LENDERS GEAR UP FOR TOUGH YEAR ● Leading UAE banks will consolidate existing business with a strong focus on digital innovations
Stability
This will be a defensive year for retail banks. We have witnessed a contraction in economic growth. The knockon impact has seen a marginal slowdown in retail credit growth, but more importantly, higher loss rates on retail portfolios. While the UAE economy remains diverse and robust, there are challenges in certain sectors. Stability, rather than growth, will be the guiding principle. The focus will be on optimising returns while remaining vigilant on financing — especially unsecured types in the form of personal finance and credit cards. Cost of funds are expected to rise steadily through the next year, posing an additional challenge for consumer banks.”
Real innovation
2016 was a challenging year for the banking industry, especially the retail sector. We have seen banks respond to these challenges by making changes to their product propositions, customer targeting and credit criteria to weather the tough market conditions. While 2017 is likely to see some positive changes, we would be cautiously optimistic, continue prudent lending practices and build on premium segments. It is extremely important to innovate for things that matter to customers — real innovation that makes banking faster, easier, more convenient or more engaging.”
Digitisation
We expect to see competition among retail banks grow even further in the coming year. We have set a digital banking strategy that revolves around the needs of our customers and are investing in upgrading our digital banking channels, particularly the capability of mobile solutions. Our research shows that customers demand full access to their banking services anytime, anywhere. Over the coming year we will be tailoring solutions that fit the lifestyle and financial needs of our existing customers, as well as targeting new ones in both the expat and UAE national segments, with a heavy emphasis on digital delivery.”
Value-driven services
As we have seen over the past year, the performance of the retail banking sector, and the broader industry, has been influenced by the volatility in oil prices. This year will be a period of transition as we settle into the new normal of lower prices. In retail banking, customers and banks will continue to adjust to the credit bureau, and as a result, the focus will be on quality lending. We expect a drop in discretionary spending among the public and a greater demand for value-driven services such as cashback products and discounts. There are a number of e-wallet initiatives expected to go online that will drive the ongoing growth in digital banking.”