Will the UAE Succeed in Changing the 'Spending' Culture?

Published April 16th, 2019 - 10:12 GMT
Savings is barely significant on the minds of residents in the UAE,
Savings is barely significant on the minds of residents in the UAE, (Shutterstock)
National Bonds is dedicated to create a culture of savings among residents in the UAE

Residents in the UAE need to adopt a culture of saving their monthly earnings for long-term benefits in the future, and Mohammed Qasim Al Ali, Chief Executive Officer at National Bonds, aspires to achieve just that through its various initiatives and personalised programmes that are aimed at different lifestyles.

"By default, we are born and raised to spend money. And we are good at it too because we now have digitalised this behaviour through  the various E channels (online and mobile payments) that lead to more spending. But when it comes to savings, how many people consciously deduct at least 10 per cent from their salary as savings every month? Not many. So, that is the radical change we want to create in people's minds," he said. 

Al Ali has been at the forefront of National Bonds' initiatives since May 2007 when the Company was just over one year old. With his expertise and the support of his board, he has introduced several divisions and investment strategies into the organisation in order to take it to the next level.

"We have created different solutions for our clients and introduced channels to fulfil that need. Our investment strategy is very simple. We are a low to mid-risk fund because we have people's savings and some of their investments . We distribute that across five to six asset classes according to the level of associated risks and returns. Overall, this brings us a return at the end of the year, and that pays off the competitive dividends and profits to the customers," he said. 

With a disposable income, monthly financial responsibilities as well as opportunities to splurge, savings is barely significant on the minds of residents in the UAE, which is why National Bonds  has been spearheading several programmes to inculcate the habit in every aspect of an individual's life. 

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"It is a gigantic task and it is not easy. We are changing a culture; we are trying to change the behavioural DNA of people where we transform spenders into savers," he said. 

Novel ventures

The organisation takes into consideration all segments of residents in the UAE, as Al Ali revealed a recent MoU with the Ministry of Human Resources and Emiratisation to encourage almost three million blue collar workers to sign up for National Bonds through regular deductions from their Wages Protection System (WPS) scheme. 

"This is a massive initiative that takes care of them on a holistic approach. It is something we want to fulfil and ensure that these workers are able to save some funds - for family and/or emergencies - earn a bit and maybe win prizes during their time here. This will be implemented over the next few weeks," he said.

National Bonds is also set to introduce objective-based saving plans, where residents can link their funds with a chosen goal - ranging from emergencies, education, wedding, travel and/or retirement.

"Overall, savings have an impact on the economy. In any nation, the first line of defence is the savings of the people. The more savings people have, the stronger the economy becomes," he said.

All this will be complemented with a new mobile app that eliminates paperwork and gives customers digital access to National Bonds' portfolio of products and services at their fingertips.

Strategical values

National Bonds is in collaboration with the Dubai Financial Market (DFM) to implement a framework that could strengthen the emirate's position as a global hub of Islamic economy. This move aims to invest idle, dormant funds resting with  brokers and give clients an opportunity to deploy idle liquidity while waiting for the market to pick up.

From a regional perspective, it is preparing its foray into the Saudi market, a strategic move that is in line with the country's vision 2030, according to Al Ali.

"We are 90 per cent ready to submit the official application to the Capital Markets Authority of Saudi Arabia. It is a big country with triple the population of UAE (two-thirds of locals vs expats). This will be a strategic game-changer for us, as it places emphasis on people to save as part of its national vision. Our entry into the KSA market will take place at the right time," he concluded.

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