UAE retail banking revenues are expected to grow at a Compound Annual Growth Rate (CAGR) of 6.4 percent between 2021 to 2026, while GCC economies are expected to see an 8.8 percent CAGR within the same period, according to a report by Boston Consulting Group (BCG).
The report also reveals that a quarter of retail banks surveyed globally report ESG as a primary focus area for digital transformation and 38 percent say that ESG is a key criterion in selecting and prioritising digital transformation initiatives.
Payments, mortgages and deposit products are likely to drive banking revenue growth in the GCC retail banking sector from 2021-2026. A further benefit to payment revenue growth is expected from adoption of digital payments and e-commerce.
“Sustainability is rapidly reshaping competitive advantage, remaking whole industries, and generating new waves of growth. It has long been a part of good business – but in today’s evolving marketplace, engaging with customers and other stakeholders on ESG issues is a matter of rising urgency,” said Bhavya Kumar, Managing Director and Partner, BCG.
“In addition to promoting sustainable behaviours by customers, banks can play an instrumental role in contributing to the UAE’s ambitious agenda for sustainable development. Through ESG-related products, banks can shape the sector and the country’s leap forward,” he added.
“The UAE has deployed extensive efforts towards driving sustainability forward in the country under the framework and in alignment with the UAE Green Agenda 2015-2030. Retail banks have a critical role in contributing to the vision of the nation. To ensure continued success, banks must constantly strive to look to markets where they have unique advantages to create offerings and build business models to leverage these advantages,” said Martin Blechta, Principal, BCG.
“ESG in banking is very much a credit portfolio review and there is a significant first mover’s advantage – whereby, banks that start this activity ahead of competitors have more choice to prioritize the right clients. As they consider a redirected future, retail banks must adapt to changing consumer preferences and utilise digital tools and technology to craft solutions that will fulfil customers’ needs in new and sustainable ways while advancing the overall ESG agenda.,” he concluded.
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