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About 55% of UAE residents polled as part of a survey said they would have no problem switching banks, a report by management consulting firm Boston Consulting Group shows.
Sixty-six percent of UAE banking customers are also actively seeking new offerings, according to the study which surveyed more than 2,000 people in the UAE this year.
“In the UAE, we find that most customers have multiple banking relationships, which is understandable considering the high expectations people now have from their banks,†said Mohammad Khan, partner at BCG.
“Two-thirds of those surveyed are proactively looking for offers that offer better value for money and more than half would not hesitate to go for a completely different bank.
The rise of FinTech companies and an increasingly digitally savvy consumer base have forced banks around the world to invest in digitization. The Covid-19 pandemic has further accelerated the shift to digital services, with consumers opting for cashless payments and online shopping.
About 69% of banks in Europe, the Middle East and Africa believe they will lose market share within two years unless they make significant strides in their digital transformation, according to a September report by the Mambu cloud banking platform and Focus of the Financial Times noted.
More than 20% of UAE consumers have switched banks in the past 12 months, according to the BCG report. High interest rates, products not meeting personal needs and poor customer service were cited as the main reasons for attrition among the UAE’s top banks, according to the report.
[There is] a strong desire to open exclusively digital accounts, a trend that we do not foresee a decline
Markus Massi, Managing Director and Senior Partner, BCG
Alternatively, excellent customer service, a superb digital experience and a strong brand reputation were cited as the top reasons that would force customers to recommend their banks to friends and family, the BCG study showed.
“With many factors behind consumers’ decisions to switch banks, there is definitely room for improvement,” Khan said.
“Leading banks offering excellent service via digital have set the latest benchmark in the industry, and this is something those currently behind should aspire to emulate not only for the purposes of customer retention and attraction,†but also for the development of the brand. “
About 88% of UAE customers are also now ready to open a digital-only bank account, according to the BCG study.
At the same time, branch visits are down 5% from a year ago, while mobile and online banking usage has increased 10% since 2020, the study found. .
The most important features for digital banks are instant account opening, easy bill payments, personalized offers, instant online credit cards, and peer-to-peer payments, respondents said.
“As digital transformation accelerates, consumers now expect autonomy and convenience through transparent service delivery,†said Markus Massi, CEO and Senior Partner of BCG. “This translates into such a willingness to open digital-only accounts, a trend we don’t plan to reverse.”
Digital-only banking is not a new concept in the UAE. In 2017, Emirates NBD launched Liv.bank to meet the needs of millennials. Mashreq, Dubai’s oldest lender, also unveiled Mashreq Neo in the same year.
Abu Dhabi Islamic Bank, the emirate’s largest Sharia-compliant lender, launched a digital-only bank called Amwali in August this year to tap the UAE’s growing segment of tech-savvy young people aged 8 to 18.
Independent digital banks are also entering the market, including Al Maryah Community Bank, which was licensed by the UAE Central Bank in April this year.
This was followed by the launch of digital banking, Zand, which caters to individuals and businesses.
ADQ, the conglomerate that owns the Abu Dhabi government stakes in various companies, also revealed last year its intention to set up a digital bank in the United Arab Emirates using a legacy banking license owned by First Abu Dhabi Bank.
Update: October 10, 2021, 4:57 p.m.
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