Tech companies compete with banks.
Abu Dhabi Global Market rolled out new digital banking licenses during the summer, hoping to attract new investors.
The new licensing system allows nonbank financial digital-service companies to provide banking services for the first time.
Three types of applicants are allowed: conventional banks looking to develop a digital arm; “firms with an innovative value proposition;” and partnerships between such firms and financial institutions. “This is going to be a strong development, as there is no other country in the MENA [Middle East North Africa] region that has a digital banking license,” says Nameer Khan, co-founding board member of the MENA Fintech Association.
For now, there are only a handful of digital banks in MENA. All of them operate under an established lender’s license, such as Emirates NDB’s Liv; Mashreq Neo; CBD Now; meem by Gulf International Bank; and soon Bank ABC, Bahrain’s neobank.
“The main challenge today remains onboarding and customer experience, both of which are still very manual and inefficient,” adds Khan. “Hopefully, digital banks will be able to address these core pain points.” Digital banks could also open up opportunities for local entrepreneurs—although barriers to entry and the sheer scale of traditional banks make it difficult to imagine a digital-only challenger bank starting from scratch in the Middle East.
