DIGITAL BANKING: OPEN AN ACCOUNT IN 4 MINUTES
PERSONALISATION, REAL-TIME PAYMENTS AND AUTOMATION ARE DRIVING GROWTH AS PANDEMIC CHANGES BEHAVIOUR
Many clients want to bank anywhere, anytime on whatever device and this in a seamless and cost-efficient way. Digital banks have a technology advantage, which results in lower cost of serving cients.”
Is it possible to open a bank account in just four minutes without leaving home? The answer is yes. What’s more, this vastly simplified process will be the ‘new normal’.
“Once the world entered the reality of extended periods of social distancing, stay-at-home orders and all that goes with them, digital banking was no longer a nicety. It’s now a necessity,” said Abdul Rahman Jaroudi, head of digital transformation and innovation, at Aafaq Islamic Finance (AIF).
Sacha Holderegger | Strategist, CIO European Equities at UBS Global Wealth Management
What it means
Digital-only banking is banking on your smartphone with no paperwork. In short, it’s challenging the Medici model of banking — the idea that a bank is a place where you go. Today, banks live in the ‘cloud’.
“Many clients want to bank anywhere, anytime on whatever device and this in a seamless and cost-efficient way. Digital banks have a technology advantage here which results in lower cost of serving cients,” Sacha Holderegger, Strategist, CIO European Equities at UBS Global Wealth Management, said.
Does the UAE have a strictly digital-only bank?
Some of UAE’s mega-banks already have gone live with their digital banking spinoffs.
For example, EmiratesNBD launched Liv., its digital-only bank in 2017. Operated and managed by Emirates NBD, the mobile-only bank is dubbed as the “fastest-growing bank” in the UAE, acquiring more customers monthly than any other bank.In 2018, Asian Banker named it as the Best Digital Bank in the Middle East.
On April 13, the UAE Central Bank granted the first digital banking licence to Al Maryah Community Bank, making it the UAE’s first licensed digital-only bank. On April 12, Mohammad Alabbar announcd that he will be chairing Zand, a digital-only bank awaiting “final regulatory approvals”.
Another digital-only bank is expected to be launched by Abu Dhabi’s ADQ. It was reported in October 2020 that First Abu Dhabi Bank will transfer the licence it holds for First Gulf
Bank to ADQ. This licence will be used to create a digital-only bank headquartered in Abu Dhabi.
How are other countries captalising on the trend?
In the US and Europe, traditional banks have made forays into the digital-only set. At the same time, new entrants have sprung up — from phone companies partnering with retailers and ride-share companies, to gaming companies joining forces with supermarkets. Such solutions have caused a disruption in the money trail.
For example, China gave WeBank a private bank licence in 2014. In the UK, Starling Bank received its banking licence in 2016. Elsewhere in Asia, digital banking licences had been issued in Hong Kong, Malaysia, and Taiwan.
In 2018, Financial IT ranked the top 50 digital banks. In 2020, the Monetary Authority of Singapore (MAS) reportedly received 21 digital banking applications.
Experts say ‘fintech’ is doing to banks what YouTube has done for TV. Banks have allocated $297 billion to IT budgets this year, a 14 per cent jump from 2018, according to Celent.
Digital banking is here to stay thanks to pandemic restrictions driving demand for personalisation, real-time payments and automation.