As new fintech challengers enter the digital bank arena in the UAE, incumbent Al Hilal Bank is throwing its hat into the ring with eyes on being the first fully digital Islamic retail bank in the Emirates, with a view on regional expansion. Its parent, Abu Dhabi Commercial Bank (ADCB), one of the largest banking groups in the country, is backing this ambition with a new bold five-year strategy spearheading significant digital transformation across the group.
Al Hilal is working on launching its Islamic digital financial services platform in the fourth quarter of 2021. The new service will include a whole suite of retail banking products including accounts, payment cards and financing and will also cover non-banking financial solutions through an ecosystem of partnerships. Advanced data analytics, machine learning and artificial intelligence are driving the Islamic bank’s product strategy.
“The scalable offering is built on a cloud-based platform to ensure agility, enabling the bank to respond to evolving customer needs and to extend access to customers in key regional markets post-successful launch in the UAE,” ADCB explained.
Al Hilal’s digital bank ambition comes against the backdrop of ADCB’s new five-year strategy to accelerate digital transformation to gain market share and optimize group-wide efficiencies. Since merging with Union National Bank and acquiring Al Hilal Bank in 2019, ADCB has been heavily investing in digitization. This is paying off.
In the first quarter of 2021, ADCB’s net profit surged 436% year-on-year to AED1.12 billion (US$304.85 million). It pared down its operating expenses by 20% and improved its cost-to-income ratio by 180bps to 36.3% in the same period. The bank attributes these improvements to “aggressive realization of merger synergies, efficiencies derived from digital transformation and an additional program of cost-control measures”.
It is worth noting that in the first three months of 2021 alone, ADCB has launched nine digital customer releases, rolled out new digital features including an e-KYC portal, allowed credit card financing on its mobile app and enhanced its wholesale banking self-service capabilities. Consumer banking subscribers and active digital users grew 22% year-on-year as at the end of March 2021 while digital bill payments and fund transfers rose 42%.
The digital bank space in the UAE is heating up. In recent weeks, three new entities revealed their plan to serve the market.