- Adopts practices such as open banking and integrating financial services into non-banking platforms.
The United Arab Emirates (UAE) is emerging as the leader of banking innovation across the Middle East, commanding a significant portion of the region’s $3.2 trillion banking assets.
A report from Arthur D. Little (ADL) emphasises the UAE’s influential role in digital banking, highlighting its capacity to reshape financial services throughout the Gulf Cooperation Council (GCC) region.
Yacin Mahieddine, a Partner in the Global Financial Services practice at ADL, said that the UAE’s banking strategy transcends mere competitiveness; it aims at establishing a global benchmark.
“The UAE’s Central Bank has pioneered initiatives such as the digital currency program and advanced blockchain integration, which fundamentally redefine its status as a modern financial hub. This transformation is characterised not only as a trend but as a structural shift with far-reaching implications for global markets.”
The UAE banks are harnessing lessons from Southeast Asia, adopting practices such as open banking and integrating financial services into non-banking platforms.
The approach, combined with advanced data analytics, offers personalised customer experiences that enhance loyalty and facilitate entry into new small and medium-sized enterprise (SME) segments.
Central Bank Digital Currency
The digital banking sector has exhibited remarkable growth, achieving a compound annual growth rate (CAGR) of 8.7 per cent over the past two years and projected to reach $175.7 billion by 2029.
A key element in this transformation is the Central Bank of the UAE’s pioneering program for Central Bank Digital Currency (CBDC), which positions the UAE at the forefront of financial inclusivity and modernisation in the Middle East.
Several banks within the UAE have already implemented blockchain technology for cross-border payments, establishing a regional benchmark for both efficiency and innovation.
Cultural shift
Nelson Danam, a Principal at ADL, said the transformation within the UAE’s banking sector is as much a cultural shift as it is technological.
“The readiness to embrace advanced technologies such as artificial intelligence and blockchain reflects an organisational culture that prioritises change and innovation. By investing in both cutting-edge technology and the talent to leverage it, UAE banks are not only aligning with global standards but are actively redefining them.”
Looking forward, 80 per cent of UAE banks have identified digital transformation as a priority for 2024, positioning the nation at the helm of a tech-driven banking revolution in the region.
Through strategic technological partnerships and cloud-based customer relationship management solutions, UAE banks are redefining customer service and operational efficiency for an increasingly digital audience.
Moreover, investments in workforce development, exemplified by new Digital Academy models, are nurturing the skills necessary for a thriving digital economy.