UAE takes pole position in digital banking as trend picks up momentum in the region: Al Masah Capital Report


Dubai, UAE: Pressure is mounting on regional banking and financial institutions to accelerate the adoption and digitization of processes as the demand for cutting-edge online banking from millennial consumers continue to rise.

In order to remain competitive, swift response to the evolving consumer needs is paramount as more and more customers are now expecting their respective banks to be at the forefront of effective and efficient technological transformations.

In a detailed report by Al Masah Capital Limited titled, Digital Banking – ME Trends, digitization continues to take the global economies by storm.

As a revolution whose uptake in the Middle East and North Africa (“MENA”) has gathered noticeable momentum, the digitization of core financial and banking processes can no longer be termed as a passing phase.

Unprecedented disruption is steadily engulfing the regional banking and financial services space with the private sector, governments, and individuals realigning their inward and outward operations in line with the day-to-day needs of the customer.

MENA’s digital proposition

The MENA region offers compelling and promising opportunities for the banks and other financial institutions, with the United Arab Emirates (“UAE”) and Saudi Arabia emerging as two of the most active markets in the development of a digital ecosystem.

In terms of adoption, the UAE is now leading the pack regionally with an impressive 16.4 % in digital penetration.

It is followed closely by its smaller neighbors, Qatar and Bahrain with 14.9% and 13.6%respectively, followed by Saudi Arabia with 11.5%.

Collectively, the MENA region, with 4.1%, seems to be closing the digital gap with North America with 8% and Europe with 6.2%, as players in the Gulf region continue to make meaningful investments in telecom infrastructure, digital readiness initiatives, and competitive arrangements for network providers.

According to Al Masah Capital, the MENA region enjoys a large millennial population, which is expected to further drive the future of digital banking industry.

Consumer engagement

With cost reduction through digitization as the main focus for regional banks, major players are now creating ecosystems that will ultimately offer customers multiple interaction-points such as the branch, ATM, online presence (e-banking) and mobile banking apps.

Al Masah Capital Limited report reveals that the MENA region banking and financial sector is undergoing a significant digital transformation in order to keep their customers engaged with next-generation services and offering.

“The Middle East, being no exception to the global trend, is now on the verge of a massive digital disruption. Businesses and governments are now alive to the fact that in order to optimize operating costs and resources, guarantee customer satisfaction, attract new customers, and gain competitive advantage, digital adoption is a must.” said Shailesh Dash, chief executive officer of Al Masah Capital.

Mobile and online banking

The region is witnessing an extensive usage of digital customer engagement channels such as websites, social media platforms, apps, and digital transactions.

With over 90 %of the mobile users in the MENA region owning smart devices, mobile banking has now become a significant component of the banking strategy.

According to a survey cited in the report, the digital banking users in the MENA region mostly use mobile and online banking for bill payments (33%), credit card related transactions (33%), checking bank statements (33%), and money transfers (29%).

This high penetration is attributed to its cost-effectiveness and its time-saving method of conducting business, which frees customers of the task of physically visiting the banking halls.

New revenue streams

With MENA’s banking industry changing rapidly, digital technologies have now opened up new revenue streams for the financial sector.

Traditional brick and mortar presence is now under imminent threat with technology, automation, and big data now on the verge of making branches almost obsolete.

This, according to Shailesh, is expected to gather momentum as banks across the region respond with a greater focus on mobile banking, smart branches, and social media banking.

“Digital technologies haven now opened up new revenue streams for banks and financial institutions. And with banks now serving a new crop of digitally-savvy customers, it is evident that these institutions are now pegging their profitability to cost-effective digital solutions.” noted Shailesh.

MENA’s Fintech scene

The Fintech trend is yet to fully catch up in MENA even as this digital revolution continues to engulf other developed financial sectors globally.

But with low infiltration notwithstanding, this relatively new trend is still expected to offer MENA payers significant opportunities to capitalize on.

In the last ten years, the regional governments have sunk over US$100 million, opened Fintech accelerators, and also introduced new regulations to promote digital banking.

Leading countries in the GCC’s digital banking

Due to its highly competitive banking sector, the UAE has arguably the most advanced digital technology infrastructure within the GCC.

UAE’s government has been keen to develop all required digital infrastructure through substantial spending and attracting private investments. This has strategically positioned the country on the path to becoming one of the most digitally advanced countries in the world.

On its part, Saudi Arabia is also rapidly transforming itself as an attractive destination for regional banks.

Through the National Transformation Program, Saudi banks have lately been focusing on the digital transformation of traditional banking services, which has subsequently resulted in the rise of digital technologies.

According to Al Masah Capital, the rising mobile penetration, tech-savvy millennials, and a growing banking population are likely to grow the country’s digital banking services in the coming years.


But even as regional countries undergo a significant transformation phase in the digital banking arena, penetration still remains relatively low in the region due to a lack of awareness.

Regional players continue to face numerous challenges in the adoption of digital trends, some of which include, low adoption rate, integration of complex services with digital space, low availability of digital infrastructure, and data security especially in the wake of rising cyber-attacks.

These challenges, however, are not likely to dampen bank’s spirits in adopting digital technologies that are expected to reduce inefficiencies and increase profitability.

About Al Masah Capital:

Al Masah Capital is one of the fastest growing alternative asset management and advisory firms focused on the MENA and SEA regions. Established in 2010, Al Masah Capital provides tailored solutions to a broad investor base, offering private equity advisory (across Healthcare, Education, Food & Beverages, Logistics and other consumer-driven sectors), asset management, corporate and real estate advisory as well as public market research services. With operations in Dubai, Abu Dhabi and Singapore, Al Masah advises qualifying investors on growth opportunities in 13 focus markets in MENA and South East Asia.