Thursday, May 23, 2024
Editor's PickUAE revs up digital banking engine

UAE revs up digital banking engine

With its regional peers all throwing their hats into the fintech ring, the UAE is putting on a solid showing particularly on the digital banking front with the unveiling of new entities in recent months. Could this pave the way for Islamic digital banks in the Emirates?

In the last week, two entities revealed that they will be launching in the UAE soon as virtual banks.

Al Maryah Community Bank

Al Maryah Community Bank confirmed it has received approval from the Central Bank of the UAE. It is building its proposition as a “specialized” digital bank providing retail and SME customers — Emiratis and expatriates — smart banking services built on artificial intelligence-powered technology integrated with the UAE government’s Smart Services.

“I believe this initiative will effectively contribute to meeting the needs of customers by employing a group of specialized financial experts who will work to improve the financial capacities of individuals and SMEs and promote the community’s sustainable development in a scalable and easy way through the smart application that will be launched soon,” Tarek Ahmed Al Masoud, the chairman of the bank’s board of founders, said.


The other is Zand, which is not only positioning itself to serve both the retail and corporate banking segment, but also shaping itself to become a “digital economic accelerator” to provide the “foundation for a broader generation of digital services”.

Not yet launched and still subject to final regulatory approvals, Zand however has been making headlines because of the stature of its chairman, business tycoon Mohamed Alabbar. As the founder of real estate giant Emaar Properties, Mohamed is behind some of the most iconic landmarks in the UAE such as Burj Khalifa and Dubai Mall. He is also the founder and director of the largest GCC e-commerce company,

“The UAE combines progressive regulations with commercial, financial, and technology hubs. This provides the perfect environment for a world-leading digital bank that can launch in the UAE and scale beyond. As the first fully independent digital bank in the country, with a full UAE banking license, Zand will provide innovative, effective financial solutions that help simplify businesses and lives, addressing the needs of both retail and corporate customers,” Mohamed shared.

Olivier Crespin will head Zand as CEO. Crespin was previously attached to Malaysia’s CIMB Group as the chief fintech officer, overseeing the fintech initiatives of the group, including its Islamic banking brand — one of the largest in ASEAN.

“Backed by strong shareholders and working with the best bankers and technologists, we have built a bank that delivers on the promise of understanding and meeting customer needs. From our systems to our processes and our team, we are built and ready, and we are looking forward to welcoming the first customers soon,” Crespin said.

It is also perhaps worth noting that Crespin is also CEO of Eradah Capital, which will be acquiring Emirates NBD Bank’s controlling stake in Dubai Bank, an Islamic bank. Subject to central bank authorization, the transaction is expected to be completed this year. It is understood from industry chatters that Dubai Bank’s license could potentially be used to launch a new challenger bank.

Gaining momentum

This spur of digital banking entrants follows on the heels of the launch of the Emirates’s first independent digital banking platform, YAP, in March. Instead of being a fully digital bank which requires a regulatory license, Dubai-based YAP instead is leveraging on banking incumbent RAK Bank — which offers both conventional and Islamic products — to furnish YAP users with international bank account numbers and to secure their funds under its banking license.

In 2020, Abu Dhabi-based ADQ also voiced its intentions to set up a digital bank — it would utilize the legacy license of First Gulf Bank which it acquired and plans to establish the neo bank with an initial capital of AED2 billion (US$544.43 million). Incumbents are also making a concerted effort to penetrate the digital bank sphere: Emirates NBD, for example, launched its digital bank proposition in 2017, known as Liv., which has been carefully designed to capture the millennial segment.

This drive toward digital is unsurprising. The nation of over nine million, of which almost 90% are expatriates, is very receptive toward digital financial services. Some 87% of respondents surveyed by Boston Consulting Group (BCG) in late 2020 indicated their willingness to bank with a digital-only bank. This is on the back of a surge in digital banking users triggered by the COVID-19 pandemic — BCG noted that over 53% of UAE banking customers increased their online usage.

Islamic ambitions?

It is not immediately clear if Al Maryah Community Bank or Zand would offer Shariah compliant banking services. At the time of publishing, IFN Fintech has yet to receive a response to queries from these entities. However, going Islamic, even on a window basis, would be a strategic move considering the country’s affinity for Islam, its current standing as one of the most influential Islamic financial markets globally and more importantly, the UAE’s ambition to anchor itself as the global center for Halal economy.


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