Nearly 76% of UAE consumers keen to switch banks, new survey shows

Banks will have to invest further in digital services and create an omni-channel experience to retain clients

Financial inclusion is critical for the region’s competitiveness and for employment creation. Mona Al Marzooqi / The National

Nearly eight out of 10 people in the UAE, or 76 per cent are interested in switching their banks, while 70 per cent are actively searching for new bank offers, according to new research by Boston Consulting Group.

“Customers are experiencing a new reality, relying on conducting day-to-day activities remotely,” Godfrey Sullivan, managing director and head of financial institutions UAE, BCG.

“When they face challenges in the current digital capabilities offered by banks or reduction in credit lines, both of which are becoming increasingly important to them in the current circumstances, they will naturally start to look for service providers who can better cater to their needs.”

The UAE’s banks and other financial institutions are rapidly digitising to cater to the demands of an increasingly smartphone-savvy consumer base.

Conventional lenders in the country are investing heavily in digital banking services as the scope for FinTech expands. Many have also opened digital-only banks to appeal to millennials – a growing consumer segment. The mobile wallet market in the UAE alone is predicted to hit $2.3 billion by 2022, according to the US-based consulting firm TechSci Research.

The BCG research, which polled more than 2,000 respondents in the UAE, found that 87 per cent of respondents would be willing to open an account with a branchless digital-only bank.

The coronavirus pandemic has further accelerated the adoption of digital banking.

More than half, or 53 per cent of UAE consumers increased their mobile app usage for banking during the pandemic, while more than 50 per cent of users tried digital banking for the first time as a result of the pandemic restrictions.

“Banking customers in the UAE have a strong appetite for digital banks, and we saw more growth in the demand of digital products during the pandemic,” said Mohammad Khan, partner, BCG.

“When an end-to-end digital banking solution, such as those found in Europe, is introduced, customers in the UAE will make the concerted effort to fully transition to a digitally enabled banking experience.”

Around six in 10, or 63 per cent, of customers in the UAE said they struggle to identify any differentiation across banks and their products. Although 50 per cent of higher-income customers have been with the same UAE bank for five years or more, the BCG research pointed out the importance of re-strategising to adapt to customer demands.

“The ever-changing customer preferences that we are witnessing in banking as a result of the pandemic mean banks must explore new avenues to upgrade their services across channels – which includes investing in digital and also in creating an omni-channel experience to meet customer needs,” Mr Sullivan said.

“There is a great opportunity for banks to disrupt the market and taking immediate actions to meet the evolving customer demands will be vital in business retention and the road ahead,” he added.