The oldest banks in the United Arab Emirates is preparing for a digital-only future as it fends off competition from non-traditional financial services startups.
Dubai-based Mashreqbank now operates just 10 branches in the UAE, down from 34 two years ago. That’s set to fall further, with Chief Executive Officer Ahmed Abdelaal predicting traditional branches will “cease to exist very soon.”
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“There’s a complete shift in our strategy to focus on digital channels,” which now account for the majority of new business at the lender, Abdelaal said in an interview.
“We still have some clients who rely on brick and mortar but our numbers show these are diminishing by the minute.”
If you can’t beat them, join them
Mashreq traces its origins back to 1967, four years before the UAE was founded as an independent country.
The lender, like others in the Middle East, is pivoting to digital banking to cater to a young population that prefers to bank online. For some countries like Egypt, digital platforms are often the only way to access banking services.
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By GlobalDataWhile lenders including Emirates NBD have set up digital offshoots, independent entities are also entering the market.
Facing “our real competitors”
The founder of Dubai-based Emaar Properties PJSC has set up a platform called Zand, while Abu Dhabi sovereign fund ADQ last year announced plans for a $545m digital bank.
Meanwhile, local payment apps have attracted funding and companies like Stripe Inc. have entered the market.
Abdelaal said Mashreq isn’t competing with traditional banks anymore. “Our real competitors are the providers of client experience…the owners of data, the owners of information,” he said.
The move comes as Covid-19 accelerates the adoption of digital services across the Gulf region. Demand for financial technology products among its young and mobile enabled population is rising, particularly in the UAE and Saudi Arabia.
