Mobile banking on the rise in UAE

Residents are conducting one out of five bank transactions on their smartphone.

Mobile banking is the fastest-growing segment across the globe due to its increasing popularity and the UAE is no exception. It is part of the core banking strategy of most of the financial institutions that are developing mobile apps to cash in on the high demand from the bankers.
Latest data suggests that UAE banking customers are conducting more of their everyday banking through their mobile phone. The UAE market as a whole remains very branch-driven, but high usage of online banking and mobile banking is prevalent in addition to branches.
According to RFi's 2015 first-half survey of UAE retail banking customers, there is a high penetration of digital banking usage among the UAE population, with 82 per cent of UAE customers using at least one digital banking channel. About 61 per cent have in fact conducted online banking via a mobile device, while 57 per cent have used a mobile app.
According to the survey, 32 per cent of the UAE banking population are frequent users of banking via an app on their mobile device, using it at least once a month. Approximately, 39 per cent use online banking via their mobile device once a month.
The survey said 36 per cent of UAE banking customers believe that their main financial institution offers good mobile banking, while 38 per cent believe that it always offers the most up-to-date technology.
The RFi research shows that the UAE possesses a large smartphone penetration level, with 97 per cent of UAE phone owners holding smartphones.
About 17 per cent of the UAE population surveyed would prefer to pay a bill via an app using a mobile phone in the first half, up from 15 per cent in the second half of 2014. It further said 17 per cent would prefer to transfer money to a family member or a friend this way, up from seven per cent in the second half of 2014.
Abdulla bin Khalaf Al Otaiba, senior managing director of global retail and commercial at National Bank of Abu Dhabi, said mobile banking is far more efficient than traditional branches. Perhaps, most importantly, mobile banking has the potential to be a game-changer in terms of customer service. He said technology is changing the very definition of service and mobile banking helps to improve the service and relationship between a bank and its customers.
"We have recently launched mobile banking in May 2015. It is expected that global mobile banking users and usage will exceed 1.75 billion in 2019, representing 32 per cent of the global adult population," Al Otaiba told Khaleej Times.
"Today, the UAE stands at the forefront of mobile banking industry being among the highest in the world in terms of penetration. The NBAD mobile banking application is a result of long and extensive research and development. We expect it to be among the most popular mobile banking apps in the market."
Global shift
A pressure towards change in distribution channels is occurring at the global level, with a clear trend away from branch channels and towards digital channels and call centres. The branch channel has dropped from 73 per cent of applications worldwide prior to 2011, to just 60 per cent in the last year, while usage of digital channels for applications has almost doubled, from 19 per cent to 37 per cent, according to RFi's research.
This global shift has come about with the help of the proliferation of mobile digital devices such as smartphones and tablets, as well as the digital native generation, helping to push the boundaries of digital uptake and exerting a strong influence over how banks distribute their products to consumers.
According to the RFi study, consumers in the UAE has a high level of trust in new payment technology, a high level of interest in using new types of payments and are more likely to be able to envisage a cashless world. These findings suggest that the UAE is primed for adoption of alternative payment methods, in particular digital wallet.
"At Emirates NBD, approximately 80 per cent of the transactions are already performed via digital and direct channels such as online, mobile, ATMs and call centre. As a result of our integrated multichannel approach to optimise our channel mix and improve the service to our customers, this percentage has been growing over the last few years," Pedro Cardoso, head of multichannel and CRM at Emirates NBD, told Khaleej Times.
"We aim to reach 90 per cent of total transactions outside the branch though various convenient channels in the next three years, if not before. This is helping us to serve customers better and more efficiently as we grow our business,"
"Our mobile banking transactions are growing by more than 70 per cent year on year, and this year we expect it to reach 20 per cent of all branch transactions. Yes, we think the fact that Dubai and other emirates in the UAE are transforming into smart economies will contribute to sustain the growth of mobile and digital banking services in years to come."
The UAE currently lags far behind in digital application levels, relying almost exclusively on the branch and call centre channels. However, RFi data indicates that banked customers in the UAE are among the most ready to rapidly move towards digital channels by 2020, falling just behind urban retail banking customers in China in this metric.
"I think it is widely apparent that the mobile banking market in the UAE is growing at a phenomenal pace. Indicative of our success, the HSBC Mobile Banking app has now been downloaded approximately 80,000 times across the UAE, growing at about 120 per cent last year in comparison to 2013," Khalid Elgibali, head of retail banking and wealth management for the UAE and Mena at HSBC Bank Middle East, said.
"With approximately 770,000 log-ons, a large number of customers downloading the app are using it regularly, as a result of which transactions on this channel have witnessed an 80 per cent year-on-year growth," he said.
In recognition of these strong levels of engagement, he said the bank is investing in further expanding the range of services to customers. "Given our commitment to the UAE, we were one of the first banks to offer an Arabic-mobile application when it launched earlier this year." 
Elaborating the latest trend in the mobile banking, Noor Bank's head of customer experience Dr Fraz Chishti said replacement of the physical cards with mobile devices is gaining grounds in the industry. As more and more POS machines accept NFC/RFD communications, and digital services become available on mobile devices like Apple Pay, the bank will see the growth of device+based POS transactions as compared to card based.
"Undoubtedly, as friction is reduced by simplifying authentication activities, transactions will become easier to execute. Coupled with the smart cities initiative, more and more services are providing online payment options, which would again increase mobile based transactions," Dr Chishti said.
- muzaffarrizvi@khaleejtimes.com