The banking sector in the UAE is expected to show economic recovery in the second half of this year, the apex bank said in its first quarter report recently.

Earlier in March, to combat the Covid-19 crisis across the country, the Central Bank of the United Arab Emirates (CBUAE) introduced economic support scheme to provide financial support to private and business customers affected by the Covid-19 pandemic. This regulation aimed at giving financial relief ro the banks' customers and ensuring the continuation of business activities within the UAE. The aggregate value of all capital and liquidity measures it adopted since March 14 is Dh256 billion.

The Targeted Economic Support Scheme (TESS) consists to 50 per cent of CBUAE funds in form of secured loans at no charge to all banks operating in the UAE and to 50 per cent of capital buffers from banks that became available. The regulatory relief announced by the CBUAE aims on decreasing the impact of the Covid-19 on the economy and the banking sector.

The minimum reserve was initially cut by half from 14 to seven per cent for all local banks. This step will inject about Dh61 billion into the banking system and subsequently support lenders and their liquidity management. The aim of the above-mentioned programme is to provide all affected private sector companies and private customers in the UAE with a temporary exemption from capital and interest payments on outstanding loans.

Measures such has these have made the banking sector resilient supported by early adoption of digital technologies and 'new age banking'.

A KPMG report showed that banks are increasingly exploring the concept of 'banking the ecosystem', an interconnected set of services, where customers can fulfil a variety of needs in a single integrated experience. This integration of services may represent the cornerstone of digital banking in the years to come, creating a differentiated experience that can improve customer satisfaction, increase loyalty and generate additional revenue streams.

According to the report, the banking industry in the country the rapidly evolving customer expectations and increasing regulatory scrutiny are putting pressure on UAE banks to modernise every facet of their operations. Many are structuring their businesses in new and exciting ways and are recognising customer experience as a source of commercial value rather than as a differentiator versus their competition.

Meanwhile, a recent Finastra research revealed this month that nearly nine out of 10 (88 per cent) financial institutions in the UAE plan to enable 'Open Banking' in the next 12 months. The demand from UAE banks for further collaboration is driven by innovation in customer service and the customer experience. However, the main factors challenging greater industry collaboration in the region, according to those surveyed, include potential reduced control in decision-making (48 per cent), complex regulation (47 per cent) and legacy systems (46 per cent).

Open Banking is a series of reforms to make the banking sector more competitive. It brings changes to how banks handle their customers' financial information, putting control back in the hands of the customer. It means that customers can opt to share their financial information with authorised providers, to gain access to new services and innovation to help them manage their money better.

The findings are revealed in Finastra's 'Open Banking and Collaboration: State of the nation survey 2020', which was conducted before the Covid-19 outbreak amongst 774 financial institutions across the United States, United Kingdom, Singapore, France, Germany, Hong Kong and the UAE. More than 100 responses were gathered from financial institutions in the UAE.

The key UAE findings include:

. Banks believe a way in which future collaboration can be fostered is by 'standardising best practices' across the industry, via regulators (69 per cent) and by technology (53 per cent)
. Respondents are overwhelmingly favourable towards the principle of collaboration: 94 per cent agree or strongly agree it has been a driver for success in their organisation, while 91 per cent agree or strongly agree it has helped make their business more efficient
. Open Banking will have the greatest impact on corporate banking (57 per cent) followed by retail banking and payments (both 51 per cent)
. Just under half (48 per cent) of UAE financial institutions find 'reduced control in decision making' a barrier to collaboration, the most out of every country surveyed

Copyright © 2020 Khaleej Times. All Rights Reserved. Provided by SyndiGate Media Inc. (Syndigate.info).

Disclaimer: The content of this article is syndicated or provided to this website from an external third party provider. We are not responsible for, and do not control, such external websites, entities, applications or media publishers. The body of the text is provided on an “as is” and “as available” basis and has not been edited in any way. Neither we nor our affiliates guarantee the accuracy of or endorse the views or opinions expressed in this article. Read our full disclaimer policy here.