The UAE’s legacy banks are in no mood to give up the digital fight. Recent months have seen all the notables having introduced updated digital banking app features or rollout services that target a new generation of customers. Image Credit: Shutterstock

Which digital bank will you choose? Or, more to the point, will the prospect of lower fees and click-to-access pull in UAE’s individuals and businesses to the new crop of standalone digital banks?

The prospect of lower processing and transaction fees will be of particular interest, especially among SME clients, which will be a key target area for the new banks to focus on. At the same time, existing hybrid-banks - those with legacy and digital services - will line up new incentives to win/retain clients.

Zand - the one where Mohamed Alabbar and Yussufali M.A. are founder-shareholders - has won UAE Central Bank clearance to launch. Abu Dhabi headquartered Wio, with the likes of FAB and e& on board, has made key personnel appointments as it closes in towards a launch date. According to Apex Group, family offices in the region are looking at neobanks – exclusively digital banking platforms – which can provide a more nimble service and with lower compliance associated fees and costs.

Already well into the race are Mashreq’s Neo and Emirates NBD’s Liv, which apart from online access also offer branch operations for those who still feel the need to pay a visit to a branch. Others from UAE’s legacy banking sector have also launched digital extensions to try and capture a new base of users, again with a special focus on younger clients and SMEs.

Olivier Crespin is CEO and co-founder of Zand. The way he sees it, “We built Zand to be more than a fully licenced bank. It is a platform that allows digital players across the UAE’s ecosystems to connect for financial services.”

These banks will give easy access to funds, offer savings tools to control finances, credit options, and easy payment methods.

Digital banks not only increase the circulation of money and boost the economy, but also facilitate the movement of money across the world.

- Olivier Crespin, CEO and co-founder of Zand

Easier fund flows, lower fees?

The last point – ease of fund flows – will figure prominently in these digital banks’ marketing pitch. According to Crespin, the platform allows households to absorb financial shocks, and sending and collecting money from relatives and friends for emergencies. It gives credit options for families and individuals to enable them to meet sudden funding needs.

Multiple industry sources have raised the point that digital-only banks come with lower fee structures. The impression is that such banks have no branches, less business verticals to oversee, and which can then be passed on to their clients.

“Neobanks’ attraction is zero paperwork and seamless opening process, including KYC,” said Ambareen Musa, founder of Souqalmal.com. “Currently, neobanks in the region offer limited services and most are based on traditional banks. That means the customer sees the neobank brand, but their funds are kept with a traditional bank. So the neobank sits on top of a traditional bank. “This is often due to regulation, and capital requirements that a neobank has not been able to secure as it starts off. Some neobanks offer money lending services through partner banks, but would not underwrite the risk.

Current neobanks are the ‘secondary account’ for many. Give it a few more years, and we will potentially see a much bigger adoption of fully digital banks by the coming generation.

- Ambareen Musa, founder of Souqalmal.com

Wio’s all-out business focus

Once operational, Wio will go heavy into building a base with businesses, especially SMEs, entrepreneur-helmed organisations, and even freelance professionals. “Often SME owners need to be very involved with banking admin works, which takes them away from focusing on the things that matter, mainly their business growth,” said Jayesh Patel, CEO. “Wio Business will alleviate this pressure with fast digital onboarding, an easy-to-use dashboard, automated VAT saving, invoicing, virtual cards and low FX charges.

“Neobanks have the opportunity to shape the future of the industry and the economy in the UAE, especially as market needs and customer behaviours evolve. Digital banking is essential to support the growth of the next generation of customers and companies in the country.”

Laser focus on CX

According to Dubai-based Xpence’s co-founder and CEO Saad Ansari: “Digital banks are made for a specific niche - like apps for teen banking - and being laser-focused can offer excellent customer experience to that segment only. Traditional banks cater to the masses, with several segments.”

Spoilt for choices

The UAE’s legacy banks are in no mood to give up the digital fight. Recent months have seen all the notables having introduced updated digital banking app features or rollout services that target a new generation of customers.

For instance, the Emirates NBD app E20 is a digital business banking option for entrepreneurs, freelancers, sole proprietors, partnerships firms and SMEs, enabling services related to expense management, invoicing, and even cash and cheque deposits.

Another example is YAP, an independent branchless digital banking app that has partnered with RAKBank to offer services like remittances, bill payments, and tools to track spending and budget.

Neo NXT is a digital banking app by Mashreq targeting the 12-18 year olds. It offers this generation ‘independence over spending’ with access to a debit card, the ability to transact using the app, create financial goals, save money, and get smart with money matters.

The question, then, remains the same - have UAE clients decided where they will go for their digital banking?

What digital banks have to offer

Their biggest promise is a highly convenient branchless banking experience. Typically, your entire relationship with a digital bank can be managed through an app.

Digital banks offer a high level of personalisation with customers. They understand how to use data to enrich the customer experience.

On offer will be ‘attractive’ interest rates on deposits as well as competitive rates on remittances.