Competition in UAE banking sector heats up as consumer expectations increase

Competition in UAE banking sector has heated up as consumer expectations increase. According to new data released today by Boston Consulting Group, competition in the banking sector in the United Arab Emirates (UAE) is heating up as consumer needs and expectations rise (BCG). The findings of BCG‘s “2021 Consumer Sentiment Study in Banking,” which polled over 2,000 UAE residents to gain a better understanding of the developing retail banking market. According to the findings, 55 percent of consumers would have no trouble transferring to a new bank, and 66 percent actively seek out fresh offers.

“In the UAE, we see that most customers have multiple banking relationships, which is understandable when one considers the significant expectations people now have on their banks,” said Mohammad Khan, Partner, BCG.

He said, “Two-thirds of survey respondents proactively search for offerings that provide better value and over half would not be hesitant before opting for a different bank altogether. These tendencies illustrate the competitive nature of retail banking today, with many customers across different income categories changing banks over the past year.”

According to the study, more than 20% of UAE consumers switched banks in the previous 12 months. High interest rates, products that don’t fulfil personal demands, and bad customer service are listed as the primary causes for today’s attrition among major banks and customers looking for greener pastures. Customers are more likely to suggest their banks to friends and family if they receive exceptional customer service, have a great digital experience, and have a strong brand reputation.

“With numerous factors behind consumers’ decisions to switch banks, there is unquestionably room for improvement,” explained Khan.

He also said, “Yet despite these setbacks, many positives that appeal to the modern customer are also apparent. Leading banks offering excellent service via digital have set the latest industry benchmark, and this is something those currently behind should aspire to emulate not only for customer retention and attraction purposes but also for brand development.”

The study also discovered that, compared to a year ago, branch visits have decreased by 5%, while mobile and internet banking usage has climbed by 10% since 2020, with 88 percent of clients eager to acquire a digital-only bank account. Instant account opening, fast bill payments, and personalised offers are the most significant – and enticing – characteristics for virtual institutions, with instant virtual credit cards and Peer-to-Peer (P2P) payments also gaining traction.

“Retail banking is much like every other sector from a consumer standpoint. Due to acceleration of digital transformation, they now expect empowerment and convenience through the provision of seamless services,” said Markus Massi, Managing Director and Senior Partner, BCG.

He added, “This is reflected by such a high willingness to open digital-only accounts, which is a trend we do not anticipate receding. Simplicity and personalization are other benefits that resonate with audiences nationwide, both of which are easily attainable through fast bill payments and the multitude of offers now being presented to customers.”