Digitization is the only way forward for the banking sector and most UAE banks are investing heavily to automate most of its services in line with the international trend to ensure sustainable growth, experts say.
Bankers, technology experts and analysts dispel the impression that automation and exposure to the latest technologies will eliminate jobs, and said that digitization is not cannibalizing human jobs - it is only evolving into more efficient roles as more consumers prefer to use digital channels.
"While digitization will automate a lot of banking tasks and processes, it will never eliminate the human interaction as it is still of paramount importance for empathic customer service in any service related industry. We will also witness blockchain going more mainstream in banking which will be used and integrated with other existing technologies," Vijay Jaswal, chief technology officer for Middle East and Turkey at Software AG, told Khaleej Times.
A recent study conducted by Deloitte found that 86 per cent of consumers use branches or ATMs to access their primary bank, while 84 per cent use online banking and 72 per cent use mobile apps to access it. It highlighted that digital channels are used more frequently than branches and ATMs across all generations, and in all countries.
"Consumers are more likely to increase use of digital channels - both online and mobile - if banks increase security, provide more real-time problem resolution, and allow for more regular banking transactions to be handled digitally," according to the Deloitte study on accelerating digital transformation in banking.
Banks investing in tech
Suvo Sarkar, senior executive vice-president and group head of retail banking and wealth management at Emirates NBD, said the bank is investing Dh1 billion to carry out a transformation of its major technology platforms and applications including carrying out robotic process automation of its operations to enable straight-through processing and shorter turnaround times.
"The bank is also investing behind blockchain, launching last year a QR code-based service to strengthen cheque authentication as well as partnering with Smart Dubai and the Dubai Department of Finance to create a payment reconciliation system," he said.
Jameel Khan, head of strategy and governance at Mashreq, said the bank will be investing over Dh400 million in its retail banking transformation programme in the next few years.
"We constantly look at the overall customer experience and match the best technological solution to the underlying customer need. That might see us using blockchain in the customer on boarding process or AI to automate cheque processing," he said.
To a question about cyber-security, he said it is a major challenge in the digital age and understandably remains a concern for all banks, businesses and governments.
"We are constantly working to educate customers on how to keep their data safe and to maintain our own multiple lines of defence against attack. In addition, we look to embed technology and processes across our business to proactively deter, detect and resist cyber-threats."
About the future of physical banking, he said: "For the foreseeable future we believe there will be a customer demand for physical banking, but it will principally be to help address more complicated elements like financial planning or corporate relationships."
Transform via digitization
Jaswal said digitization has a significant impact on the growth and progress of the banking sector. The industry, both internationally and regionally, is in the process of continuous transformation, i.e. digitising to streamline business processes and operations in order to achieve optimum customer experiences.
"The UAE offers one of the world's most advanced digital technology capabilities and infrastructures for digitization. Leveraging this, several banks in the UAE have commenced digital banking initiatives to enhance customer experiences that range from launching digital-only banking platforms and digitizing payment methods to consolidating the existing mobile banking services, mobile wallets, leveraging the power of data, robotic chatbot capability, compliance, acting on insights to improve the customer experience and many others, thereby offering customers ease of interaction, convenience and speed."
To a question that digitization will have an adverse impact on jobs, he said it isn't true.
"Absolutely not. We have multiple examples of banks that have automated up to 95 per cent of the workload on certain departments [i.e., credit checks] and none of them even considered head-count reduction as the banks reallocate staff and in many occasions this can even create a career opportunity."
Tech firms eye finance sector
Veenu Mittal, partner at Grant Thornton, said technology companies are heavily leaning into the finance sector as they seize the opportunities presented by a shifting customer preference.
"This is intensified by the entry of Gen Z into the financial sector customer base, who are more open to banking with technology companies or any other provider as they feel less tied to incumbent banks. This poses a huge threat to those incumbent banks who have not recognized that the tide is turning and they may well be relegated to being mere Infrastructure providers if they do not capitalize on the edge they currently have over these tech companies."
In the UAE, she said the regulators - the Securities and Commodities Authority, the Dubai Financial Services Authority and the Financial Services Regulatory Authority- support initiatives such as Fintech Live and ADGM Reg Lab, which will act as catalysts in disrupting the existing eco-system and will pave way for adopting 'new thinking'.
"Given the fast changing and increasingly competitive industry, the next phase of disruption can be expected to include application of cognitive analytics to help customers manage and optimize their finances," she said.
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