Banking Sector Faces Big Challenges in UAE
For those living and working in the United Arab Emirates ("UAE"), finding suitable finance solutions for both personal and business projects is widely available. A recent report by the Abu Dhabi Islamic Bank (ADIB)[1] have highlighted that the UAE is home to the most competitive banking industry. Due to the long standing presence maintained by leading global banks in the UAE, including the likes of Citibank, strong competition is a vital feature of the retail banking sector in the UAE, ultimately creating a rich market for personal loans and credit card products. Reports have also indicated that the high level of education and rapid social changes has led to a climate where the population takes the lead in demanding ever more flexible and sophisticated banking products.
Human Resource Factors
Late last year leading Human Resources provider, Accenture[2], reported that a skills shortage in the banking sector may be one of the biggest challenges to face the industry in the region. An increasing number of global banks have entered the region in the last few years, which has led to fierce competition in the industry to recruit and retain the best of the best. Nearly seventy per cent of banking executives responding to the survey cited a skills shortage as one of their biggest obstacles. The report states that as global banks operating in the region have cut staff in their home countries, the skills shortage they are experiencing could potentially affect operations in the Gulf region. This is creating a keen focus amongst executives, according to the report, on recruiting and retaining staff within the region to enable them to meet increasing customer demand for a wide range of banking services.
Customer Management and Loyalty
These challenges facing the banking industry in the Gulf may, on the surface, seem like bad news for individuals searching for banking services, credit cards or a personal loan in Dubai or the UAE in general. However, the very demand among both individuals and businesses for banking services is driving change within banks; a key player influencing the level and competitiveness of services available. The Accenture report highlights that executives in the banking industry have also focused their concerns on managing relationships with customers, many stating that they believe this will be a crucial factor in banking success over the coming years. Growing demand for online facilities, mobile banking facilities is increasing rapidly; among global competitors in the market, institutions like Citibank are already market leaders in these areas.
Social Pressures
Rapid social changes in the region have also had their impact on the banking sector. In 2000, 30% of the work force in the Gulf Cooperation Council countries ("GCC"), including the UAE, was comprised of women, rising to 37% by 2009. Add to this a booming SME sector, which currently holds a relatively small proportion of loans, when compared with global figures, and a demographically ‘young' population and banks are facing a demand that has changed from a "traditional" market almost overnight. In the coming years, younger business people, women and the SME sector are all likely to become increasingly important within the GCC economic region, contributing to a growing diversity and depth in the banking market. As banks struggle to compete amidst the background of a rapidly changing market, alongside the increasing demand for affordable banking services, the competition to provide both loans and credit cards in the UAE can only be good news for consumers as it should lead to lower prices for these services.
[1] http://gulfnews.com/business/banking/uae-is-most-competitive-banking-market-in-gcc-but-profits-lower-1.964770
[2] http://www.accenture.com/us-en/landing-pages/gulf-cooperation-council/Pages/index.aspx
Human Resource Factors
Late last year leading Human Resources provider, Accenture[2], reported that a skills shortage in the banking sector may be one of the biggest challenges to face the industry in the region. An increasing number of global banks have entered the region in the last few years, which has led to fierce competition in the industry to recruit and retain the best of the best. Nearly seventy per cent of banking executives responding to the survey cited a skills shortage as one of their biggest obstacles. The report states that as global banks operating in the region have cut staff in their home countries, the skills shortage they are experiencing could potentially affect operations in the Gulf region. This is creating a keen focus amongst executives, according to the report, on recruiting and retaining staff within the region to enable them to meet increasing customer demand for a wide range of banking services.
Customer Management and Loyalty
These challenges facing the banking industry in the Gulf may, on the surface, seem like bad news for individuals searching for banking services, credit cards or a personal loan in Dubai or the UAE in general. However, the very demand among both individuals and businesses for banking services is driving change within banks; a key player influencing the level and competitiveness of services available. The Accenture report highlights that executives in the banking industry have also focused their concerns on managing relationships with customers, many stating that they believe this will be a crucial factor in banking success over the coming years. Growing demand for online facilities, mobile banking facilities is increasing rapidly; among global competitors in the market, institutions like Citibank are already market leaders in these areas.
Social Pressures
Rapid social changes in the region have also had their impact on the banking sector. In 2000, 30% of the work force in the Gulf Cooperation Council countries ("GCC"), including the UAE, was comprised of women, rising to 37% by 2009. Add to this a booming SME sector, which currently holds a relatively small proportion of loans, when compared with global figures, and a demographically ‘young' population and banks are facing a demand that has changed from a "traditional" market almost overnight. In the coming years, younger business people, women and the SME sector are all likely to become increasingly important within the GCC economic region, contributing to a growing diversity and depth in the banking market. As banks struggle to compete amidst the background of a rapidly changing market, alongside the increasing demand for affordable banking services, the competition to provide both loans and credit cards in the UAE can only be good news for consumers as it should lead to lower prices for these services.
[1] http://gulfnews.com/business/banking/uae-is-most-competitive-banking-market-in-gcc-but-profits-lower-1.964770
[2] http://www.accenture.com/us-en/landing-pages/gulf-cooperation-council/Pages/index.aspx