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UAE small firms seek streamlined banking experience

Study unveils emerging SME megatrends in UAE

Obtaining financing from banks can be a hurdle for small and medium enterprises (SMEs) in the UAE due to short credit histories, difficulty providing collateral, interest rates, and administrative hurdles, a study showed.

A new study from Visa, the SME Megatrends report, says that lthough UAE banks have taken significant steps to enhance the process of opening a bank account for SMEs, it can still be challenging and expensive.

The report identifies how issuing banks can leverage the needs and challenges facing businesses to unlock new revenue opportunities, gain a competitive edge and influence SME growth and scalability prospects.

Regulatory policies, funding, and digital transformation initiatives and more are enhancing the local business landscape, fostering new opportunities for businesses in the UAE. In such a dynamic environment, SMEs are swiftly embracing the digital potential by expanding their online presence to attract new customers, adopting contactless and digital payments to stay competitive and incorporating digital business tools to optimise business operations.

The rapid acceleration of digitisation within the region’s SME sector presents a wealth of new revenue opportunities for issuing banks. By facilitating access to essential financial products and services, banks can tap into this potential, resulting in an expanded customer base, increased transaction volumes, and heightened revenue prospects. By working in partnership with Visa, issuing banks can deliver bespoke financial products tailored to SMEs’ unique needs to actively promote inclusive economic growth.

Salima Gutieva, vice president and country manager for the UAE, Visa, said: “SMEs are the backbone of economies worldwide, playing a critical role in driving growth, innovation, and employment. In a rapidly changing environment, it’s imperative for issuing banks to deeply understand their needs and develop targeted solutions that propel the SME sector forward. We are confident that the SME Megatrends report will help issuing banks adapt their offerings to better meet the needs of SMEs in the market. By pinpointing ways for issuers to provide SMEs with vital financial products and services, Visa seeks to foster economic growth collaboratively. This effort not only aids SME development but also contributes to new channels of prosperity, offering meaningful benefits for the economy at large.”

Other key trends identified in the report include:

Integration with Social Media Platforms: SMEs are increasingly leveraging social media and e-commerce platforms to build their marketing presence and tap into the digital economy.

Contactless payments: As mobile payments and digital wallets grow in tandem to changing consumer behaviours and payment patterns, 49 per cent of UAE SMEs are accepting contactless payments as a critical investment area to meet customer expectations. In the UAE, the use of digital payments has massively increased with over 90 per cent penetration of in-store digital contactless transactions.

Increased movement towards digital payments: Though checks are still commonly used in the UAE, SMEs are moving towards low-cost and faster digital payment options demonstrating demand for solutions such as Tap to Phone and Visa Direct for cross-border transactions.

Investment in SME digitisation tools is increasing: SMEs are increasingly using invoicing and expense management platforms to digitise financial processes and digital accounting software, though 74 per cent of SMEs still rely on manual processes and basic communication tools.

Growing interest in providing better employee benefits: In the UAE’s competitive market, 86 per cent of businesses would provide additional employee benefits if they were more affordable to attract and retain top talent.

Digital payment technology is believed to be the foundation to grow business, with 95 per cent SMEs accepting the value received is at par or more than the price paid for digital payment setup and more than seven in 10 merchants believing such an investment to be business critical.

Visa has already digitally enabled nearly 67 million SMBs worldwide, leveraging its extensive expertise and partner network, exceeding our three-year goal of digitally enabling 50 million SMBs globally.