Zand Bank, the first digital corporate lender in the UAE, is planning to expand to other markets in the Gulf and Africa within the next three years to boost growth and diversify its product offerings, its chief executive has said.
The digital lender, which is in its fourth year of operation, has already been approached by several African banks and financial institutions in the Gulf region for joint ventures and partnership, Michael Chan told The National on the sidelines of Abu Dhabi Finance Week.
“One and half years ago, many banks, at least from four countries in Africa and two in the GCC, approached us asking whether we want to be joint venture partners, leveraging their license, or co-create a new bank together in the region,” Mr Chan said.
“But at that time, we were very busy on transformation and that's why I think the next three years is probably the right time."
The higher rate of digital adoption in Africa as well as its strong trade ties with the UAE builds the case for Zand to expand its presence in the continent.
“The UAE actually serves a few purposes – one as an investor and two, as a re-export hub for Africa – on both sides: African trade going out, and also the China trade going in,” Mr Chan said.
Zand, he said, is confident its future business and growth based on payment corridors and border trade flows, which is already a strong focus area for the lender. “That's why Africa and GCC will be the next target,” Mr Chan explained.
He said there is no particular Gulf or African market Zand is aiming for first. “Banks just follow the money,” he said. “The country that's growing the fastest will be the country to go to."
The bank will maintain its UAE DNA, he added, even in new markets, and will not only provide specialty banking services but also serve FinTech sectors in new jurisdictions.
Zand, whose board is chaired by Emaar Properties founder Mohammed Alabbar, counts Abu Dhabi's Al Hail Holding as its largest shareholder with a 55 per cent stake. Other main shareholders include Emirates NBD; Templeton International, which is part of the Franklin Templeton group; and Lulu Group founder Yusuff Ali. Each have a 10 per cent shareholding.
Dual strategy
The second lender in the UAE to receive a digital banking licence from the UAE’s Central Bank, Zand is primarily focused on organic growth. However, it is also open to acquiring technology that can help it accelerate growth, Mr Chan said.
Zand’s dual growth strategy is based on broadening its “niche and unique propositions” and partnerships with top FinTech players to “create the market together”, he said.
But “we are always open” to acquisitions as part of the bank’s longer-term strategy, he added.
The ambition to position Zand as an international player explains why the lender pivoted from being a retail-focused bank to a corporate lender just months after its formal launch.
“We initially chose to be a digital corporate bank, and not a digital retail bank, because digital retail banking is a single market focus,” Mr Chan said.
Zand relies on blockchain and on-chain banking, which is essentially borderless banking. That has also changed its competition dynamics in the UAE market.
It targets mid-to-large corporates, institutions and also government-sector entities. “We are in competition with legacy banks because we provide universal banking services,” Mr Chan said.
Growth aspirations
The bank, which currently offers AI-powered transaction banking; digital asset custody; escrow services; as well as ESG (environmental, social, and governance) financing solutions, expects to grow between 50 per cent to 100 per next year.
Having expanded its revenue base by about 120 per cent last year, Zand is on track to achieve about 60 per cent annual growth this year, Mr Chan said.
The bank is still a start-up, but growth so far has been “quite promising”, with Zand also the youngest digital lender to break even and become profitable.
There are more than 300 digital banks worldwide and it takes, on average, six years to reach the break-even stage. However, Zand achieved that milestone in 22 months after Mr Chan became chief executive in November 2022.
The lender established partnerships with several global giants, including Ripple and Mastercard, this year to broaden its suite of services.
In November, the UAE Central Bank also approved Zand AED, a fully regulated, multi-chain AED-backed stablecoin. Zand AED, which is backed one-to-one by the UAE dirham, is available across multiple public blockchains, enabling fast borderless settlement and integration for developers, enterprises, and financial institutions.
Zand is also gearing up to launch its wealth management services within the first quarter of next year, Mr Chan said.
