UAE’s digital-only banks set to launch with promise of lower fees
Which digital bank will you choose? Or, more specifically, will the prospect of lower fees and click-through access attract UAE individuals and businesses to the next generation of autonomous digital banks?
The prospect of reduced processing and transaction fees will be particularly attractive, particularly for SME customers, who will be a key target area on which new banks will need to focus. At the same time, existing hybrid banks – those offering legacy and digital services – will introduce new incentives to win/retain customers.
Zand – the one of which Mohamed Alabbar and Yussufali MA are the founding shareholders – has obtained the launch authorization from the Central Bank of the United Arab Emirates. Abu Dhabi-headquartered Wio, with companies such as FAB and e& on board, has appointed key personnel ahead of a launch date. According to Apex Group, family offices in the region are turning to neobanks – exclusively digital banking platforms – which can provide a more agile service and with lower fees and compliance costs.
Neo from Mashreq and Liv from Emirates NBD, which apart from online access also offer in-branch operations for those who still feel the need to visit a branch are already well into the running. Others in the UAE’s incumbent banking sector have also launched digital extensions in an attempt to capture a new user base, again with a particular focus on young customers and SMEs.
Olivier Crespin is CEO and co-founder of Zand. According to him, “We built Zand to be more than a fully licensed bank. It is a platform that allows digital players in the UAE ecosystems to connect for financial services. »
These banks will provide easy access to funds, savings tools to control finances, credit options and easy payment methods.
Digital banks not only increase the circulation of money and stimulate the economy, but also facilitate the movement of money across the world.
– Olivier Crespin, CEO and co-founder of Zand
Easier fund flow, lower fees?
The last point – ease of funds flow – will feature prominently in the marketing discourse of these digital banks. According to Crespin, the platform enables households to absorb financial shocks and to send and collect money from relatives and friends in times of emergency. It provides credit options to families and individuals to help them meet sudden financing needs.
Several industry sources have raised the issue of digital-only banks offering lower fee structures. The impression is that these banks have no branches, fewer verticals to monitor, and which can then be passed on to their customers.
“The attraction of Neobanks is the absence of paperwork and a transparent 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. This means that the customer sees the neobank brand, but their funds are held with a traditional bank. The neobank is therefore added to a traditional bank. “This is often due to regulations and capital requirements that a neobank was unable to secure initially. Some neobanks offer money lending services through partner banks, but would not underwrite the risk .
Today’s neobanks are the ‘side account’ for many. Give it a few more years, and we’ll potentially see much greater adoption of all-digital banking by the next generation.
– Ambareen Musa, founder of Souqalmal.com
The commercial orientation of Wio
Once operational, Wio will strive to build a foundation with businesses, especially SMEs, entrepreneur-led organizations and even independent professionals. “Often, small business owners have to be very involved in bank administration work, which distracts them from focusing on the things that matter, primarily the growth of their business,” 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 foreign exchange fees.
“Neobanks have the opportunity to shape the future of industry and the economy in the UAE, especially as market needs and customer behaviors evolve. Digital banking is key to supporting the growth of the next generation of customers and businesses in the country.
Laser focus on CX
According to Dubai-based co-founder and CEO of Xpence, Saad Ansari: “Digital banks are designed for a specific niche – like teen banking apps – and being laser-focused can deliver a great customer experience. This segment only Traditional banks cater to the masses, with multiple segments.
Spoiled for choice
The old banks of the United Arab Emirates are in no mood to give up the digital fight. In recent months, all notables have introduced updated digital banking app features or rollout services that target a new generation of customers.
For example, the Emirates NBD E20 app is a digital business banking option for entrepreneurs, freelancers, sole proprietors, partnership companies and SMEs, enabling services related to expense management, invoicing and even cash and check deposits.
Another example is YAP, an independent branchless digital banking app that has partnered with RAKBank to offer services such as remittances, bill payments, and tools to track expenses and budget.
Neo NXT is a digital banking app from Mashreq targeting 12-18 year olds. It offers this generation “spending independence” with access to a debit card, the ability to transact using the app, create financial goals, save money and be smart with money matters.
So the question remains the same: have customers in the UAE decided where they will go for their digital banking services?
What digital banks have to offer
Their biggest promise is a very 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 personalization with customers. They understand how to use data to enrich the customer experience.
“Attractive” interest rates on deposits as well as competitive rates on remittances will be offered.