The UAE Banking Outlooks in 2022

In the hopefulness that the Covid-19 pandemic will be confined and the economies will combat the challenges, the financial services sector in UAE is dynamically progressing to adopt revolutionary business flexibility mechanisms. The CEOs of the local banks are concentrating on a variety of pivotal area consisting digitization, corporate governance, addressing regulatory issues, and risk management.

The Four Key Themes to Influence the Financial Services Sector

Particularly, there are four key themes that are emerging dynamically and are expected to influence the sector in the upcoming decades. Here is the picture of the future of the UAE’s banking industry:

• Modeled by advanced fiscal and economic environment
• Led by innovative, disruptive, and responsible trends
• Strengthened by top-notch infrastructure capabilities
• Backed by connected risk and regulation frameworks

Leveraging Techniques for Digital Transformation

By leveraging the techniques for digital transformation such as Artificial Intelligence (AI), Blockchain, and Machine Learning (ML), the banks are substantially automating the processes to provide seamless and swift customer service within an efficient virtual environment.

An important proportion have encompassed predictive analytical models for evaluation of larger data set. Eventually, it will help rapid identification of data and drawing more efficiency in credit, business, and investment-related methodologies for decision making.

The other key trends aiming to redefine the financial institutions comprised of implementing cloud strategies, outsourcing and offshoring of IT, compliance and other processes to fulfill the demand for swift, flawless, and secure transactions.

More Emphasis Assessment of Environmental, Social, and Governance (ESG) Policies

The stakeholders are also anticipating the banks to play a significant part in working towards a more sustainable and equitable future. Thus, the global regulators are rapidly placing emphasis on assessing the Environmental, Social, and Governance (ESG) Policies.

A hike in the risk concerning the misconduct of compliance failure in the last few years had led to superior focus on corporate governance and values along with organization culture. For mitigating the risk, the UAE’s Central Bank has issued latest Consumer Protection Regulation and Standards that aim to contribute towards the wide-ranging stability of the financial services sector.

The role of financial institutions is crucial is offering funding to overcome climate adversities and challenges, thereby incentivizing the ESG practices across their clientele and support the organizations as they address the UN SDGs (Sustainable Development Goals).

Noteworthy Takeaways to Consider

• Top 10 banks in the UAE have reported a 5% year-on-year increase in the total assets amounting to AED 2,989 billion along with a hike of 42% in net profits in 2021.
• Enhanced infrastructure and digital innovations such as cryptocurrency will drive the financial services segment to improve its overall functioning.
• The capital position stands strong and the inclusive liquidity position, return on equity, and cost-to-income ratio remained steadfast year-on-year.

Analyzation of Pivotal Drivers of Consumer Satisfaction

The UAE report for banking perspectives 2022 analyzed the major drivers of consumer satisfaction throughout the leading UAE banks. It rooted out that one of the major obstacles for the consumers was inefficient support regarding their reported issues pertaining to business conduct, including suspected fraud and inaccurate information being acknowledged. The cryptofication of banks was recognized as a key trend in 2022. The reasons behind it were increase in demand and supply alongside the banks unwilling to miss out on such futuristic adoption.

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How digitalization in the banking sector would have a positive impact on financial services?

As the customers’ banking requirements are evolving rapidly, the banks also need to progress accordingly. The major part of potential market comprises of clients with low investment capital amounts. These individuals are seeking top-notch advisory solutions from advisors with technological acumen and highly-advanced platforms and features. It would help them manage and channelize their family succession and wealth tactics. The digitalization has lessened the costs for client-retention and improved the capital accessibility. As a result, the banks are working to reinforce their wealth management businesses effectively.?