Opportunities for banks in the UAE: 61% of customers turn to their banks for new services

  • Beyond the banking business, which is gaining in importance in international markets: Successful “super apps” that bring together e-commerce and financial services valued at 4 to 40 billion US dollars
  • 70% of UAE customers aged 25-44 are ready to contact their banks for new deals
  • New customer-centric approaches are crucial: 45% of customers in the UAE are willing to switch banks entirely in search of bigger and better options
  • 37% of traditional customers currently do not know whether their bank goes beyond banking services

Dubai, United Arab Emirates: In the United Arab Emirates, the banking and financial services sector is changing faster than most individual incumbent banks, with consumer forces disrupting their roles, structures and competitive landscape. As financial and lifestyle services continue to converge and financial products become even more embedded in customer offerings, the enrichment of existing banking offerings with lifestyle services will enable local institutions to build deeper and broader end-user relationships while at the same time consolidating their relevance status. Arthur D. Little (ADL), the leading management consultancy with the longest presence in the Middle East, takes this point of view in their latest report, Beyond Banking: Is There An Opportunity for Banks to Go Beyond Banking in the UAE? Based on a recent survey by Arthur D. Little in partnership with M2P Solutions, a leading application programming interface (API) infrastructure company, the report explains why the national banking sector is likely to drive new avenues of banking in due course , and explains the need for adopting multiple partnership strategies in the developing ecosystem.

Beyond the banking outlook in the UAE

In line with an analysis of 2,000 UAE retail banking customers, the report confirms the view that the retail banking market is coming under increasing pressure as 45% of traditional bank customers are willing to switch to competitors within the next six months. Low interest rates, regulatory changes, and various new players entering the financial services landscape – including fintech companies, retailers, and telecommunications providers – are behind this trend. As a result, banks have begun to take proactive steps to move beyond traditional banking and expand into growth areas beyond financial services. These efforts have subsequently resonated with the customer base: 61% of customers are now ready to turn to their main bank for an offer that goes beyond banking, as is 70% of customers aged 25 to 44.

Pierre Mariani, Partner, Financial Services Practice, Arthur D. Little Middle East, said, “Evolving customer demand accelerated digital transformation and the entry of new players is disrupting traditional business models for UAE banks. These trends will continue to transform the financial sector in the years to come, and banks that do not embrace the change and make the adjustments necessary to serve their customers beyond existing services will inevitably be left behind. Therefore, a holistic approach is required for banks that are keen to retain customers, seize future opportunities and really go beyond banking as they know it. “

According to the report, the appetite for offers that go beyond banking is increasing among banks and customers alike, with the proportion of customers with a positive outlook rising from 61% to as much as 68% as complementary services in the areas of entertainment, education, Retail, and food. However, there are several considerations for the wider UAE banking community before such avenues can be successfully pursued.

Important considerations for UAE banks

After examining the beyond banking landscape, the report provides a comprehensive rundown of the most pressing considerations related to banks’ beyond banking efforts. First, banks need to quickly revise their respective diversification strategies. In order to remain relevant in the future, they have to understand and pursue dynamically changing markets in order not to build on outdated perspectives. Second, they should build on a vision and decide whether to run their own ecosystem or join an existing one. In addition, the other key considerations concern SME banking and customer focus. Beyond retail banking, SME banking is seen as a new growth area to explore, while banks pursue customer-centric approaches and can ultimately go beyond banking success by closing existing data, digital maturity and talent barriers.

“The full use of the ways that go beyond the banking business and the presentation of new values ​​for customers through diverse, attractive offers depends on a future-oriented approach from the beginning on such projects,” adds Vaanathi Mohanakrishnan, Business Head, M2P Solutions. “If banks heed this recommendation and take such an approach, their efforts to make current offers more attractive and at the same time combine them with various lifestyle services will certainly accelerate progress on the way beyond banking.”

Beyond Banking: Is there an opportunity for banks to go beyond banking in the UAE? Also provides insights and intelligence on the drivers of changing bank customer needs, the importance of data sharing and customer trust, and why UAE banks need bold investments and partnerships.

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About Arthur D. Little

Arthur D. Little has been at the forefront of innovation since 1886. We are a recognized thought leader in linking strategy, innovation and transformation in technology-intensive and converging industries. We navigate our clients through changing business ecosystems to discover new growth opportunities. We enable our clients to build innovation skills and transform their organizations.

Our consultants have extensive practical industry experience combined with excellent knowledge of the most important trends and dynamics. ADL is present in the most important economic centers in the world. We pride ourselves on serving most of the Fortune 1000 companies as well as other leading companies and public sector organizations.

About M2P Fintech

M2P Fintech, registered in the United Arab Emirates as M2P Solutions, is an API infrastructure company that enables companies of all sizes to embed financial products in their customer journeys.

Our agile platform enables companies to quickly create and deploy fintech products by simplifying partnerships with banks, PPIs, FIs and other regulated entities. We provide extensive domain expertise with significant time to market while maintaining the core of the scalability, security, and reliability of our offerings.

© Press release 2021

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