UAE Banks Face Digital Transformation Amid Consumer Demand

Banks in the United Arab Emirates are undergoing a significant transformation as they navigate the evolving demands of digital-savvy consumers. According to a survey by Capco, nearly 90% of UAE respondents now have digital-first banking accounts, with a significant portion opting for services provided by local institutions. This shift reflects the growing consumer preference for personalized, AI-driven financial services that offer a more integrated and seamless user experience.

The Capco survey highlights that consumers in the UAE are increasingly drawn to banking apps that combine financial services with non-financial daily activities, such as ride-hailing and e-commerce. This trend underscores the need for banks to adopt more agile and collaborative models, integrating advanced data analytics and AI to meet the specific needs of their customers.

Despite the rise of digital banking, traditional methods still hold ground. Cash remains a favored payment option for 51% of respondents, while checks are preferred by 28%. However, the adoption of online payments and digital wallets continues to gain momentum, with a majority of respondents indicating these as their preferred payment methods.

As the UAE hosts global events like COP28, the environmental and social governance (ESG) stance of banks is becoming increasingly important to consumers. The survey found that 88% of respondents prioritize banks that actively address ESG issues, signaling a shift in consumer values towards sustainability.

The findings suggest that UAE banks must focus on enhancing their digital offerings while maintaining trust and personalized services to stay competitive. This includes investing in data management and fostering partnerships with fintechs to deliver the value-added services that consumers now expect.

Capco’s research indicates that as banks in the UAE adapt to these changes, they stand at a critical juncture between traditional banking models and a future dominated by digital innovation. The challenge will be to balance these demands while ensuring a smooth transition for their customers.