The Banking Executive Magazine - October 2023

UAE NEOBANKS Despite the rapid expansion of neobanks in the UAE, they are un- likely to generate a significant migra- tion from traditional banks to neobanks in the foreseeable future. “Neobanks are still in the early stages of their development in the local UAE market. It doesn’t help that most customers in the UAE continue to prefer traditional banks, which have digitalised successfully,” S&P Global analysts Puneet Tuli and Mohamed Damak wrote in a paper titled Future Of Banking: Neobanks In The UAE Will Complement, Not Replace, Tra- ditional Banks. Neobanks try to attract traditional banks’ customers by typically offer- ing products and services at a lower cost. The regulatory environment for fintechs in the UAE is also somewhat supportive of the emergence of neobanks. Their current product and service offering is limited and mainly concentrates on raising deposits and issuing credit cards, the report noted. In the past few years, neobanks haven’t just increased their presence in the UAE, but globally. According to Statista, the number of neobank customers worldwide reached about 188 million in 2022, up from about the BANKING EXECUTIVE 22 ISSUE 178 OCTOBER 2023 UAE NEOBANKS WILL COMPLEMENT, NOT REPLACE TRADITIONAL BANKS