Consumer trust in UAE banks at a five-year high, industry body says

More than three quarters of respondents to UAE Banks Federation annual survey displayed high levels of trust in lenders

The coronavirus pandemic will help customers migrate from branches and ATMs to online and mobile banking, says Abdulaziz Al Ghurair, chairman of the UAE Banks Federation and chairman of Mashreq Bank. Show more

More than three quarters of consumers in the UAE had high trust in the country’s banking sector last year, a 2 per cent improvement from 74 per cent in 2018, according to the UAE Banks Federation’s (UBF) annual Trust Index survey.

This is the highest reading for UAE banks in the past five years, the federation said on Monday.

“It’s going to be very difficult to keep growing consumer trust forever. We should be ready for a 0.5 per cent to 1 per cent improvement or deterioration on this indicator [for 2020],” Abdulaziz Al Ghurair, chairman of UBF, said at a virtual press conference announcing the survey's results.

Trust in the UAE banking sector stood at 70 per cent in 2015 but fell to 68 per cent in 2016 and 2017.

The fifth edition of the UAEBF's Trust Index survey was based on responses from 2,068 adults in the Emirates. It was carried out in collaboration with data provider RFI Group.

Sixty six per cent of respondents said they are impressed with UAE banks. Expat Arabs have the most positive impression of the UAE banking sector at 83 per cent, but this falls to 57 per cent among South Asian expats (from Pakistan, India, Sri Lanka, Bangladesh).

“Maybe Asian customers have a unique requirement or they need unique services both here and back home. If we can [better] link the banking sector between the UAE and the subcontinent, probably that will ease banking for them and enhance the customer experience,” said Mr Al Ghurair, who is also chairman of Mashreq Bank.

Around 73 per cent of Emiratis were happy with banking services in the UAE, while 70 per cent of Westerners expressed their satisfaction and 74 per cent of East Asian (Chinese, Japanese, Korean, Filipino) expats have a positive perception of UAE lenders.

The survey also indicated a growing preference for online banking channels.

While 94 per cent of bank customers use ATMs, only 47 per cent still use bank branches.

Around 61 per cent of consumers use online banking and 67 per cent said they prefer to bank through their mobiles.

Mr Al Ghurair said the use of branches will "shrink" with digital transformation.

"We have fully fledged smart ATMs that can be used to perform any function that you would do in branches. The coronavirus pandemic will help customers migrate from branches and ATMs to online and mobile banking,” Mr Al Ghurair said.

“Eventually, the role of the call centre will also diminish. Customers will need to use call centres only if there is a transactional issue.”

Responding to a question as to whether UAE banks would cut costs further as part of this digital transformation, Mr Al Ghurair said: “Everyone is looking to do their business in a more cost-efficient and efficient way. In the last few months, customers have been moving more towards digital platforms, be it for government entities or large corporates."

The shift in customer behaviour will "require more investment from banks to improve the digital customer experience", Mr Al Ghurair said.

"They will have to drop some services that were available traditionally through branches or other channels. There will be some cost-cutting because of digital transformation,” he added.

The fifth edition of the Trust Index survey also revealed that customers trust traditional banks more than other financial service providers when it comes to the safekeeping of their money.

Traditional banks received a score of 7.2 out of 10 in relation to keeping customers’ money safe, followed by card schemes with a score of 6.6. Digital banks and FinTechs scored 5.2.

The UAE banking sector has a higher trust score than many other developed nations, with 82 per cent of UAE consumers stating that their bank is honest, trustworthy and fair. Moreover, local banks compare favourably to lenders in expats' home countries, the survey found.

“Around 21 per cent of Westerners (Europe, America, Canada) think UAE banks are better than banks back home while 79 per cent think UAE banks are on par with banks in their home country. This is a good benchmark to compare,” Mr Al Ghurair said.