• Mobile banking usage increases by over 65% in the Emirate during the ongoing pandemic.
• Regulators are one of six main actors in the national fintech ecosystem, with the others being education and research institutions, venture capital funds, startup incubators and accelerators, public institutions, and incumbent banks.

Covid-19 has accelerated digital influence in banking and tech giants’ success in raising standards concerning online experiences has driven increased consumer demands for digital services in the UAE.

As per Boston Consulting Group, the use of digital banking channels has increased significantly across the UAE during the pandemic, with 42 per cent more customers using online banking and 65 per cent more using their respective banks’ mobile app more often.

This year, consumer expectations have shifted to include simpler interfaces and journeys, digital-first experiences, data-driven personalised offerings, and frictionless, on-demand access to information and services.

Moreover, the pandemic has further pushed these trends, propelling financial institutions to move from a digital as a choice to a digital as the only choice approach.

Harold Haddad, Managing Director and Partner at BCG Middle East, said that Covid-19 and subsequent events that took place have increased consumers’ already ravenous appetite for digital financial services and like in many other nations across the region and wider world, this applies to the UAE as well.

“Consumer demands have grown with Apple, Google, Facebook, Netflix, and other leading tech influencers simultaneously elevating the quality of digital interactions and online experiences – transcending industries to implicate banking too. As banks and financial technology (fintech) firms strive to accommodate customers with progressively sophisticated solutions, regulators are poised to take on a more important role in the coming period,” he said.

The report highlights that regulators are not alone, and emphasises the need to orchestrate across a set of actors. Regulators are one of six main actors in the national fintech ecosystem, with the others being education and research institutions, venture capital funds, startup incubators and accelerators, public institutions, and incumbent banks.

At present, UAE regulators have taken steps towards fostering fintech innovations.

Abu Dhabi Global Market (ADGM) makes use of a regulatory sandbox which allows testing of fintech solutions within a controlled environment, employing evaluation criteria such as level of innovation, consumer benefit, and testing readiness and scenarios among those most widely adopted.

Furthermore, the Central Bank of the UAE has recently rolled out its stored value facility (SVF) regulations, regulating, licensing and supervising SVF providers including e-wallet solutions.

Digital transformation

In the Middle East, operational fintech’s have grown from 30 in 2008 to more than 200 today, and these firms, together with traditional banks, are working relentlessly to ride the current wave of digital momentum.

Because they are developing and adopting the latest digital technologies at an unprecedented pace, Haddad said that regulators need to proactively build their fintech agenda or else they’ll be struggling to keep up.
Haytham Yassine, Principal at BCG Middle East, said that numerous studies have shown that economies that foster innovation in financial services open doors for digital advancement and economic growth.

“The ultimate objective from a regulator standpoint is to maintain the financial sector’s stability while protecting consumers from inequitable, deceptive, or abusive activities. Regulators in the UAE should build on the country’s fintech momentum and further drive their regulatory agenda to foster financial innovations amid the increased adoption of digital banking channels,” he said.

Rather than working in isolation, Haddad said that regulators in the UAE should proactively pull in and work with the broader fintech ecosystem to make the national fintech agenda as effective as possible and foster innovation.

“Consumer demands for digital will continue to increase, and regulators can help lead the charge by innovating and transforming financial services,” he said.