Mashreq to close more branches in shift to digital
Mashreq, the Dubai lender controlled by the Al Ghurair family, has said it will reduce its number of branches in response to changing customer behaviour amid a wider push towards digital banking.
The emirate’s oldest bank has decided to reduce its number of physical branches to 10 by the end of August 2021, down from 34 two years ago.
It will, however, increase its number of electronic banking service units as customers “embrace automated and online banking offerings”, Mashreq said in a statement on Sunday to the Dubai Financial Market, where its shares are traded.
“Catering to the evolving needs of our customers and their transactional behaviour, Mashreq continues to make appropriate changes to its branch operations,” it said.
Established in 1967, Mashreq, like its peers in the Middle East, is moving towards digital banking to cater to a young, tech-savvy demographic that typically opts to complete its banking requirements online.
While traditional banks are offering more digital services, there are new independent digital banks entering the market in the UAE.
One of these is Al Maryah Community Bank, which secured a licence from the Central Bank of the UAE following the launch of the Emirates’ first independent digital bank, Zand, catering to retail and corporate clients.
ADQ, the conglomerate that owns Abu Dhabi government stakes in a range of businesses, said last year it planned to set up a digital bank in the UAE using a legacy banking licence held by First Abu Dhabi Bank.
About 87 per cent of UAE residents polled in a study would be willing to open an account with a branchless, online bank, according to a Boston Consulting Group survey.
The rise of FinTech companies, an increasingly knowledgebale consumer base and a sharp increase in digital services have forced banks worldwide to increasingly invest in digitalisation and reduce their number of branches.
The Covid-19 pandemic, which led to lockdowns and social distancing, further hastened the shift to digital services across many industries.
Last week, Mashreq reported a 50 per cent drop in its second-quarter profit as impairment allowances climbed.
Net profit attributable to owners of the parent for the three months ended June 30 declined to Dh42.3 million ($11.51m). Impairment allowances climbed 38 per cent year-on-year to Dh785m, while total interest income and income from Islamic financing and investment products slid 12 per cent to Dh1.1 billion.
Net profit for the half-year period declined 84 per cent annually to Dh85m as impairment allowances climbed 53 per cent to Dh1.49bn, the lender said.
“We remain cautiously optimistic that with the continued support of the UAE national government, a continued economic recovery and Mashreq’s ongoing digital transformation, the future looks promising,” Abdul Aziz Al Ghurair, chairman of Mashreq, said in a statement at the time.
The UAE economy is expected to grow 2.4 per cent this year, as the country gradually recovers from pandemic-induced headwinds, the Central Bank said last month.
Mashreq is moving towards digital to cater to a tech-savvy demographic that opts to bank online