The UAE is at the forefront of banking innovation in the Middle East, accounting for the largest share of the region’s $3.2 trillion in assets. The Arthur D. Little report highlights the UAE’s pivotal role in shaping the future of the region’s financial sector. The report also highlights the UAE’s leading role in shaping the future of digital banking in the region.
“The UAE is not content with competing in the banking sector, but is also seeking to set global standards in this sector. With the launch of the Central Bank’s digital currency strategy and pioneering steps in integrating blockchain technology, the UAE is redefining the concept of a modern financial center. This is not just a temporary trend, but a radical shift that will set a model for global markets, as the UAE works to build a banking system that combines modern technology with a focus on meeting customer needs,” commented Yassin Mohiuddin, Partner in the Global Financial Services Practice at Arthur D. Little.
Innovation and progress have taken leaps and bounds by leveraging Southeast Asia’s market experiences, ranging from open banking and the integration of financial services into non-banking platforms to advanced data analytics for personalized offerings. Examples include driving customer loyalty and harnessing technology and partnerships to target new segments of SMEs.
The digital banking sector in the UAE has grown at a CAGR of 8.7% over the past two years, outperforming the region. This robust growth is expected to continue at a CAGR of 4.8% from 2024 to 2029. The sector is expected to reach $175.7 billion by 2029. Banks in the UAE are adopting the latest technologies including artificial intelligence, blockchain and cloud computing, setting new standards for customer experience and enhancing operational efficiency.
As the first to launch a CBDC strategy, the UAE is leading the Middle East region with its transformative CBDC initiative, laying the foundation for enhanced financial inclusion and innovation across the economy. Some of the UAE’s leading banks have already begun implementing blockchain technology for cross-border payments to enable faster and more secure transactions, setting new standards for efficiency and innovation in the region.
“The transformation of the UAE’s banking sector is not just about technology, it’s about changing the mindset. The willingness to embrace AI, blockchain and cutting-edge fintech solutions reflects a culture that embraces change at all levels. By investing in innovation and the talent to drive it, UAE banks are not just keeping up with global standards, they are shaping them. This proactive approach by the UAE is setting a global benchmark and positioning it as a leader,” said Nelson Dunam, Senior Project Manager and Member of the Global Financial Services Practice at Arthur D. Little.
In addition, 80% of UAE banks are prioritizing digital transformation in 2024, reinforcing the country’s position as a leader in financial innovation in the region. Through strategic partnerships with innovative technology companies and cloud-based CRM platforms, UAE banks are redefining the customer experience and enhancing operational efficiency to deliver a distinctive digital banking experience.