digital banking
This is the year digital banking in the UAE has come of age, with multiple launches and transformations. GII wants to be part of the move. Image Credit: Shutterstock

Dubai: When it comes to banking in the UAE, digital seems to be the only way to go about it.

The first wave of digital-only banks are going live – Wio, Zand – and more of UAE’s traditional banks are scoring hits by transitioning, with Abu Dhabi’s Al Hilal Bank confirming some strong consumer wins since the switch in February.

Soon, another digital-only bank will be opening its virtual doors in the UAE, but with a slight difference in its target audience. That’s the plan Dubai-based GII (Gulf Islamic Investments) has for a banking entity – Anglo-Gulf Trade Bank - bought from Mubadala earlier this year.

“We are working on making it a wholesale bank that will be heavily driven by technology,” said Pankaj Gupta, co-CEO at GII. “It will not be driven by branches, and what we plan to do is address the massive question of financing faced by high-growth companies in the UAE or GCC.

"We are looking at all possible opportunities relevant to this economy, relevant to the region, and which can add FDI and bring new employment opportunities," said Gupta. Image Credit: Supplied

“The aim is to try and create businesses that can run for generations.”

Clearly, UAE’s new generation of digital banks are carving up their turfs. And that means thinking beyond consumers or SMEs. For instance, Emirates Development Bank’s digital entity is exclusively focusing on its core area – development-linked funding and that meets the needs of the UAE economy going forward. With GII, financing ‘high-growth businesses’ represents an opportunity, and it will not be distracted by the small-ticket lending to individuals.

“We would provide a very important resource - financing - to high-growth companies,” said Gupta. “Whether in the region and outside, we will address a larger section of the economy that is run by high-growth firms.”

The likely launch date for the new entity has not been set, with Gupta making clear that it will not happen before the year-end.

Who can say that a digital bank in any technical language is not a fintech? The bank we bought in Abu Dhabi is as much a fintech any other other one. But will the bank get into consumer/retail banking? The answer is a big 'NO'

- Pankaj Gupta, co-CEO of GII

It’s all tech

Gupta makes a point that GII’s investments into tech will not be distracted by the noise over global tech staring at a recession and what that would mean for growth.

“We have a much bigger push already going on – we are in the last stage demerger of largest AR/VR company – Zspace - in the US that is only focussing on education,” said Gupta, who is also the chairman of the Silicon Valley-based firm. “In the last three years, we have picked up a majority stake in it.

“The demerger will eventually lead to a listing, sometime by Q2 next year.”

Gupta feels the timing is just about perfect, given the funding that the US is finally putting back into education. “There’s massive US government budgets backing education, in the hundreds of millions of dollars.

2D to 3D

“Zspace numbers – the top-line- and other vitals – are growing strongly in these 3 years, and the solutions are present in 25,000 schools. This is tech that can be exported, and we are in talks with education providers in the UAE.

“What AR/VR in education does is make difficult concepts that were only explained in 2D mode easier when in 3D. If you want to know how to build a car from scratch, that’s what Zspace does offer in 3D.”

Light on real estate

GII has through the years been a heavy hitter in real estate, whether that’s in Dubai, London or Paris. Over the last few months, it has not had any major commitments in property, apart from that associated with logistics. “It does not make technical sense to do a real estate transaction in a volatile interest rate scenario,” said Gupta. “Instead, we have been focusing on private equity.”

India calling
Gulf Islamic Investments has bought into a range of companies based in India in the last 24 months, through two dedicated PE funds – the IGP1 and IGP2. Together, these funds have raised more than $300 million.

“The theme of IGP is to invest primarily in three sectors within India - healthcare, consumer and tech,” said Pankaj Gupta. “Our region is very averse to blindfold investing; Gulf investors want clarity and visibility on where you are investing. GII came up with a way where an investor takes PE in not just one company but 6-7.

“Investors know what's happening in India but don't have access to the right transparent and visible portfolio. We have come up with a structure where investors can see all of that from Day 1. And there is no single company concentration risk.”