E20., the first digital business bank for entrepreneurs and small- and medium-sized enterprises (SMEs), launched by Emirates NBD in Dubai last week, is expected to support the banking giant's future profit.

The creation of E20. is credit positive for ENBD, UAE's second-largest bank, because it will provide the bank with better access to the underserved SME customer segment, Moody's Investor Service said in a note to investors.

“E20.’s beta phase will be completed by Q1 2020. How profitable banks are when dealing with SMEs depends on how they underwrite the risk and how they price the risk,” Mik Kabeya Assistant Vice President at Moody's told Zawya.

E20. enables start-ups, sole proprietors, freelancers and fintechs to open a bank account and conduct financial requirements via a mobile app.

E20. will increase ENBD’s customer base by providing the bank with better access to the SME segment. This will support the bank’s profitability by generating fee income from the various services provided, as well as interest income on loans provided to this high yielding segment, Kabeya said. 

“The new bank will have seamless digital account opening which leverages new local advancements such as e-KYC modules as well as the UAE Pass for digital biometric-based identification along with easy, intuitive tools,” Shayne Nelson, Group CEO of Emirates NBD had said during E20.'s launch on September 26. 

While SMEs constitute a much larger portion of the country's economy, they only account for a small portion of UAE banks' loans. According to the Dubai Chamber and the UAE Ministry of Economy, nearly 65 percent of UAE entrepreneurs find banking as their first challenge, with opening a bank account taking up to three months in some cases.

(Reporting by Seban Scaria; editing by Daniel Luiz)

(seban.scaria@refinitiv.com)

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