Mashreq Bank starts online-only bank as financial services go digital

Mashreq Neo first online bank in the GCC to offer international investments

Abdul Aziz Al Ghurair said with the launch of Mashreq Neo, the bank has entered a new era in the digitisation of retail banking. Satish Kumar / The National

The Dubai lender Mashreq launched Mashreq Neo, a digital-only bank in the UAE, as the lender increases investment in artificial intelligence and plans to trim its workforce by 10 per cent over the next year.   

"Mashreq Neo was created in response to the fast-evolving customer behaviours which we observe in the UAE," said Subroto Som, Mashreq's head of retail banking.

"Today, we see customers of all ages spending significant amount of time on their mobile phones, and they demand convenience. They are active on social media, make purchase decisions based on recommendations and they rank flexibility and convenience as their reasons for choosing
a bank." 

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Digital-only banks have proliferated in the UAE over the past year as lenders find that reducing the size of branches and attracting customers to do more of their banking online is a win-win proposition that saves time for customers and money for the banks.

In February, ADCB launched uBank in Abu Dhabi's Yas Mall, letting customers access key banking services in a paperless environment by means of biometric authentication, a digital signature system and video assistance from a virtual relationship officer.

Mashreq first teased Mashreq Neo, which it is marketing specifically to millennial customers, at its 50th anniversary celebrations in May. 

Customers will be able to open online accounts in less than five minutes by down­loading a dedicated smartphone app and scanning their Emirates ID.

Customers will receive a welcome pack within 24 hours, including a debit card, chequebook and credit card based on real-time credit bureau information.

Mashreq said it was the first digital bank in the GCC region to provide access to international markets for investment opportunities that include international stocks, gold and foreign currencies. 

Abdul Aziz Al Ghurair, the bank's chief executive, said last month the bank would shed 10 per cent of its workforce of over 4,000 in the next 12 months as investments in artificial technology are reducing its reliance on human resources.

The impact of the savings from leveraging technology will take a couple of years before it reflects on the bank's profitability, Mr Al Ghurair said.

At the same time, the bank is reducing the size of its branches in line with the financial services industry that is increasingly going digital.

The shift in the banking industry towards an ever more digital future has prompted lenders to reassess the need for large branches, he said. 

Investments in technology and digitisation are timely for UAE banks as profitability has been on the wane in the wake of the biggest oil price slump since the 2008 financial crash.

Banks moving towards more online offerings are fortunate that the UAE has one of the highest smartphone penetration rates in the world. 

Mr Al Ghurair would not say how much Mashreq is spending on artificial intelligence and digital technology.

Emirates NBD, Dubai's biggest bank by assets, said in July it plans to spend Dh1 billion on technology over the next three years to help
reduce costs.

"With the launch of Mashreq Neo, we have entered a new era in the digitisation of retail banking," Mr Al Ghurair said yesterday. 

"Considering Mashreq's historical strength in the innovation and digital space, we are confident that customers will respond positively and we will see strong adoption of Neo. Our goal is to ultimately provide seamless, convenient, secured and cost-effective banking services, compared to traditional branch banking."