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UAE banking sector assets surge 12 times since 2000: Al Ghurair

The nation has made remarkable headway in the digital transformation of the financial sector with 95 per cent of the banking transactions going digital, and 90 per cent via smartphones

The UAE, which is among the top seven financial hubs in the world, saw its banking sector assets grow 12 times from $75 billion in 2000 to more than $900 billion in 2022, representing an increase to more than 250 per cent of the nation’s nominal GDP from 70 per cent in 2000, Abdulaziz Al Ghurair, chairman of UAE Banks Federation, said.

He said the banking sector in the UAE has a solid foundation to continue to grow and meet fast-evolving customer requirements. The nation has made remarkable headway in the digital transformation of the financial sector with 95 per cent of the banking transactions going digital, and 90 per cent via smartphones, Al Ghurair said.

Speaking at the Abu Dhabi Financial Week, Al Ghurair said the closure of more than 200 bank branches in the country, representing a 30 per cent reduction, reflects the country’s growing reliance on digital banking. The UAE is home to two digital-only banks, while three operating banks have launched their own digital banks.

In his address to over 500 prominent investors and experts in the financial sector from 30 countries at the event, the UBF chief pointed out that the UAE is among the top seven financial hubs in the world. He noted that specialised financial centres, particularly Abu Dhabi Global Market and Dubai International Financial Centre, have played an important role in developing the financial sector and placing it on the global map. At the same time, they are home to more than 7,000 companies and employ more than 44,000 people from various countries.

Underlining the tremendous progress made by the banking sector in developing digital solutions offering the best services to customers while building a reliable and secure financial environment, Al Ghurair explained that local banks had invested more than $1 billion during the last five years to modernise the technology infrastructure. They now provide enhanced specialised services while improving cloud computing and digital channels.

“Digital Transformation has contributed to increasing the reliance on digital services, as more than 95 per cent of all transactions of leading banks have become digital, which is one of the highest globally. Meanwhile, the provision of services through smart devices is increasing, leading banks now provide 90% of their services via smartphone, and more than 50 per cent of new bank accounts are opened through digital channels,” said Al Ghurair.

He praised the contributions of local banks in talent development to keep pace with the requirements of this evolving sector while developing appropriate solutions and employing technology innovatively. “As a result, UAE banks have attracted and trained professionals, including designers, system engineers and data specialists, to meet service demands in the digital age. He further added that the number of employees in this segment exceeds 20,000 professionals.”

Forecasting positive and robust growth of the UAE banking sector, Al Ghurair predicted that the banking industry would grow faster than the macroeconomic rate with bank revenues, after risk provisions, to reach more than $25 billion by 2030, a 50 per cent increase over current revenues establishing an excellent financial standing.

“The digitalisation of financial services will further accelerate, and budgets for technological development will rise in order to keep pace with this growth, while effective data management and use will become a competitive advantage. Digitalisation requires restructuring operating models; hence reducing the branch network is the first step. In addition, the UAE banking sector is expected to attract many international players due to its tremendous growth opportunities,” he said at the event organised by Abu Dhabi Global Market (ADGM) in cooperation with the Department of Economic Development - Abu Dhabi.

Al Ghurair said the UAE banks are well-capitalised and profitable, which are prerequisites to enhancing the stability of the sector in the long term, under the supervision of the Central Bank of the UAE.

He also praised UAE Banks Federation’s strategic partnership with ADGM, which constitutes an essential platform for exchanging expertise and experiences to strengthen the banking and financial sector in the UAE through various initiatives and events.

The UBF chief said the banking sector is expected to attract many international players due to its tremendous growth opportunities. The country has become the fintech hub for the Middle East and Africa due to significant investments in this field. He observed that the UAE has all the components needed to strengthen its position as a regional and global financial hub, with regulations and legislation in the country being characterised by innovation and aligned with global changes in the sector.

— issacjohn@khaleejtimes.com