Banks in the United Arab Emirates (UAE) are reaping the rewards of digital transformation, boasting the highest revenue per branch across the Gulf region, according to a report by Roland Berger, a global strategy consulting firm.
Saumitra Sehgal, Head of Financial Services in the Middle East at Roland Berger, highlighted that UAE bank branches generate a whopping US$18.6 million annually in retail services, significantly higher than competitors in the region.
This financial strength is coupled with a strategic shift towards digital banking. The report revealed that between 2019 and 2022, UAE banks witnessed the most significant reduction in physical branches compared to their Gulf counterparts. This streamlining effort, fueled by digitalization, resulted in a network reduction of 157 branches.
In contrast, other Gulf nations saw more modest branch closures: Saudi Arabia (82 branches), Bahrain (57 branches), Qatar (20 branches), and Kuwait (20 branches). Interestingly, Oman bucked the trend, expanding its branch network by 8 branches during the same period.
Sehgal emphasized the crucial role digitalization has played in optimizing branch networks and driving revenue growth. By embracing online and mobile banking solutions, UAE banks have empowered customers to conduct transactions conveniently, reducing foot traffic in physical branches. This shift not only enhances customer experience but also translates to significant cost savings for banks in terms of rent, staffing, and operational overheads.
The report suggests that this trend towards digital banking is likely to accelerate across the Gulf region. As customer preferences evolve and technological advancements continue, banks that prioritize digital transformation stand to gain a competitive edge. The ability to provide seamless and secure online banking experiences will be paramount in attracting and retaining customers in the ever-evolving financial landscape.
The findings from Roland Berger underscore the UAE's position at the forefront of digital banking innovation within the Gulf region. With a robust revenue stream and a streamlined branch network, UAE banks are well-positioned to capitalize on the growing demand for digital financial solutions. The success of UAE banks serves as a compelling case study for other Gulf nations, highlighting the potential of digitalization to optimize operations, enhance customer experience, and drive long-term profitability.