In their recent research, Beyond Banking: The Middle East, Arthur D. Little surveyed in collaboration with M2P Solutions. Is there Apps’ way for banks to branch out beyond banking in the UAE? The report explains why the national banking sector is likely to drive newer ways of banking in the future and details the necessity of adopting multiple partnership-based strategies in the evolving ecosystem
Consumer forces are transforming their responsibilities, structures, and competitive environment in the UAE banking and financial services sector, which is evolving faster than most individual incumbent banks. Enriching existing banking offerings with lifestyle services will enable local institutions to build deeper, wider end-user relationships while consolidating their relevance status as financial and lifestyle services continue to converge and financial products become even more embedded within customer propositions.
Pierre Mariani, Partner, Financial Services Practice, Arthur D. Little Middle East, said: “Evolving customer demand accelerated digital transformation and entry of new players are disrupting the traditional business models of UAE banks. These trends will continue to reshape the financial sector in the years to come, and banks that fail to embrace the change and make the necessary adjustments to serve their clients beyond existing services will inevitably fall behind. Therefore, a holistic approach is required by banks striving to retain customers, capitalize on future opportunities, and truly go beyond banking as they know it.”
“Making full use of beyond banking avenues and presenting customers with newfound value through diverse, attractive offerings hinges on a forward-facing approach from the outset of such projects,” added Vaanathi Mohanakrishnan, Business Head, M2P Solutions. “If banks do heed this recommendation and pursue such an approach, their efforts to elevate the appeal of current offerings while pairing them with various lifestyle services will certainly accelerate progression on the beyond banking route.”
The survey substantiates the assumption that the retail banking market is under increasing pressure, with 45 percent of traditional banks” clientele willing to switch to competitors within the next six months, according to an analysis of 2,000 UAE retail bank customers. This trend is driven by low rates, regulatory changes, and a slew of new participants entering the financial services industry, including Fintech firms, retailers, and telecoms providers. As a result, banks have begun to take aggressive initiatives to expand beyond tr” aditional banking into growth areas other than financial services.
According to the report, both banks and customers are increasingly interested in beyond banking offerings, with the share of customers with a positive outlook expected to rise from 61 percent to as high as 68 percent as a result of complementary services opportunities in entertainment, education, retail, and food. However, before such routes can be successfully pursued, there are numerous considerations for the greater UAE banking community.
The paper giv”es a complete review of the most important considerations relevant to banks” beyond banking operations after examining the beyond banking landscape. To begin, banks must swiftly rethink their diversification strategy. They must comprehend and track continuously changing markets to avoid drawing on old perspectives in order to remain relevant in the future. Second, they should have a vision, selecting whether to create their own ecosystems or join one that already exists. Furthermore, SME banking and customer-centricity are two of the most important factors. SME banking, in addition to retail customer franchises, has been recognized as a new growth territory to investigate while banks can adopt customer-first approaches and ultimately enjoy beyond banking success by closing existing data, digital maturity, and talent capability divide.
Is there a chance for banks to branch out beyond banking in the UAE? Also included are details on the factors influencing changing banking customer demands, the necessity of data sharing and customer trust, and why UAE banks need to make bold investments and collaborations.
