Artificial Intelligence (AI), blockchain and FinTech have emerged as the major technological disruptors that will change the way UAE-based banks operate, according to a new report.
As the UAE banking sector comes to terms with new regulations and the implications of VAT, KPMG’s annual UAE banking perspectives report reveals how technological innovation and strong corporate governance will enable banks to transform into robust financial institutions.
The report said some banks are even exploring automated decision-making based on sentiment analysis by extracting data from millions of emails and other data sources.
The report said that as banks grapple with the new VAT regime and the high compliance costs associated with mandatory VAT registration, banks could be forced to increase their fees to compensate for the additional costs.
KPMG also analyses the validity of exploring and implementing blockchain applications to achieve three objectives - improve operational efficiency, increase revenue and reduce risk.
Emilio Pera, partner and head of Financial Services, KPMG Lower Gulf, said: “Banks in the UAE are operating in very dynamic times. The introduction of new laws and tougher regulations is putting tremendous pressure on banks to re-think their business models. Furthermore, the introduction of VAT has impacted profit margins.
“All these factors are encouraging banks to embrace technological innovation like never before and use it to engage with customers in new and creative ways.”
Cybersecurity has also emerged among the top priorities in the board room, as any breach could undermine the trust that customers have in their bank, and affect the future profitability, it added.
Pera said: “The last year has seen the emergence of an increasingly disruptive banking sector which has heightened the degree of both opportunity and threat. Despite this, the general picture is a healthy one, with the sector continuing to surpass that of the wider UAE economy in 2017.
"We are also confident that banks are in better shape compared with a year ago, in terms of having a more long-term, ethical and consequently more trustworthy culture. Banks will now have to embrace change if they are to operate to their optimum over the next nine months."For all the latest banking and finance news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
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