Digital Banks - United Arab Emirates

United Arab Emirates

In the United Arab Emirates, the Digital Banks market market is expected to witness a significant increase in Net Interest Income, reaching an estimated value of US$121.90m by the year 2024.
Furthermore, it is anticipated that the Net Interest Income will experience a steady annual growth rate (CAGR 2024-2028) of 13.33%, leading to a market volume of approximately US$201.10m by the year 2028.
In terms of global comparison, in China is projected to generate the highest Net Interest Income, with an estimated value of US$969,200.0m in the year 2024.
The United Arab Emirates is witnessing a surge in the adoption of digital banks, with consumers embracing the convenience and accessibility offered by these tech-driven financial institutions.

Key regions: United Kingdom, Japan, China, United States, Brazil

Definition:

Digital Banks refer to the emerging market for purely digital banks that offer financial services via online and mobile platforms. Unlike traditional banks, digital banks also known as neobanks, do not have store-based branches and instead rely on technology to deliver their services. But in contrast to digital-only direct banks, which focus on providing traditional banking services in an online format, the digital banks/neobanks covered in this analysis prioritize cutting-edge features and a modern user experience.
Digital Banks offer a wide range of financial products and services, including savings and checking accounts, credit cards, personal loans, and investment products, among others. They aim to provide a more convenient, accessible, and user-friendly banking experience by leveraging technology such as mobile apps and artificial intelligence. They also provide a digital identification and onboarding process, often via smartphone.
The Digital Banks market is growing rapidly as consumers increasingly demand more convenient, digitally focused financial services. Neobanks/Digital Banks are able to offer these services at a lower cost compared to traditional banks, as they have lower overhead costs and a more efficient operating model.
However, digital banks face challenges in building trust and establishing their reputation in the financial services industry. They must also navigate the complex regulatory landscape and comply with the same rules and standards as traditional banks.
Overall, the Digital Banks market represents a growing and exciting opportunity for financial services providers to deliver innovative and convenient solutions to consumers.

Structure:

The market data comprises Net Interest Income, the value of Deposits, the value of Loans, Credit Card Interest Income as well as the number of ATMs.

Additional information:

The Banking market is highly competitive and characterized by the presence of large global players as well as regional and local banks. Banks are continually seeking ways to improve their offerings and remain competitive by leveraging technology and offering innovative financial products and services. Additionally, changes in regulations and the growing trend toward digitalization are shaping the retail and commercial banking market, creating opportunities for new entrants and forcing existing players to adapt.

Key players in this market are companies such as Bunq, Tomorrow, and Revolut.

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Analyst Opinion

The Digital Banks market in United Arab Emirates is experiencing significant growth and development, driven by various factors shaping the financial landscape in the region.

Customer preferences: Customers in the United Arab Emirates are increasingly leaning towards digital banking solutions due to their convenience, accessibility, and efficiency. The tech-savvy population in the country values the ability to conduct financial transactions on-the-go, anytime and anywhere, which has led to a surge in demand for digital banking services.

Trends in the market: One of the key trends in the Digital Banks market in the United Arab Emirates is the focus on personalized and seamless customer experiences. Digital banks are leveraging advanced technologies such as AI and machine learning to offer tailored financial solutions and enhance customer engagement. Moreover, partnerships between traditional financial institutions and fintech companies are becoming more common, leading to the introduction of innovative digital banking products and services in the market.

Local special circumstances: The United Arab Emirates has a high smartphone penetration rate, with a large percentage of the population having access to mobile devices. This widespread adoption of smartphones has created a conducive environment for the growth of digital banking services. Additionally, the government's initiatives to promote a cashless economy and digital transformation have further accelerated the adoption of digital banking solutions in the country.

Underlying macroeconomic factors: The robust economic growth, favorable regulatory environment, and increasing investments in digital infrastructure are playing a crucial role in driving the growth of the Digital Banks market in the United Arab Emirates. The country's strategic location as a global financial hub and its efforts to diversify the economy away from oil dependence are attracting both domestic and international players to invest in digital banking services, leading to a competitive and dynamic market landscape.

Methodology

Data coverage:

Data encompasses B2B and B2C enterprises. Figures are based on Net Interest Income, Bank Account Penetration rate, the value of Deposits, the number of depositors, the value of Loans, the number of borrowers, Credit Card Interest Income, the number of ATMs as well as the number of Bank Branches.

Modeling approach / Market size:

Market sizes are determined by a combined Top-Down and Bottom-Up approach, based on a specific rationale for each market segment. As a basis for evaluating markets, we use data provided by the IMF, World Bank and the annual reports of the top 1000 Banks by asset size. Next we use relevant key market indicators and data from country-specific associations such as GDP, deposit interest rates, lending interest rates or bank account penetration rates. This data helps us to estimate the market size for each country individually.

Forecasts:

In our forecasts, we apply diverse forecasting techniques. The selection of forecasting techniques is based on the behavior of the particular market. For example, the S-curve function and exponential trend smoothing are well suited to forecast financial services for digital as well as traditional products and services.

Additional Notes:

The market is updated twice per year in case market dynamics change.