Digital influence in banking was already well underway prior to the COVID-19 outbreak and the pandemic has accelerated this further across the segment, according to a new report.
As online services witness an uptake amongst UAE customers, banking is fast becoming digital.
The use of digital banking channels has increased significantly across the UAE during the pandemic, with 42 per cent more customers using online banking and 65 per cent more using their respective banks’ mobile app more often, as per the Boston Consulting Group report’s findings.
This year, consumer expectations have shifted to include simpler interfaces and journeys, digital-first experiences, data-driven personalised offerings, and frictionless, on-demand access to information and services.
Moreover, the pandemic has further pushed these trends, propelling financial institutions to move from a digital as a choice to a digital as the only choice approach.
The report, titled ‘The Regulator’s Dilemma: Financial Innovation Within a Regulatory Paradigm,’ details how tech giants’ success in raising standards concerning online experiences has driven increased consumer demands for digital banking services in the United Arab Emirates.
“COVID-19 and subsequent events that took place have increased consumers’ already ravenous appetite for digital financial services. Like many other nations across the region and wider world, this applies to the UAE as well,” said Harold Haddad, Managing Director and Partner, BCG Middle East.
“Consumer demands have grown with Apple, Google, Facebook, Netflix, and other leading tech influencers simultaneously elevating the quality of digital interactions and online experiences – transcending industries to implicate banking too. As banks and financial technology (fintech) firms strive to accommodate customers with progressively sophisticated solutions, regulators are poised to take on a more important role in the coming period.”
The report highlights that regulators are not alone, and emphasises the need to orchestrate across a set of actors. Regulators are one of six main actors in the national fintech ecosystem, with the others being education and research institutions, venture capital funds, startup incubators and accelerators, public institutions, and incumbent banks.
At present, UAE regulators have taken steps towards fostering fintech innovations. Abu Dhabi Global Market (ADGM) makes use of a regulatory sandbox which allows testing of fintech solutions within a controlled environment, employing evaluation criteria such as level of innovation, consumer benefit, and testing readiness and scenarios among those most widely adopted.
Furthermore, the Central Bank of the UAE has recently rolled out its stored value facility (SVF) regulations, regulating, licensing and supervising SVF providers including e-wallet solutions.
