Fast digital growth has UAE banks looking to a mobile future

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. Mona Al Marzooqi / The National

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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