How the UAE can build on the rise of FinTech during the pandemic

In an era of rapid digitisation, the banking sector must continue to innovate to remain agile and lead by example

The amount of commercial office space in Dubai is likely to grow by 5 per cent to 9.18 million square metres by next year, according to KPMG. The National

As the world continues to grapple with the outbreak of Covid-19, and the economic effects resulting from movement restrictions, we are now slowly seeing which changes have worked and those that haven't.

While countries are loosening restrictions now and governments are gearing up to reopen economies, there is still fear over what now and what next. As businesses gradually restart operations and people venture out cautiously, technology continues to take centre stage.

In normal times, adapting to new ways of living can take time but the pandemic has seen many adopt new technologies very quickly. This disruption has propelled businesses and institutions into an overdrive towards digitalisation.

FinTech is one such technological advancement – particularly across the Middle East and North Africa – with the Covid-19 outbreak accelerating this journey in a big way.

FinTech companies were involved in 2,693 deals in 2019 worth $135.7 billion (Dh498.4bn), according to KPMG's Pulse of FinTech survey. That is 3.7 per cent below the $141bn record set a year earlier. Nevertheless, the movement towards FinTech has gone full speed ahead and we will certainly derive the benefits of these headwinds.

There are 9.06 million people that use mobile internet in the UAE, according to Global Media Insight, making them all smartphone users. The report found web traffic across various devices is derived in the following way: 54.5 per cent from mobile phones, 44 per cent from laptops and desktops and 1.5 per cent from tablets.

Being extremely digitally connected means carrying out transaction-related activities through devices. The pandemic saw residents switch from being in-person purchasers to increasingly depending on online transactions, in turn accelerating the growth of FinTech in the UAE and the wider region.

This has come as a nudge for digital services in the UAE’s banking and finance sector, which continues to embrace the global trend where typically the banking sector has been slower to evolve than most as it remains dependent on traditional business practices.

There is also an increasing need for efficient and user-friendly digital banking solutions in the country to help with seamless and quick transactions. In the UAE, remittances to home countries are very important for many expatriate households. Many exchange houses and banks have taken this into account by increasing their digital offerings amid growing competition and making transfers more convenient during the movement restrictions.

Although the restrictions are being lifted, the convenience of online banking and remittance services will continue to be adopted, even by traditional bankers. It saves time and is digitally documented for ease of reference. Mobile wallets like Apple Pay and Samsung Pay, among others, are also easy to use for consumers and offer contactless payments at a time when they are really needed.

According to KPMG’s UAE Banking Perspectives report, despite the challenges presented by Covid-19, there is an increasing focus on open, connected banking, and successful organisations tend to be those that put their customers at the heart of their strategy.

Banks are also increasingly exploring the concept of ‘banking the ecosystem’, which refers to an interconnected set of services, where customers can undertake a number of banking and financial needs in a single unified experience.

This integration may be small steps towards a more sustainable and holistic banking experience that can increase customer satisfaction and in turn help banks diversify and build additional revenue streams.

In an era of rapid digitalisation and FinTech being key to economic growth, the banking sector in the UAE must continue to innovate to remain agile and lead by example. The businesses and industries know and understand that customers and their needs should be foremost. To be able to serve better, they must transform in a way where transparency and agility is key.

Another early technological adoption the country has seen is the transition into distance learning. In May, for example, the Minister of Education, Hussain Al Hammadi ensured the continuity of distance learning for more than 1.2 million students in the UAE through the use of modern technologies.

With the UAE's preparedness showcased over the past few months, it remains to be seen what course the new normal takes. Now, more than ever, digitalisation and FinTech are propelling growth for many industries. There is so much more to be done, but the start is in the right direction. It is important to continue along this path, keep up the momentum and sustain it, as this is now the future, and it is here to stay.

Jamal Al Jassmi is the general manager of Emirates Institute for Banking and Financial Studies