Mashreq, the Al Ghurair family’s Dubai lender, has created a digital bank to appeal to the UAE’s expanding population of tech-savvy youths.
The bank, Neo NXT, will allow parents of Generation Z children aged 12 to 18 to create an account on their behalf. The lender said in a statement on Tuesday that it will provide youthful clients with a debit card and the opportunity to conduct transactions using the Mashreq Neo mobile app.
“We are helping the next generation take their first steps on the journey towards financial responsibility in a safe and secure environment,” Fernando Morillo, senior executive vice president and group head of retail banking at Mashreq, said.
“It is more important than ever to encourage good financial management from as young an age as possible. Developing good habits early on can last a lifetime.”
According to a Morgan Stanley study, millennials and their younger generation will alter the financial industry in their tech-savvy, mobile-first image, with implications for all consumers, businesses, and investors.
“The very anticipation of their coming-of-age could remake the financial landscape in the coming years,” Morgan Stanley said in the report.
“After all, Generation Z … has been practically raised with a smartphone within eyeshot at all times. They breathe mobile, juggle payment apps and consider terms like ‘online shopping’ redundant,” it said.
Meanwhile, a 2019 financial literacy survey by Visa found that about 43 percent of respondents in the UAE aged between 16 and 24 said they are not ready to manage their own money, while 53 percent said schools did not prepare them enough to take care of their finances.
The rise of FinTech companies, and increasingly digital-savvy consumer base, and a jump in digital services have forced banks to invest in digitalization.
The coronavirus pandemic, which led to lockdowns and social distancing around the world, hastened the move to digital services as consumers switched to cashless payments and online shopping.
Digital-only banks are not a new concept in the UAE. In the first half of 2017, Emirates NBD launched Liv. bank, which is aimed at millennials. Mashreq also unveiled Mashreq Neo in the same year. Abu Dhabi Islamic Bank unveiled Amwali, a digital-only bank targeted at Generation Z, last year.
However, independent digital banks are also entering the market, including Al Maryah Community Bank, which secured a license from the UAE Central Bank in April last year. This was followed by the launch of the UAE’s first independent digital bank, Zand, which caters to retail and corporate clients.
Abu Dhabi holding company ADQ received in-principle approval from the Central Bank of the UAE to launch Wio, a digital banking platform, in February this year. Wio’s primary shareholders are ADQ and investments holding company Alpha Dhabi, which hold a controlling stake of 65 percent. Etisalat holds 25 percent, while First Abu Dhabi Bank, the UAE’s largest lender by assets, has the remaining 10 percent.
“Neo NXT allows Generation NXT to set their personal financial goals, foster positive savings habits,s and spend wisely,” Sridhar Iyer, head of Mashreq Neo and consumer banking at Mashreq, said.
Parents need to be existing Mashreq customers to open the Neo NXT account. They can apply to open an account on the Mashreq or Mashreq Neo mobile apps, the lender said.
Young customers can set financial goals and save towards them on the Neo NXT account, according to the statement.
They will also be entitled to discounts on purchases done using the Neo NXT debit card, Mashreq said.
Both parents and young customers can track transactions from their respective logins to the app, the lender said.
Mashreq will offer a recurring allowance option with the account. Parents can set challenges for their children on the platform and they will earn an allowance for completing those tasks, the lender said.
