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The digital banking revolution: transforming tradition in the UAE

Already established as a booming global hub for the FinTech industry, the UAE is set to become a major player in the digital banking sector.

As one of the world’s biggest adopters of digital banking, the UAE is surging forward with the launch of secure and innovative banking solutions from the likes of Mashreq Neo, Liv by Emirates NBD and the region’s first platform-only bank, Wio.

Here we look at the impact of digital banking and the newest players revolutionising the traditionally conservative banking industry.

The UAE: an ideal ecosystem for digital banking
For consumers:

The move to digital banking is a welcome shift for the UAE’s consumers. With a 97% smartphone penetration, the highest in the world, the country’s young, tech-savvy population has a growing appetite for all things digital. Since the COVID-19 pandemic, consumers have become accustomed to organising their lives through smartphones, from entertainment and e-commerce to booking transport and grocery shopping. It’s no surprise, then, that demand for full-service digital banking solutions is also on the rise.

In a 2021 YouGov-backed survey, 89% of UAE consumers said they would opt for digital banking services, post-COVID, rather than visit a physical bank. While movement restrictions may have opened the door to digital banking, today’s consumers want more than simple day-to-day transactions and services. There’s a growing demand for more comprehensive and sophisticated banking solutions such as remote account openings, multi-currency accounts, cryptocurrency investment, and access to products like insurance and loans.

For SMEs:

For SMEs, which make up over 90% of the UAE’s total registered companies, digital banking can be a vital lifeline in the startup process. Companies are looking for convenient and user-friendly features tailored to their business size and requirements, with a more-support-less-admin approach from their bank of choice. Digital banking can offer SMEs fast, efficient banking, as well as support and guidance on all aspects of running a business, not just financial matters.

For FinTech:

Already a major global hub for FinTech startups, the UAE also provides the ideal infrastructure and environment for FinTech innovators looking to tap into the growth potential of digital banking technologies. Government initiatives such as the different visa programmes and the DIFC’s FinTech Fund are helping to drive the growth of FinTech by attracting investors and talent to the region.

As part of the National Innovation Strategy, other initiatives, such as the Artificial Intelligence Strategy 2031 and the Emirates Blockchain Strategy 2021, have further springboarded investments in emerging technologies, especially in the banking and finance sectors.

It’s predicted that by the end of 2022, over $2 billion in VC funding will be raised for more than 800 FinTech companies specialising in different banking tech segments such as payments, open banking, smart lending, blockchain and cybersecurity.

What about compliance and security?

As part of its strategy to drive digital transformation, industry regulator the Central Bank of the UAE (CBUAE) is committed to improving frameworks and enhancing transparency and governance, especially in the Payment sector.

The CBUAE is working with the UBF to continuously update legislation and introduce new laws with a focus on anti-money laundering, consumer protection and data security, to ensure safer banking for customers. By addressing these challenges, the CBUAE aims to promote the UAE as a region of excellence in anti-money laundering compliance and jurisdictional regulation. Digital banks must therefore adhere to strict regulations on compliance, crime prevention and security.

When it comes to security, today’s tech-savvy customers want the best of both worlds – a trusted platform which offers clients easy and seamless transactions, while keeping their money and privacy safe. Multi-factor authentication, biometrics, and data encryption enable newer banks to demonstrate their integrity while building customer trust and confidence in their digital services.

So, who are the digital disruptors giving traditional banks a run for their money?

The digital banking space is becoming increasingly competitive in the UAE, with innovative new players entering the fast-moving and thriving market.

Here’s a look at some of the UAE’s brightest digital disruptors, offering exciting and diverse banking models:

Mashreq Neo

Awarded the ‘Best Mobile Banking App in the Middle East 2020’ by World Finance, Mashreq Neo provides a secure, safe, and intuitive banking solution for smartphone users. Offering a range of accounts including current, savings, salary and investments, Neo is also committed to enhancing customer security. In collaboration with the UAE’s Ministry of Interior, Neo was the first digital bank to offer account opening using biometric facial recognition.

Liv Bank by Emirates NBD

Launched in 2017, Liv is the fastest growing digital bank in the UAE. Primarily targeting millennials and Gen Z, Liv defines itself as a ‘lifestyle banking app’ for the digital generation. From simplified tracking on spending habits to fantastic benefits programmes, the Emirates NBD sponsored banking app offers an easy and rewarding way for the UAE’s young generation to take control of their finances.

Much of Liv’s success is down to the visionary leadership of CEO Jayesh Patel who combines a customer-centric approach with quality of service and innovation. Patel’s mission to transform the UAE banking landscape doesn’t stop with Liv. He’s recently been appointed as the CEO for the region’s newest digital disruptor, Wio.

Wio

Officially launched in September 2022, Wio is the UAE’s first digital banking app fully regulated by the Central Bank of the UAE and promises to give customers a ‘fully digital banking experience’. Wio Business, a dedicated app for startups, freelancers and SMEs offers a range of business banking solutions, including expenses management, automated invoicing and saving spaces for VAT, rent and bills.

“We believe the next evolution of banking is a shift from traditional online banking and pure play digital banks to that of platform banking and we are excited to launch Wio as the first platform bank in the region.”
Jayesh Patel – CEO

Migom

Migom Bank UAE first made its appearance at the AIBC Dubai 2022 Summit. The Migom Global Corp subsidiary offers a full range of global e-banking services for SMEs and entrepreneurs looking for opportunities in emerging markets.

Specialising in cryptocurrency, Migom’s ‘Whole in One™’ banking service integrates traditional fiat banking products with blockchain-based services. Fully licensed, regulated and secure, this challenger neobank is a trailblazer in making cryptocurrency markets accessible to all.

3S Money

International payments platform 3S Money was originally launched with one aim in mind: to help SMEs make cross-border transactions faster and easier. Licenced and regulated in the UAE by Dubai Financial Services Authority (DFSA) in October 2022, 3S Money provides tailored international business accounts with a human touch. Streamlining international payments will enable UAE businesses to scale faster and further.

The future is digital

With an ecosystem that favours financial alternatives, and a government that strives for innovation, the future of digital banking in the UAE is looking bright.

Digital disrupters are transforming how we manage our finances while sending a clear message to traditional banking institutions – ‘adapt and modernise, or risk becoming obsolete.’

Ultimately, the future of modern banking hinges on the needs of the customer. As more technologies emerge, individuals and businesses will expect faster, safer, more efficient and flexible banking options, with no barriers to currencies or geographies.

This is all good news for the UAE, whose mission to become competitive on a global level will drive further FinTech and BaaS innovation and investment in the region.

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