Digital bank transactions are growing as much as five times faster than those at branches as the battle for new customers moves from the street to the web.
In the next couple of years, online bank transactions in the UAE, which boasts the highest penetration of smartphones in the world, are likely to overtake those at branches.
Lenders are spending billions of dollars on technology inside and outside of branches that will reduce customer stress and put their staff to better use.
"We're seeing a shift to digital across the industry," said Suvo Sarkar, the head of retail banking at Emirates NDB, Dubai's biggest bank. "I can talk about my own bank, where transaction growth for digital is five times the growth of branch transactions. Having said that, our branch transactions are still higher than mobile and online transactions. It still will take some time for digital to overtake branches. It might be in the next couple of years, but that trend is definitely there. If you are not in the mobile space, you are missing out on a huge opportunity."
In a region where personal relations are highly prized, banks often pride themselves on the size of their branch networks and managers who are available to chat over a cup of tea. But people have increasingly shown preference to get their banking needs done remotely through the internet to avoid traffic, parking and queues, and banks would much prefer that simple activities, such as changing an address or requesting a bank statement, be done online to free up their staff to sell more of their products.
According to a study last year by Google, the UAE has the highest usage of smartphones in the world, at 75 per cent, while the country ranks 19th for internet usage, the telecommunications ministry said.
Data traffic carried over mobile networks is forecast to increase 14-fold in the Middle East and Africa from 2013 to 2018, according to Cisco.
Still, bank visits – obligatory for account openings because of “know your customer” rules – remain high enough toencourage branch openings, although new facilities are smaller.
Mr Sarkar said the average size of new branches built in the UAE has been almost halved in the past 10 years to between 2,000 and 3,000 square feet from 5,000 sq ft as banks position themselves for changing consumer patterns. A focus on interaction with customers through social media has also meant higher rates of customer satisfaction because problems can be dealt with quickly, he said.
The push to digitise banking in the UAE came after the global financial crisis in 2008 when many lenders began to focus on consumer operations as big corporate clients struggled to pay old loans and could not take out new ones. In a country with more than 50 banks, the fierce competition has been a boon for consumers, who can now do most of their banking on their smartphones.
But the shift to digital banking has come at the expense of upgrading technology inside banks, said Dean Young, a product management vice president at SunGard, a US company that provides software to banks. In many cases the person serving you does not have as much information about your loans, credit cards and accounts as you do through your internet banking portal, Mr Young said.
“They’ve lagged in the infrastructure that sits behind [the bank counter],” he said. “And I think people are starting to realise that now. It’s great having a brilliant mobile experience, but it still has to be backed up by face-to-face service.”
Mr Young said banks here can become more effective by spending money on technology that will facilitate the mobility of staff. Instead of being boxed all day inside a bank doing transactions such as cash deposits and withdrawals, they can go out to meet customers armed with a tablet, he said.
The technology has become so cutting edge that some banks, such as Emirates NBD, have invested in interactive teller machines where you can bank with a teller sitting hundreds of miles away through video conferencing, said Mr Sarkar.
“Ninety per cent of what you can do at the physical teller you can do here, except the teller is not in front of you – she is in Ajman,” he said. “Today we have 100 transactions on the machine and more and more you can go to the Dubai Mall and see older customers using that as well. Adoption in this market is very fast.”
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How to watch Ireland v Pakistan in UAE
When: The one-off Test starts on Friday, May 11
What time: Each day’s play is scheduled to start at 2pm UAE time.
TV: The match will be broadcast on OSN Sports Cricket HD. Subscribers to the channel can also stream the action live on OSN Play.
Match info
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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
TOUR RESULTS AND FIXTURES
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June 7: Blues 22 Lions 16
June 10: Crusaders 3 Lions 12
June 13: Highlanders 23 Lions 22
June 17: Maori All Blacks 10 Lions 32
June 20: Chiefs 6 Lions 34
June 24: New Zealand 30 Lions 15 (First Test)
June 27: Hurricanes 31 Lions 31
July 1: New Zealand 21 Lions 24 (Second Test)
July 8: New Zealand v Lions (Third Test) - kick-off 11.30am (UAE)
MATCH INFO
Uefa Champions League semi-final, second leg
Roma 4
Milner (15' OG), Dzeko (52'), Nainggolan (86', 90 4')
Liverpool 2
Mane (9'), Wijnaldum (25')
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THE BIO
Ms Davison came to Dubai from Kerala after her marriage in 1996 when she was 21-years-old
Since 2001, Ms Davison has worked at many affordable schools such as Our Own English High School in Sharjah, and The Apple International School and Amled School in Dubai
Favourite Book: The Alchemist
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Wicked: For Good
Director: Jon M Chu
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Rating: 4/5
The specs: 2018 Maserati GranTurismo/GranCabrio
Price, base Dh485,000 (GranTurismo) and Dh575,000 (GranCabrio)
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Film: In Syria
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Verdict: Four stars
Fifa Club World Cup quarter-final
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Al Ain 3 (Ahmed 02’, El Shahat 17’, Al Ahbabi 60’)
MATCH INFO
Manchester United 1 (Rashford 36')
Liverpool 1 (Lallana 84')
Man of the match: Marcus Rashford (Manchester United)
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Trolls World Tour
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The White Lotus: Season three
Creator: Mike White
Starring: Walton Goggins, Jason Isaacs, Natasha Rothwell
Rating: 4.5/5
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