Competition in the United Arab Emirates (UAE) banking sector is intensifying as customer demands and expectations continue to increase, according to new research announced today by Boston Consulting Group (BCG). The findings from BCG’s “2021 Consumer Sentiment Study in Banking”, in which over 2,000 respondents in the UAE were surveyed to ascertain a further understanding of the evolving retail banking segment. The research found that 55% would have no problem switching to a new bank and 66% of customers actively look for new offers.
“In the UAE, we see that most customers have multiple banking relationships, which is understandable when one considers the significant expectations people now have on their banks,” said Mohammad Khan, Partner, BCG. “Two-thirds of survey respondents proactively search for offerings that provide better value and over half would not be hesitant before opting for a different bank altogether. These tendencies illustrate the competitive nature of retail banking today, with many customers across different income categories changing banks over the past year.”
Specifically, the research shows that over 20% of UAE consumers changed banks within the last 12 months. High interest rates, products not meeting personal needs, and poor customer service are cited as the top reasons behind today’s attrition amongst leading banks and people moving to pastures new. Alternatively, excellent customer service, superb digital experience, and strong brand reputation are cited as the main reasons that would compel customers to recommend their banks to friends and family.
“With numerous factors behind consumers’ decisions to switch banks, there is unquestionably room for improvement,” explained Khan. “Yet despite these setbacks, many positives that appeal to the modern customer are also apparent. Leading banks offering excellent service via digital have set the latest industry benchmark, and this is something those currently behind should aspire to emulate not only for customer retention and attraction purposes but also for brand development.”
The study also found that branch visits have declined by 5% compared to one year ago, while mobile and online banking usage has increased by 10% since 2020, with 88% of customers now willing to open a digital-only bank account. The most important – and appealing – features for virtual institutions are instant account opening, easy bill payments, and personalized offers, with instant virtual credit cards and Peer-to-Peer (P2P) payments also beginning to gain traction.
“Retail banking is much like every other sector from a consumer standpoint. Due to acceleration of digital transformation, they now expect empowerment and convenience through the provision of seamless services,” said Markus Massi, Managing Director and Senior Partner, BCG. “This is reflected by such a high willingness to open digital-only accounts, which is a trend we do not anticipate receding. Simplicity and personalization are other benefits that resonate with audiences nationwide, both of which are easily attainable through fast bill payments and the multitude of offers now being presented to customers.”