Banks are racing to put artificial intelligence and digital technology at the heart of everything from payments to customer service. But the deeper technology becomes embedded in banking, the greater the consequences when it fails.
Recent disruptions have brought that risk into sharper focus. Iranian attacks during the war struck Amazon Web Services facilities in the UAE, while a region-wide IT breakdown disrupted online and phone banking services at several lenders. More recently, Abu Dhabi Commercial Bank suffered intermittent digital disruption that affected customers for about a week.
The incidents expose a dilemma facing banks in the UAE and globally. Digitalisation and AI are no longer optional in an industry where customers expect instantaneous service and switching banks can take little more than a few taps on a phone. But every new layer of technology also creates dependencies that lenders must protect against disruption, cyberattacks and geopolitical shocks.
“In banking, trust is the ultimate currency,” said Pedro Cardoso, group chief digital officer at Abu Dhabi Commercial Bank. “As individual customers and businesses' expectations continue to evolve, the industry’s responsibility is to ensure that innovation, resilience and customer experience advance together.”
Evolve or perish
Competition from the new breed of banks built on AI-driven, cloud-first and asset-light models has set new standards for speed, personalisation of services and cost efficiency, the Dubai International Financial Centre (DIFC) said in its 2026 Future of Finance report.
“Without decisive transformation”, industry profit pools could fall by $170bn by 2030, pushing many institutions below their cost of capital, according to a DIFC report released in June.
UAE lenders are responding by accelerating investment in technology.
Abu Dhabi-based Sharia-compliant lender Al Hilal Bank has transformed its traditional operating model to a “digital-first” proposition “in response to a fundamental shift in customer behaviour and preferences”, chief executive Jamal Al Awadhi said.
Today, more than 95 per cent of the lender’s active customers bank digitally, and as digital engagement grows, “so do customer expectations”, necessitating “continued investment in infrastructure, cyber security and cloud capabilities”.
The name of the game is strengthening the bank’s “resilience, flexibility and scalability” to enable it to “rapidly shift critical banking services across multiple environments when required”, he added.
While the top-tier UAE banks are investing heavily on digitalisation programmes and AI integration, the mid-tier banks such as National Bank of Fujairah are also pouring substantial sums into changing the DNA.
NBF is committing Dh100 million a year to become a “digital-first bank with a human touch”, chief executive Adnan Anwar told The National in March.
Although the likes of First Abu Dhabi Bank, the UAE's largest, Mashreq, ADCB, Abu Dhabi Islamic Bank and Dubai Islamic Bank, have not disclosed how much digitalisation accounts for their annual expenditure, they have repeatedly emphasised on their continued transformation.
Their efforts are paying off. Emirates NBD and First Abu Dhabi Bank, topped an index tracking the use of responsible artificial intelligence, receiving recognition for their role in narrowing the adoption gap between the Middle East and Africa and global peers.
The lenders were ranked first and third, respectively, by the Evident AI Index for Banks – Middle East & Africa. The index tracks how lenders in the region leverage AI and navigate its transformational effects throughout their operations.
Fragilities laid bare
But the more dependent banks become on technology, the greater the stakes when systems go down.
Recent events in the Middle East have been an extreme test of that dependence.
Cloud and digital infrastructure on which most banks rely to run core banking platforms, process digital payments, store customer data and power mobile banking apps can become points of vulnerability during conflict as well as targets for attack.
On March 2, online and phone banking services of several banks in the UAE were disrupted due to a regionwide IT services breakdown.
It was not clear whether the issues were related to strikes at Amazon Web Services data centres in the UAE that took place on the same day.
A day later, AWS, Amazon's cloud division, confirmed that two of its facilities in the UAE “were directly struck”, while in Bahrain a drone strike near one of its sites damaged its infrastructure.
Following the disruption, the UAE Central Bank allowed Emirati lenders “temporary relief” to host some data outside the country to avoid the fallout of Iranian attacks, the UAE Banks Federation chairman, Abdul Aziz Al Ghurair, said in May.
Under regulations, the UAE Central Bank requires all financial institutions to keep customer and transaction data within the Emirates.
“Banks are accountable not just for their own systems, but also for the vendors and platforms they rely on … especially when we consider the rising expectations around resilience-by-design, governed execution of AI systems, and strategies aimed at third-party concentration risk,” Inci Kaya, senior research manager at International Data Corporation (IDC), said.
Intermittent disruptions
War, however, is far from the only threat to the smooth functioning of digital banking. Technology can fail for more conventional reasons.
Last month, ADCB, the third-largest lender in the UAE by assets, suffered intermittent outages to its services.
On July 6, ADCB said its mobile app was back to normal operation for most customers after a week of technical disruption. The lender’s core systems, branches, ATMs, card networks and payment operations absorbed heavy transaction volumes despite the intermittent downtime.
Its corporate banking channels remained fully operational throughout that period, the lender said at the time.
The scale of its digital customer base illustrates what can be at stake during an outage. Some 1.9 million customers, representing about 93 per cent of the bank's customer base, were registered across ADCB’s mobile and internet banking platforms at the end of 2025.
Over 1.5 million users have already migrated to ADCB’s new AI-powered app, according to the bank's data.
“As digital banking continues to evolve, resilience is becoming as important as innovation,” Sean Langton, chief information officer at ADCB, said.
ADCB has plans to spend substantially more to bolster stability. Spending on its digital banking capabilities is expected to run into hundreds of millions of dollars over the next two to three years.
“These investments are strengthening our core infrastructure, expanding cloud and AI capabilities,” Mr Langton.
Global phenomenon
Such failures are not unique to the UAE. Banks and payment networks globally regularly contend with outages.
Mastercard has suffered two disruptions this year, including an outage last weekend linked to a system upgrade, while a technical glitch in Russia's interbank networks in April temporarily disrupted services at several major lenders.
“No system is failure-proof, so we don't build as though ours are,” said Sujit Krishnan Unni, group chief technology officer at Network International.
The payments company is engineering resilience into “every layer of our technology, from infrastructure and applications to change management and monitoring”, to minimise disruption in services.
“Automation is also playing a growing role, helping us identify and fix issues before they affect customers,” Mr Unni said.
Resilience over speed
The answer, industry executives argue, is not for banks to retreat from AI or digitalisation. Instead, resilience has to keep pace with innovation.
“A system that isn't resilient can't deliver value consistently, and a system that doesn't adapt to customer expectations isn't delivering the right value in the first place,” Mr Unni said.
Financial institutions that prioritise investments in AI-enabled customer engagement and personalisation engines are seeking to improve service quality, deepen customer relationships and increase loyalty, IDC's Ms Kaya said.
That said, security and risk management outrank customer experience among their priorities. But it would not be fair to characterise the industry's adoption of technology as “reckless deployment”, she said.
The shift in technology strategies globally, she noted, is moving away from efficiency alone towards continuity, redundancy and risk absorption.
That reflects a market in which an outage can affect far more than the infrastructure itself, potentially damaging customer trust, regulatory confidence and business continuity.
“Banks must be ready to demonstrate their ability to restore critical services within defined impact tolerances,” she said.
“They are aware that they are subject to fines and remediation orders, and that they can incur reputational damages if they fail.”
For an industry built on trust, the next phase of the technology race may therefore be defined not simply by which bank deploys AI fastest, by which can sustain the continuity of flashing-fast AI-driven services.
