UAE banks consider raising fees to offset VAT costs

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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 by KPMG.

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, adding that some banks are even exploring automated decision-making based on sentiment analysis by extracting data from millions of emails and other data sources, according to media reports.

As UAE banks deal with the new VAT regime and the high compliance costs associated with mandatory VAT registration, the report said banks could be forced to increase their fees to compensate for the additional costs.

“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,” said Emilio Pera, partner and head of Financial Services, KPMG Lower Gulf, according to Arabia Business.