The global financial industry has transformed over the past few decades as a result of widespread digitalization. A standalone neobank operates entirely online or through a mobile application, and has no physical branches. It is the primary contact point of customers.
Numerous new digital banks have entered the marketplace, seeking to compete with traditional banks. This competition has led to innovations in business models and services, necessitating the development of new online solutions for customers. In response to pandemics like Covid-19, neobanks have even developed new strategies aimed at breaking into traditional banking markets.
In the UAE, 90% of people use digital banking channels, according to the federal competitiveness and statistics authority. Mobile banking is used for transactions and internet banking for new products.
A regulatory framework for banks applying for a digital banking license was launched by Abu Dhabi Global Market (ADGM) in 2015. It aims to assist conventional banks seeking to establish digital banks or branches of digital banks, as well as fintech companies with innovative value propositions. To apply for a license for a digital bank, technology companies and financial institutions have to form a partnership.
Neobanking is still in the nascent stage in the region, some of the challenges that neo banks face are the regulatory framework in the UAE requires fintech companies to partner with a banking institution before it is granted a digital banking licence. For neo banks to legally operate, they have to partner with a traditional bank and use their licence with a revenue-sharing agreement in return. Thus, the complex regulations and cultural differences pose challenges to banks wanting to enter the UAE’s fintech space. These barriers make it difficult for digital-only banks to emerge.
Traditional banks were often favored by existing regulatory frameworks. However, the internet and smartphone penetration in every part of our lives has forced these banks to reassess their digital strategy. They invested in digital infrastructure and expanded their offerings through online channels and apps. At the same time, startup fintech companies are reshaping the entire financial services industry by demonstrating a wealth of technological innovations and providing personalized services to meet changing customer demands. This is why most banks are making the switch to offering digital banking products.
It was reported that in the UAE there are around 18.3 million mobile phone users, which is an area of interest for companies in the digital banking landscape. It’s no secret that technology is constantly evolving. Traditional banks are now also investing in new technologies as a way to stay competitive and address the needs of their younger consumer base.
In the UAE, Liv by Emirates NBD and Mashreq Neo are two front-end digital banks backed by large traditional banks. Developed by Mashreq Bank, Mashreq Neo was launched in 2017. It targets digitally savvy generations and is completely branchless. In 2017, Emirates NBD launched Liv by Emirates NBD as a digital lifestyle bank to appeal to millennials. It has onboarded more than 300,000 clients.
Zand Bank
Zand has been given a banking licence in the UAE, allowing it to operate as a completely autonomous digital bank in the nation. With the licence, Zand will be able to provide unique solutions to retail and business clients.
Zand Bank is a new digital bank set up in Dubai. It is also a fully independent digital bank in the United Arab Emirates. This is a digital-only bank and no physical branches available anywhere. The bank proposal was announced in the month of April 2021.
Even though it has no physical branches, the bank has a full banking license to operate in the United Arab Emirates. It is not less than any other bank that has a physical presence. It will support the financial sector connected to companies and individuals.
Currently, the bank or its website is not open to doing banking, but it started taking data of those who are interested. When the website is fully operational, those who registered for banking services can open an account and start transacting.
CEO of Zand Bank
The chairman and CEO of Zand Bank is Mr. Mohamed Alabbar and the board of investors includes Al Hail Holdings of Abu Dhabi, Al Sayyah & Sons Investments, Global Development Group, M A Yussuf Ali of Lulu Group, and Zand co-founder Olivier Crespin.
The aim of the UAE’s first digital bank is to reshape the future of banking as per its Chairman. The reason for thinking about such a kind of bank is due to the high internet literacy of people. The second main reason is the usage by new generation of people who are more into the digital world.
Zand Bank Shareholders
Zand Digital Bank has a strong investor line-up. Its financial background is strengthened by the association of business groups like Aditya Birla of India and Franklin Templeton. The Aditya Birla group is a century-old company that has a market cap of $75 billion. The company has operations in 36 countries. Its fund management and financial sector experience have a volume of about $57 billion.
