In the in the UAE, as in many countries, digital channels are delighting consumers. Jeff Topping/The National)
In the in the UAE, as in many countries, digital channels are delighting consumers. Jeff Topping/The National)

As UAE customers embrace mobile banking, what happens to the role of bank branches?



In the UAE and many countries, online and mobile banking are finally coming into their own.

Some 15 per cent of UAE consumers said they used smartphones, tablets and computers for their daily banking transactions, a Bain & Company survey shows.

With mobile penetration and usage in the UAE among the highest in the world, there remains significant room for growth. In the same survey, 40 per cent of respondents said online and mobile banking would become their preferred way to bank. Both usage and preference are significant­ly higher for affluent consumers, as well as for those aged 35 and younger.

Indeed, Bain’s recent retail banking survey of about 2,500 people across the UAE highlights the relative importance of mobile, online and other direct channels.

A similar survey conducted last year included about 150,000 people in 14 countries across Europe, the Americas and Asia.

Bain’s surveys found that in the UAE, as in many countries, digital channels are delighting consumers. People love advanced features such as remote deposit capture, or alerts when homes that meet their buying criteria become available. They also value the convenience of mobile devices for straightforward tasks, such as checking account balances.

For retail bankers battling to retain customers and offer them more financial products, digital channels can be a powerful way of building loyalty – when those channels emphasise the right features and transactions, and dovetail tightly with phone centres and other ways that banks communicate with their their customers.

Banks should not assume that they can simply build mobile platforms and loyal customers will follow. Mobile banking usage increases with income, the survey finds, but wealthy customers are more demanding: They tend to seek premium service and tailored expert advice through personal banking relationships, not just convenience through digital channels. And because many of them conduct their banking and business affairs in several countries, they know what high-quality service looks like.

Why do affluent customers matter so much? In the UAE, moving affluent customers from being “detractors” or “passives” to “promoters” of a bank is worth roughly five to 10 times the economic value of turning mass-market customers into promoters, we estimate.

Affluent promoters own more bank products than affluent detractors, and they tend to recommend their banks to affluent friends and family members.

The two major themes of our survey findings – a surge in online and mobile banking and the tepid loyalty scores of affluent customers – point to a logical way forward. If UAE banks can take out costs in how they handle routine transactions, they will be able to serve mass-market segments more profitably and invest disproportionately in high-margin services for the rich.

Digital banking reduces branch visits, setting the stage for major branch redesign – thus serving the mass market more efficiently. Today, some 30 per cent of UAE cus­tomers still prefer to use bank branches for routine tasks; however, once customers turn to mobile banking, many of them will make fewer (if any) physical visits.

Bank branches will not disappear, but their role will shift to lighter, more innovative formats. A few examples in other countries show the range of possibilities. Easy­Credit in Germany operates self-service terminals, where customers can fill out the first part of a credit application or pick up product packages to complete online at home. Citibank is piloting technology-intensive branches that rely on touch-screen walls, iPads and teleconference facilities at high-traffic locations in Hong Kong, Japan and Singapore. The point is to raise customer engagement with advisory services while providing faster self-service for routine transactions through internet kiosks.

Radical branch redesign, while daunting, can be done through test-and-learn experiments in trial markets. For instance, USAA Bank primarily serves its 9 million active and retired military members and their families through the mail, via phones, the internet and mobile channels, garnering customer loyalty and satisfaction in the process. But recently, USAA has opened physical service centres at locations where its members are concentrated, often near military bases. At these service centres, USAA staff show their members how to use their services and technol­ogies, demonstrate how to complete routine transactions through various self-service channels, and help them with video-conferencing and other technologies for more complicated transactions.

Many customers will embrace such formats if the self-service channels are intuitive and convenient. The challenge is to integrate disparate channels into a seamless, holistic experience. Solid execution of the details will be critical. Does the bank pre-fill application forms with the customer data it already has? Do staff inform every customer about mobile applications? Does the core information-technology system provide a single overview of the customer?

Leading banks in other countries have already begun their network redesign. UAE banks should do so as well – before outside disruptors do. Waiting to act until the branches are drained of all routine transactions will be too late.

Tom De Waele and and Saeeda Jaffar are respectively a partner and a principal in the Dubai office of Bain & Company. They belong to the management consultancy’s Middle East financial services practice

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Director: Shankar 

Stars: Ram Charan, Kiara Advani, Anjali, S J Suryah, Jayaram

Rating: 2/5

Match info

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Manchester City v Hoffenheim, midnight (Wednesday, UAE)

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Director: Christian Carion

Starring: James McAvoy, Claire Foy, Tom Cullen, Gary Lewis

Rating: 2/5

EMERGENCY PHONE NUMBERS

Estijaba – 8001717 –  number to call to request coronavirus testing

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If you go

The flights Etihad (www.etihad.com) and Spice Jet (www.spicejet.com) fly direct from Abu Dhabi and Dubai to Pune respectively from Dh1,000 return including taxes. Pune airport is 90 minutes away by road. 

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British group

Coldplay

Foals

Bring me the Horizon

D-Block Europe

Bastille

British Female

Mabel

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British male

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1 football pitch: The length of each permanent spoke is longer than a professional soccer pitch

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Source: Federal Office for the Protection of the Constitution

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Rating: 4/5

 

Young women have more “financial grit”, but fall behind on investing

In an October survey of young adults aged 16 to 25, Charles Schwab found young women are more driven to reach financial independence than young men (67 per cent versus. 58 per cent). They are more likely to take on extra work to make ends meet and see more value than men in creating a plan to achieve their financial goals. Yet, despite all these good ‘first’ measures, they are investing and saving less than young men – falling early into the financial gender gap.

While the women surveyed report spending 36 per cent less than men, they have far less savings than men ($1,267 versus $2,000) – a nearly 60 per cent difference.

In addition, twice as many young men as women say they would invest spare cash, and almost twice as many young men as women report having investment accounts (though most young adults do not invest at all). 

“Despite their good intentions, young women start to fall behind their male counterparts in savings and investing early on in life,” said Carrie Schwab-Pomerantz, senior vice president, Charles Schwab. “They start off showing a strong financial planning mindset, but there is still room for further education when it comes to managing their day-to-day finances.”

Ms Schwab-Pomerantz says parents should be conveying the same messages to boys and girls about money, but should tailor those conversations based on the individual and gender.

"Our study shows that while boys are spending more than girls, they also are saving more. Have open and honest conversations with your daughters about the wage and savings gap," she said. "Teach kids about the importance of investing – especially girls, who as we see in this study, aren’t investing as much. Part of being financially prepared is learning to make the most of your money, and that means investing early and consistently."

Despacito's dominance in numbers

Released: 2017

Peak chart position: No.1 in more than 47 countries, including the United States, the United Kingdom, Australia and Lebanon

Views: 5.3 billion on YouTube

Sales: With 10 million downloads in the US, Despacito became the first Latin single to receive Diamond sales certification

Streams: 1.3 billion combined audio and video by the end of 2017, making it the biggest digital hit of the year.

Awards: 17, including Record of the Year at last year’s prestigious Latin Grammy Awards, as well as five Billboard Music Awards

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Name: Hassan Mohsen Elhais

Position: legal consultant with Al Rowaad Advocates and Legal Consultants.