How UAE banks can ride the digital wave to a new era of peerless service

The financial services and insurance (FSI) industry in the UAE has been in digitisation mode for some time. Traditionally, only the telecoms sector rivals FSI on digital transformation maturity and the success rates of programmes. An April 2022 report from KPMG shows that Middle East banks are currently using a range of digital technologies such as blockchain, AI, and machine learning. Use cases do not just cover customer-facing areas, but extend to regulatory compliance, corporate governance, and risk management.

The industry-player list has expanded too, to encompass the many fintech firms that have devised solutions to ongoing issues – some longstanding, some new; some widespread, some niche. Fintech’s are on the march. Mordor Intelligence cites the Covid pandemic as the basis for its projection of 12 per cent CAGR between 2021 and 2026 for the UAE fintech segment.

Meanwhile, the UAE Central Bank’s Instant Payment Platform (IPP) is scheduled for a launch in the fourth quarter of this year. Round-the-clock instant-clearing services for transactions across the country are likely to be a boost to the economy given the 2021 successes of Saudi Arabia and Bahrain, both of which implemented similar systems and reported significant related boosts to their economy –$166 million for Saudi Arabia and $246 million for Bahrain.

“Of course, it is true to say that the future is digital for every business that wants to participate in today’s digital economy,” says Ahmad El Dandachi, Enterprise Lead, Microsoft UAE, “but FSI – and GCC FSI in particular – has been leading the way.”

El Dandachi cites Kuwait Finance House (KFH), which built a service bot called Baitak Assistant to automate the creation of credit reports for loan applicants. Blue Prism built the solution, based on Microsoft technologies.

“Financial services is the classic proving ground for advanced technologies such as bots, predictive learning and advanced analytics,” adds El Dandachi adds. “This is an industry where there was, in the time before digital transformation, a traditional trade-off between service levels and costs. Not anymore. Baitak allows KFH to reduce waiting times and workloads – to engage customers and empower employees at the same time. But the bot also reduces error rates, leading to an optimisation of operations and a reduction in costs.”

The UAE FSI industry has also had to accommodate neo banks, apps, and digital services such as Wio, Zand, and Mashreq’s Neo NXT.

“These new services are proof that the sector as a whole is preparing for a future where consumers can choose when, where and how they bank,” says El Dandachi.

Amid this expansion in engagement choices is the emergence of the metaverse, which could be a major focus of FSIs around the world, especially when it comes to their strategies on crypto assets, NFTs and DeFi. Dubai recently launched its Metaverse Strategy, and Emirates NBD held a metaverse summit at which Microsoft shared its thoughts.

“The financial industry across the Middle East is growing and changing because of a relatively young, digitally savvy population that demands more,” says El Dandachi. “Product diversification and swift time to market will remain focal points for industry players in the years to come, so management of data and shrewd leverage of it for real-time insights will be crucial.”

For more on the digital future of the regional FSI sector, check out our podcast sit-down with Olivier Crespin, Co-founder and CEO of Zand, when it drops next month.