The COVID-19 pandemic has accelerated the consumer shift towards digital banking services in the UAE, a new survey has found. As per the survey conducted by YouGov for FinTech provider Backbase, 89 percent of respondents said they are more likely to choose digital banking services rather than physically visiting a bank branch. The survey was conducted with the participation of 1,005 people.

According to Matthijs Eijpe, regional vice president of sales for Europe, the Middle East and Africa at Backbase, the pandemic has enhanced services provided by the banking sector to boost customer engagement online. It will further pave the way for physical branches to only provide more complex and high-value activities to their customers.

“To make sure that they can capitalise on changing customer behaviour, banks will need to break free from siloed technology architecture and bring engagement to the forefront of their digital operations," Eijpe added. 

The pandemic has increased the horizon for a smartphone-savvy consumer base along with a surge in digital services offered by banks worldwide. With this development, global banks are encouraged to increase investment in digitisation and minimise the number of physical branches.

Restricted movements and social distancing measures during the COVID-19 pandemic also hastened the shift towards digital services across key industries.

According to an April report by Bengaluru-based customer support automation company Verloop.io, 50 percent of the consumers in the Middle East, India and South-East Asia are engaging with banks through mobile apps since the pandemic outbreak, as compared to just 32 percent in 2018.

"Technology such as artificial intelligence and machine learning is helping banks and other financial institutions to automate services quickly and address customer queries more efficiently during the pandemic," Verloop.io said.

In a survey conducted last year, the Boston Consulting Group interviewed more than 2,000 respondents in the UAE. The survey found that 87 percent of respondents expressed their interest in opening an account with a digital-only bank.

As per Backbase research, 72 percent of respondents in the UAE use digital banking services at least once a week, while about 24 percent use the services at least once a day or more. Participants said that they would want more digital self-service banking solutions delivered to them with the same convenience as e-commerce, entertainment and transport solutions.

The unprecedented rise in customer shift has facilitated dynamic advancement in digital transformation across several banks in the region. Backbase said that a number of financial institutions are shifting towards increasing their online banking services to boost customer retention and grow revenues.

Addressing Sibos, an annual conference for the global financial services industry, in 2020, JP Morgan Chase chief executive Jamie Dimon, noted that while digitisation of services for the banking sector would have taken two years, the pandemic boosted the process to just two weeks.

“Consumer expectations from digital banking have shifted from just day-to-day banking services and transactions to also include more complex interactions, such as remote account openings or subscriptions to new products or services, such as getting a loan or subscribing to insurance,” Backbase added.

In addition, the survey found that about 31 percent of UAE respondents describe the performance of their own banks as "weak" in terms of providing seamless access to online banking services. In this regard, Backbase pointed out that some UAE banks introduced stand-alone applications with new functions and services to enhance their online banking offerings. However, fragmented systems could not deliver a good experience to customers.

The survey also revealed that about 44 percent of the UAE participants cited poor customer relations as a major reason behind their decision to switch to a different bank.