How technology has revolutionized our personal finances

As the UAE celebrates its jubilee, the country has emerged as a leading global player in the financial services industry that has been revolutionized by technology and transformed the way we do our banking, invest and save our money. .

From opening bank accounts with facial recognition technology to investment robo-advice that deploys artificial intelligence to measure risk factors to instant money transfers, neo-banks and historic legal reforms, the The sector has come a long way since the early 1970s when the dirham was first created. introduced as the official currency of the country.

It was a time when it took weeks to get money home, when financial services workers painstakingly filled out forms manually and consumers lined up at a bank or bureau de change to request checks. before going on vacation abroad.

But it was the 1980s that proved to be the turning point for the industry, when humble fax and telex machines became a crucial means of ‘real-time’ communication for banks, exchange houses and other financial services companies in the world. country.

“I remember handwritten bookkeeping and using carbon paper to create copies before photocopiers and computers came into the picture,” said Rashed Al Ansari, managing director of Al Ansari Exchange. The National.

“I also remember when traveller’s checks revolutionized international money transfers, which today are considered obsolete. There were days when transactions were recorded by hand and mailed, before being sent by telex and fax.

However, it is the internet that has been the driving force behind the transformation of the industry, which has made transactions simpler, faster and more affordable than ever before, while today’s mobile technology has also influenced the way money is being transferred around the world, Al Ansari said.

The digitization of the UAE’s financial services sector has accelerated during the Covid-19 pandemic, with consumers increasingly relying on the convenience of mobile apps to do their banking, send money home. them, trade stocks or shop online during movement restrictions.

“Smartphones and other mobile devices have effectively reshaped the future of the global remittance industry,” said Mr. Al Ansari.

New technologies will continue to drive the transformation of the sector through innovative FinTech start-ups, which are working with many lenders and brokerage houses on open banking concepts and blockchain, for example, with the aim of further streamlining services.

Bank customers today want a seamless and automated experience with little waiting time – a far cry from the days when the internet didn’t exist and queuing to make a deposit or cash withdrawal at a physical bank was the norm, according to Philip King, the director of retail banking at Islamic Bank of Abu Dhabi, the emirate’s largest Sharia-compliant lender.

To do this, banks in the region are digitizing complex processes and end-to-end customer journeys in their front, middle and back offices, according to KPMG’s UAE Banking Perspectives 2021 report.

“At ADIB, we believe that the digitization of banking services is a necessary step forward to help banks generate new growth opportunities and generate greater value for customers,” King said.

“For simple transactions like payments and transfers, customers prefer digital or mobile channels that provide instant and convenient services,” he adds.

“For more complex or critical banking products, including real estate investments and financing, clients prefer to go to a branch and interact with their account managers. Thus, the appetite for digital interactions varies between banking products, which is why at ADIB, we are always looking for a hybrid approach.

Meanwhile, the UAE introduced landmark legal reforms in 2020 that improve the protection of our personal finances in the future. Radical changes to laws on inheritance, bad checks, bankruptcy and economic support during the Covid-19 pandemic were introduced as part of the UAE’s efforts to reshape its legislative and investment environment for the 21st century.

One of the most welcome changes has been the update to the Federal Commercial Transactions Act, which includes several new provisions designed to discourage criminal prosecution of individuals and businesses for bad checks.

The changes will take effect in 2022 and introduce a mechanism to ensure that banks partially pay the amount to the payee after deducting funds available in the account of the check issuer.

The opportunities for retail investors to take control of their investments have also undergone a significant change from the days when financial advisers, driven by high commissions, falsely sold complex investment products to unsuspecting people. .

These days, retail investors are increasingly looking to access markets using technology, leading to an increase in the popularity of commission-free trading apps such as Robinhood, eToro, and Interactive Brokers.

Digital wealth managers such as Sarwa and StashAway from the United Arab Emirates are also helping to revolutionize the financial services landscape in the Middle East by delivering low-cost investment solutions to a large market that traditionally had limited access to trade and to investment in the past.

Demand for trading apps has skyrocketed during the pandemic as monetary easing from the US Federal Reserve and other central banks around the world has given novice day traders more money to invest during pandemic lockdowns, according to a report by the Finra Investor Education Foundation and the National Opinion Research Center at the University of Chicago.

This trend is set to continue. The global robo-consulting market size is expected to grow 31.8% to $ 41.07 billion by 2027, from $ 4.41 billion in 2019, according to Allied Market Research.

“There have been a lot of milestones that we can highlight [in investing], but the main trend at every step was to make it cheaper, low cost, almost free in some cases, and to make it more accessible so that there was more wealth in more hands, ”according to Mark Chahwan, co-founder and managing director of Sarwa.

“It started with mutual funds and then moved on to exchange traded funds. There has been a resurgence in passive investing, but now the asset is making a comeback with trading, where it’s not just about securing your safety net and a diversified portfolio, but also investing in themes you believe in.

Over the next few decades, it will be Gen Z and their younger cohorts that reshape the financial industry in their tech-driven, mobile-centric image, with ramifications for all consumers, businesses and investors, according to Morgan Stanley.

Mr. Chahwan agrees: “I won’t say it’s a twist, but the new big thing that is shaking the industry now is the number of young people who invest … and grow up in such an environment.”

Update: December 1, 2021, 4:30 a.m.