Over the past two decades the UAE has earned a reputation for embracing change, and with a genuine drive by it's government to position the country as a leader in innovation, we are already seeing the birth of next generation Smart Cities. With ambitious plans to leverage the Emirates ID, a ubiquitous mobile wallet, and it's state of the art 4G infrastructure, the UAE is well poised to achieving it's objective of making Expo 2020 an event that showcases life in the 21st century.
Unsuprisingly, the UAE's financial sector is already making solid headway on achieving this goal. If we look back on 2014, we can see several examples of bank's that are taking the digital revolution seriously, and there were several innovations launched throughout the year. The Commercial Bank of Dubai launched the first PFM (Personal Finance Management) platform, followed by a Facebook Virtual Branch, and Mashreq continues to reinvent the bank branch experience with it's eCube digital branches and iMashreq Self-Service Branch including the option to now use remote video banking. In the remittance and payments space we saw EmiratesNBD launch P2P payments to its customers via MePAY, and RAK Bank launched ATM cardless cash withdrawals. Similarly, In the retail merchant business Mashreq pioneered its EMV compliant mPOS solution Payport, and took NFC contactless payments mainstream with its TAPnGO stickers. We also saw several ventures from them into building P2P services like Property Mart and SMEXchange, and most recently the UAE's 'first online marketplace for peer-to-peer lending' was launched, aptly named Beehive.
In 2015 the digital banking trend is not only set to continue, but will accelerate, as local banks look to invest in innovation and stay in touch with those that have a first mover advantage. The introduction of the Etihad credit bureau, increased smartphone penetration amongst the population, and the potential disruption of non-banks are the key ingredients that will drive further change. Innovation as a differentiator, and the need to build everyday banking that is both contextual, and puts customer experience first, will become a strategic priority for all UAE banks who aim to not miss the boat in an industry that is evolving at such a rapid pace. The risk of falling behind will inevitably drive a huge investment in technology spend, with a focus on innovation and digital migration. IDC recently estimated that MEA IT spend in 2015 will surpass $270Bn. With this in mind, the top UAE retail banking trends and predictions for 2015 will be:
1. Digital Branch Transformation and Virtual Banking
2. Digital Distribution and thinking 'Mobile First' design
3. Building Customer Engagement with Contextual Advice, Customer Analytics & Big Data adoption.
4. Banking Simplification and Rich Media Marketing will blossom.
5. Mobile and P2P payments will gain significant traction
Digital Branch Transformation and Virtual Banking
Physical distribution and branch banking in the UAE continues to be a critical element in the success of onboarding new customers and fostering increased engagment to improve customer experience and loyalty. Whilst it is undeniable that financial transactions are increasingly moving to online and mobile banking channels, the branch and it's employees still remains an important part of the 'local bank' culture. The challenge recognized by most banks is that transaction cost per teller is on a steep incline, and there is a need to justify the branch network investment, and subsequently they will look to change the dynamics of the branch visit such that it becomes one of an advisory role. Streamlining the KYC and onboarding process, brand awareness, and strengthening the relationship with customers will drive physical distribution ROI. Throughout 2015 it is likely that your local bank branch will be digitized, provide more self service facilities, and offer far broader access to specialised advice from investment to savings, and even insuring your home or car. This advice might be delivered via tablets, digital tables, Touchable Walls, or perhaps even through a Skype-like service, but what is certain is that your branch visit experience will be a lot 'cooler' than waiting to be served in a long line of customers with a queue ticket or token! Much like CBD has already done, you will also see banks start to offer virtual branch experiences through Facebook banking, or a dedicated Virtual Reality portal in which the physical and digital world converge.
Digital Distribution and thinking 'Mobile First' design
As the mobile phone continues to drive everyday banking and convenience, increasing consumer demands combined with continued competition from outside the industry will drive a new mindset of 'Mobile First Design'. Tradionally banks have never considered 'Design' to be as important as product offering, but increasingly they have become aware that the user experience, or 'UX' is as important as a dedicated relationship manager in how the bank's customer service is perceived. Banks will look to develop mobile phone compatible solutions to streamline the onboarding process and ensure that customers (or potential customers) are able to initiate their relationship with a bank by using their mobile phone FIRST. From browsing products and services, to using the camera to upload ID documents and complete a screen friendly application process, the mobile has become the most important channel to banks hoping to capture millennial prospects and an increasingly tech savvy expat population.
Building Customer Engagement with Contextual Advice, Customer Analytics and Big Data adoption.
