Banking - United Arab Emirates

United Arab Emirates

In 2024, the projected Net Interest Income in the Banking market of the United Arab Emirates is expected to reach US$28.21bn.
Traditional Banks are set to dominate this market segment, with a projected market volume of US$25.35bn in the same year.
Looking ahead to 2029, the Net Interest Income is forecasted to exhibit an annual growth rate (CAGR 2024-2029) of 4.26%, resulting in a market volume of US$34.76bn.
In comparison to other countries, China is anticipated to generate the highest Net Interest Income, reaching US$4,332.0bn in 2024.
The United Arab Emirates banking market is experiencing a surge in digital banking services, with a growing number of customers opting for mobile and online banking solutions.

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

Definition:

The Banking market refers to the financial services sector providing financial products and services to individuals and businesses. Retail banking focuses on offering financial services to individual consumers, such as personal loans, savings and checking accounts, credit cards, and mortgages. Commercial banking, on the other hand, provides financial services to small and large businesses, including loans, lines of credit, and other financial products designed specifically for businesses.

Structure:

The market consists of two segments:
- The Traditional Banking market refers to the financial services sector that provides a range of financial products and services to individuals and businesses through store-based branches and other traditional channels.
- The Digital Banking market refers to the emerging market for digital-only banks that offer financial services through online and mobile platforms.

The market data comprises 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.

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 & Commercial banking market, creating opportunities for new entrants, and forcing existing players to adapt.
Key players in this market are companies such as the Industrial and Commercial Bank of China Ltd., JPMorgan Chase & Co., and HSBC Holdings.

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Analyst Opinion

The Banking market in United Arab Emirates is experiencing significant growth and transformation.

Customer preferences: Customers in the UAE are increasingly leaning towards digital banking solutions, driven by the convenience and efficiency they offer. The preference for seamless online and mobile banking experiences has led banks to invest heavily in digital infrastructure to meet customer demands.

Trends in the market: One prominent trend in the UAE banking market is the rise of Islamic banking, catering to the large Muslim population in the country. Islamic banks offer Sharia-compliant financial products and services, attracting customers looking for ethical and interest-free banking solutions. Additionally, there is a growing trend towards personalized banking services, with banks leveraging data analytics to offer tailored products to individual customers.

Local special circumstances: The UAE's position as a global financial hub and its status as a tax-free jurisdiction have attracted a large expatriate population. This diverse demographic landscape has influenced the banking market, leading to the introduction of specialized services for expatriates, such as foreign currency accounts and international money transfers. Moreover, the government's initiatives to promote innovation and entrepreneurship have spurred the growth of fintech companies, challenging traditional banks to adapt and innovate.

Underlying macroeconomic factors: The UAE's robust economy, driven by oil revenues and diversification efforts, has bolstered the banking sector. The country's stable political environment, strong regulatory framework, and strategic geographic location have attracted foreign investments, contributing to the growth of the banking market. Additionally, the government's focus on digital transformation and smart initiatives has created a conducive environment for the development of advanced banking technologies and services.

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.