Complex Made Simple

UAE’s upcoming digital bank Zand is the latest in a drive to digitize the country’s financial sector

Zand, the world’s first digital bank to provide both retail and corporate banking services, is launching soon in the UAE. The country is digitally transforming its financial services sector

The digital bank will focus on ecosystems and communities of businesses and individuals The use of cash and cheques eased last year in most markets The Dubai lender Mashreq Bank is spending $136 mn on digital transformation over 5 years

Mohamed Alabbar, founder of Emaar and e-commerce platform Noon.com, will chair Zand, the world’s first digital bank to provide both retail and corporate banking services.

The digital bank is set for an imminent launch in the UAE, subject to final regulatory approvals.

The digital bank will focus on ecosystems and communities of businesses and individuals, enabling it to introduce products and services not traditionally available.

Mohamed Alabbar said: “The UAE combines progressive regulations with commercial, financial, and technology hubs. This provides the perfect environment for a digital bank that can launch in the UAE and scale beyond.

“As the first fully independent digital bank in the country, with a full UAE banking license, Zand will provide innovative, effective financial solutions that help simplify businesses and lives, addressing the needs of both retail and corporate customers.”

Zand’s CEO, Olivier Crespin said: “From our systems to our processes and our team, we’re built and ready, and we’re looking forward to welcoming the first customers soon,” he said.

Crespin previously worked for Eradah Capital, CIMB, and DBS Bank.

Zand is providing the opportunity to stay updated on its progress via a sign-up form on its website at www.zand.ae.

Read: ALVAREZ & MARSAL 2020 UAE banking pulse expects the sector to rise in 2021

Read: No more forms! How Open Banking can make applications simple and secure

Global digital banking trends

The digitization of services for banks, which would usually take 2 years, is being completed within 2 weeks as a result of the pandemic, JP Morgan Chase chief executive Jamie Dimon said last year at Sibos, an annual conference for the global financial services industry.

Globally, lenders need to speed up the shift to digital operations and reconfigure their branch networks, where demand has softened, according to McKinsey.

The use of cash and cheques eased last year in most markets, with about 20% to 40% of consumers surveyed by the consultancy saying they used significantly less cash.

Banks need to focus on and adopt what Publicis Sapient calls Jump, a key component of its transformation portfolio known as Evolve, Jump, Attack. 

Jump involves building a new shell into which the existing business can migrate.  

To compete, traditional banks must replicate those key qualities that are enabling the success of newcomers: cloud nativity, fintech-friendly architectures, customer-led cultures, efficiency enabled by straight-through processing, and careful targeting of high-value digital natives.

UAE’s digital banking drive

Online banking has become increasingly popular in the UAE. In a survey by the Boston Consulting Group (BCG) last October, 70% of respondents said they are actively searching for a new bank, and 87% said they would be willing to open an account with a branchless digital-only lender.

The mobile wallet market in the UAE is projected to hit $2.3 billion by 2022, according to US consultancy TechSci Research.

About 53% of UAE consumers increased their use of banking mobile apps amid the pandemic while more than half tried digital banking for the first time as a result of movement restrictions.

Last month, Dubai-based neobank YAP launched the first independent digital banking platform in the UAE.

In October of last year, Abu Dhabi investment firm ADQ announced plans to set up a digital bank with an initial capital of $545 million after obtaining the legacy license of First Gulf Bank.

Mashreq Bank, the Dubai lender and UAE’s oldest bank, is spending $136 mn on digital transformation over 5 years.

Mashreq’s digital plans included shutting half of its branches in the UAE last year as increased use of technology reduced the need for a physical presence.

About 97% of Mashreq’s transactions take place through a digital platform.

Digital bank Mashreq Neo saw customer acquisition grow by 50% during COVID-19.