According to new research by Boston Consulting Group (BCG), a US-based management consulting firm, 70 percent of UAE residents are actively looking for new bank offers while almost eight out of 10 people in the UAE, or 76 percent, are interested in switching their banks.
“Customers are experiencing a new reality, relying on conducting day-to-day activities remotely. When they face challenges in the current digital capabilities offered by banks or reduction in credit lines, both of which are becoming increasingly important to them in the current circumstances, they will naturally start to look for service providers who can better cater to their needs.”
To meet the demands of an increasingly smartphone-savvy customer base, UAE banks and other financial institutions are rapidly digitizing.
Traditional lenders in the country continue to invest heavily in digital banking services as the reach of FinTech grows. Many have also opened digital-only banks, a rising market segment, to cater to millennials. According to the US-based consulting firm TechSci Research, the mobile wallet market in the UAE alone is expected to reach $2.3 billion by 2022.
87 percent of respondents would be willing to open an account with a digital-only branchless bank, finds the survey that surveyed more than 2,000 respondents in the UAE.
The coronavirus pandemic has further ramped up digital banking adoption. During the pandemic, more than half, or 53 percent, of UAE customers increased their mobile banking app use, while more than 50 percent of users first attempted digital banking as a result of the pandemic restrictions.
“Banking customers in the UAE have a strong appetite for digital banks, and we saw more growth in the demand of digital products during the pandemic,” said Mr Mohammad Khan, partner, BCG.
“When an end-to-end digital banking solution, such as those found in Europe, is introduced, customers in the UAE will make the concerted effort to fully transition to a digitally enabled banking experience,” he added.
Around six in 10, or 63 percent, of UAE customers said they are struggling to recognize any difference between banks and their products. Although 50 percent of higher-income customers have spent five years or more with the same UAE bank, the BCG study highlighted the importance of re-strategizing to adapt to customer demands.
“The ever-changing customer preferences that we are witnessing in banking as a result of the pandemic mean banks must explore new avenues to upgrade their services across channels, which includes investing in digital and also in creating an omni-channel experience to meet customer needs,” Mr Sullivan said.
“There is a great opportunity for banks to disrupt the market and taking immediate actions to meet the evolving customer demands will be vital in business retention and the road ahead,” he added.