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UAE banks are embracing financial technology to evolve and grow

(Image credit: Future)

Fintechs (financial technology) are disrupting the financial markets across the world and have become the driving force for having a direct impact on banks’ business or customers’ bottom line.

Fintechs are startups that provide out-of-the-box thinking and use the internet and mobile technologies to create new or superior banking products at a faster pace and much lower cost.

So, are banks in the UAE prepared for the emergence and mushrooming of fintechs?

Miguel Rio Tinto, chief information officer at Emirates NBD, told TechRadar Middle East, that Emirates NBD is aware of the growth of fintechs across the world and is seeing many companies coming from abroad as the country have a strategy for attracting startups and talent.

Dubai International Financial Centre and Abu Dhabi Global Market play a key role in the growth of fintechs in the UAE.

(Image credit: Emirates NBD)

“Fintechs are willing to work with banks as we have a solid customer base, solid balance sheet and have access to resources and funds. The offerings by the banks in the UAE are quite sophisticated when compared to other regions.” Miguel Rio Tinto, chief information officer at Emirates NBD

Posing a threat to established ones

“The UAE is a very good infrastructure hub for technology. We have many fintechs that are coming in, locally and from abroad,” Tinto said.

Moreover, he said that small companies, which are nimbler than big banks, are deploying technology and are becoming a threat to established banks in specific areas of activities.

After seeing what is happening in the last four years across the world, he said that Emirates NBD has started the digital transformation in a bid to compete with fintechs.

“These fintechs are very positive for consumers and the market. They come in to solve some kind of consumer-led problem in a way to win customers by better pricing and at a lower cost. There is a number of business areas were banks are pretty much established such as currency exchange, lending, cards and payments but fintechs are coming in very valuable propositions for consumers,” he said.

However, he said that banks have to respond and have to be more consumer-focused. Even though it puts some kind of pressure on the banks, he added that it is good for consumers in the end.

Emirates NBD launched Liv, the first app-based bank in the UAE, thinking about the millennials and how to better serve them than the traditional way.

Liv has around 200,000 customers and planning to launch the service outside of the UAE.

“We open 10,000 new accounts every month, more than the main branch. The rewards programme associated with the Liv card is not developed by Emirates NBD, it is by partnering with Verrency, a fintech company based in Australia,” he said.

Looking at opportunities in future

Emirates NBD has tied up with around 20 fintechs across many services and is also looking at opportunities in the future.

While these fintechs are solving the problems, he said that they prefer to become partners with banks and vice versa, and some kind of cooperation is already happening here, not only in the retail space but also in the corporate space.

“Fintechs are willing to work with banks as we have a solid customer base, solid balance sheet and have access to resources and funds. The offerings by the banks in the UAE are quite sophisticated when compared to other regions,” he said.

However, he acknowledged that banks are currently facing competition from fintechs in specific areas like payments and currency exchange.

“Profit and customer bases are at risk and fintechs can disrupt that. We do believe that fintech complements rather than threatening the banking institution and diversifying the existing financial system. It is the way forward for the banks,” Tinto said.

Big banks and fintech startups have a great deal to offer each other, he said and added that there will always be space for cooperation with fintechs to better serve the customers.

Smart and preferred banks will try to cooperate and not just sit on the profits and the assets and not do anything to be disrupted in the future,” he said.

Despite the growth of fintechs, he said that Emirates NBD has no intention to acquire fintechs as “we are not a private equity company. Till now, we haven’t seen the need to buy a company in a bid to access their technology or access their processes. But, this may not be the future for us to access a specific technology.”