape of the customer's path and the journey that Wio enables through digital, the “i” represents input and the “o” represents output.

The alliance has won "in-principal approval from the Central Bank of the UAE". The movep "provides Etisalat Group the opportunity to invest in the growing digital banking sector and leverage synergies in this space by offering a broader portfolio of products and services along with taking advantage of joint and collaborative go-to-market opportunities," a statement issued by the telecom giant said. 

"This initiative brings significant value creation potential for Etisalat Group over the long-term."

Wio will soon launch a Beta version that will initially provide SMEs with an "engaging customer-centric experience". UAE already has issued digital banking licenses to Al Maryah Community Bank in Abu Dhabi and Dubai-based Zand.

Wio's financial muscle
* Wio's primary shareholders - ADQ and Alpha Dhabi - will own a combined 65%.

* Etisalat will have 25% and First Abu Dhabi Bank (FAB) holds 10%.

Etisalat will contribute will have a 25 per cent stake in Wio, in lieu of a Dh639 million commitment. The transaction will be paid in cash. "The partnership will be accounted for based on the equity method and the financial impact will be reflected in Etisalat Group’s financials effective from February 2022," the statement added.

A perfect alliance?

With Etisalat providing the tech backbone for the new bank and FAB’s status as the UAE’s biggest bank – assets of Dh1 trillion – Wio starts off with inbuilt advantages. And then comes the heft offered by ADQ and Alpha Dhabi – both as influential as it gets in the local corporate landscape.

"The launch of Wio will be significant for Abu Dhabi as it will help establish the emirate’s leadership in financial services in the digital age," said Hamad Salem Mohamed Al-Ameri, Managing Director and CEO of Alpha Dhabi. "Our Dh850 million investment in Wio is part of the strategy we announced last December to invest in promising sectors within and outside the UAE.

"Wio presents a strong investment opportunity for Alpha Dhabi, and we look forward to working together to support its growth.”

The digital rationale applies to banks too
The four-strong alliance will be enough to ensure that Wio when it launches will start off with inbuilt strengths.

"In today's times, The one gadget that dominates our life is the smartphone - The backbone of all this is provided by the telecommunication industry, where Etisalat is crucial," said Vijay Valecha, Chief Investment Officer at Century Financial.

"The new initiative is a gamechanger in the UAE banking landscape. Moreover, it can be a new revenue driver for Etisalat as the business can be launched in the other countries where the company is present. The initiative can reach its full potential with the help of Etisalat. FAB will be bringing in knowledge of financial products, while ADQ will enable the latest company to establish corporate relationships.

"It's a win-win scenario for all involved. This is undoubtedly a wake-up call for others in the banking industry."