The big data and analytics market will reach $125 billion worldwide in 2015, according to IDC. Whilst the amount of use cases in banking for big data adoption increases day by day, their are three key area's which are likely to see a tangible impact in 2015. Internally, 'Security' will become more effective and banks are far more likely to predict and detect fraudulent behaviour through the intelligent use of big data analytics. On the consumer side, storytelling will be the hot new job in analytics with data scientists and Business Intelligence teams set to become pivotal roles as retail executives seek to use their skills to improve customer everyday engagemen and targeted marketing. Finally, two of the most omnipresent trends for the year will be the elevated use of consumer insight for the delivery of an enhanced customer experience, and the continued evolution of electronic channels and associated digital services. Gone are the days when bank's were just organizations that safeguarded your money and offered financing solutions. Today's consumer has a far more elevated expectation of the advice they require from their bank. With the coming of age of PFM (Personal Finance Management) solutions, and real-time mobile payments, consumers are increasingly looking to banks to help manage their day to day spending habits and offer realtime offers based on their physical proximity. Offering contextual advice allows bank's to become embedded in the customers everyday life, and fosters whole new levels of engagement previously not offered to consumers. When a customer spends too much money on coffee in a month, they expect the bank to advise them as such, and provide them with instant alerts that help them to manage their monthly budget. Similarly when there is a discount or deal available in a store, the customer will see real value in its bank if they receive a notification at the point of sale or when entering the store. 2015 will see the proliferation of smart banking tools like PFM, Beacons, and GPS geolocation alerts to drive the value proposition offered to a the customer.
Banking simplification and Rich Media Marketing will blossom.
A trend that has really started over the past two years, and is set to explode in 2015 is - banking simplification. The banking industry has often been criticized for making banking too complex and difficult to understand for your average man on the street. Nowadays bank's are far more likely to succeed in selling their products and increasing cross-sell with existing customers if they simplify the language of their product brochures and make them free of banking 'jargon'. Non-bank disruptors have already seen the fruit that this approach brings by offering solutions and services that appeal to consumers who just want to be clear about what is available. Despite the bad press that surrounds pay day lenders and the high interest rates they charge, these companies have a hugely loyal customer base and enjoy significantly higher referral rates and NPS scores than traditional banks, simply because they make it clear what they are offering, and what the customer is agreeing to. It is matter of time before bank's learn from this approach and adopt more transparency in their product descriptions, rates and charges.
Social Media in banking has been slow off the mark, but 2015 wil be a critical year in developing this area to create brand advocacy. Given that the most consumed media on the internet today is video, it is also likely that banks will ramp up their use of this media to build a catalogue of product and service video's, how-to's, and practical advice for their customers. Video content is proven to have a far better success rate than traditional text and image websites, and bank's looking to capture the attention of consumers will invest in this marketing media far more throughout 2015. In addition to the online audience that video content attracts, the new digital branch is far more effective when the content it showcases uses video rather than traditional collateral.
E-Commerce, Mobile and P2P payments will gain significant traction.
In the UAE digital payments already enjoys early success, and with the support of the government, it's Central Bank and the UAE Banking Federation (UBF), it is only set to go mainstream in 2015. In the UAE we have already seen the likes of BEAM Wallet, Mashreq's TAPnGO, ENBDs MePAY, and NBAD's Arrow making headway into the payments and remittance space. Tech Savvy consumers in the Emirates are increasingly becoming aware of services offered abroad like P2P payments via Facebook, and ApplePAY in the US. With the runaway success of solutions like Barclay's Pingit in the UK, and Kaching in Australia, the expat community in the UAE will be looking for similair utilities from their local banks. Furthermore, the love affair that UAE residents have with Apple products will also drive the ApplePay agenda, and whilst it is still debatable whether Apple will be the winner in the race to own mobile payments, one thing is for sure is that it's publicity has finally educated consumers and merchants alike about NFC technology. UAE banks will be all to aware that delaying their entrance into the mobile payments space could seriously affect customer attrition, and you can expect mobile payments to reach an inflection point in 2015.
The fact is that digital disruption is reinventing financial services - nobody is challenging this opinion. Most of the disruption or small Fintech startups/niche organizations are unlikely to make a real dent in the market share of leading UAE bank's in 2015. Whilst this might alleviate some of the fear felt by retail banking executives, the more important danger, is that banks lose the close connection with their customers, and that day to day engagement, and its associated insight grinds to a halt. For this reason, 2015 will see significant change and investment by UAE bank's as they seek to embrace digital banking, and look to compete as disruptors in their own competitive markets. The key to their success in doing so, will be to engage with new technology companies that understand the changing dynamics of the retail banking market, and can provide practical advice and hands-on execution of the new digital banking model.