UAE banking sector has strong foundation to continue growing

Abdulaziz Al-Ghurair, Chairman of UAE Banks Federation (UBF), the unified representative and voice of UAE banks, said that the banking sector in the UAE has a solid foundation to continue to grow and meet fast-evolving customer requirements as he spoke at the Abu Dhabi Financial Week.

The event, organised by Abu Dhabi Global Market (ADGM) in cooperation with the Department of Economic Development - Abu Dhabi, was participated by UAE Banks Federation as a strategic partner.

Addressing over 500 prominent investors and experts in the financial sector from 30 countries at the event, he said, “UAE banks are well capitalised and profitable, which are prerequisites to enhancing the stability of the sector in the long term, under the supervision of the Central Bank of the UAE.”

Abdulaziz Al-Ghurair praised UAE Banks Federation’s strategic partnership with ADGM, which constitutes an essential platform for exchanging expertise and experiences to strengthen the banking and financial sector in the UAE through various initiatives and events.

Healso explained that the UAE’s banking sector has achieved significant progress, with assets growing 12 times from $75 billion in 2000 to more than $900 billion in 2022, which represents an increase from 70 per cent of UAE’s nominal GDP in 2000 to more than 250 per cent in 2022, positioning UAE banking sector at par with the growth rate in leading global markets.

He stated that today, UAE is among the top seven financial hubs in the world, noting that specialised financial centres, particularly Abu Dhabi Global Market and Dubai International Financial Centre, have played an important role in developing the financial sector and placing it on the global map. At the same time, they are home to more than 7,000 companies and employ more than 44,000 people from various countries.

Underlining the tremendous progress made by the banking sector in developing digital solutions offering the best services to customers while building a reliable and secure financial environment, Abdulaziz Al-Ghurair explained that local banks had invested more than $1 billion during the last five years to modernise the technology infrastructure. They now provide enhanced specialised services while improving APIs, cloud computing, and digital channels.

Abdulaziz added: “Digital Transformation has contributed to increasing the reliance on digital services, as more than 95 per cent of all transactions of leading banks have become digital, which is one of the highest globally. Meanwhile, the provision of services through smart devices is increasing, leading banks now provide 90% of their services via smartphone, and more than 50 per cent of new bank accounts are opened through digital channels.”

The closure of more than 200 bank branches in the country, representing a 30% reduction, reflects this growing reliance on digital banking. The UAE is home to two digital-only banks, while three operating banks have launched their own digital banks.

He praised the contributions of local banks in talent development to keep pace with the requirements of this evolving sector while developing appropriate solutions and employing technology innovatively. As a result, UAE banks have attracted and trained professionals, including designers, system engineers and data specialists, to meet service demands in the digital age. He further added that the number of employees in this segment exceeds 20,000 professionals.

Forecasting positive and robust growth of the UAE banking sector, Abdulaziz Al-Ghurair predicted that the banking industry would grow faster than the macroeconomic rate with bank revenues, after risk provisions, to reach more than $25 billion by 2030, a 50 per cent increase over current revenues establishing an excellent financial standing.

“The digitalisation of financial services will further accelerate, and budgets for technological development will rise in order to keep pace with this growth, while effective data management and use will become a competitive advantage. Digitalisation requires restructuring operating models; hence reducing the branch network is the first step. In addition, the UAE banking sector is expected to attract many international players due to its tremendous growth opportunities.” The UAE has become the fintech hub for the Middle East and Africa due to significant investments in this field.

He stressed that the UAE has all the components needed to strengthen its position as a regional and global financial hub, with regulations and legislation in the country being characterised by innovation and aligned with global changes in the sector.

He noted that the Central Bank of the UAE had recently completed the world’s most comprehensive digital currency transactions prototype.