Banks and FinTech partnerships to bring about a paradigm shift in the future of banking industry
UAE banking sector sees rapid growth in digitisation of services, sales channels and partnerships with FinTechs across the region
Digitisation has changed every sector, and the banking industry is no exception, leading several banks to reduce their physical footprint in an effort to bring more customer centric digital platforms to the forefront of their retail offering. This digitisation and transformation journey has led several global and local banks, brokers, insurers, and investment managers to opt for online and digital solutions leading to a boost in partnerships with FinTech companies.
“In the early 90s, with the UAE economy and population growing, banks saw an opportunity and launched innovative retail products for personal accounts, credit cards, auto and personal loans to fulfil the banking requirements with a focus on salaried individuals. These products were an instant hit and had an overwhelming response amongst the general population, specifically corporate and government employees. With the growing demand for retail banking products, banks were compelled to grow their distribution network and physical footprint, in addition to exploring other avenues to convert this opportunity. This gave birth to the outdoor sales – the UAE banks were the first banks regionally to introduce sales teams concept where a sales officer would visit an employer or a corporate rather than the employees visiting a bank branch,” said Ali Imran, Cofounder and Chief Commercial Officer of GoFinance, who was amongst the first retail banking outdoor sales teams in the country. “It is happening all over again, but this time in the digital space,” added Imran.
Emphasising the relationship between brokers and FinTech platforms, Ali Imran added, “When the demand for sales concept increased, banks started to hire outsourced sales staff through 3rd party partners and simultaneously considering and setting up their own outsource companies to convert this opportunity. This proved to be a successful model and banks had a greater reach into the market through this model, with up to 12,000 sales officers working in this space by 2005. Banks also started considering alternate sales channels where complete third-party companies would solicit business at no fixed costs. A whole new industry was born. Today there are over 60 retail banking brokerage companies who specialize in this domain and employ over 3000 salespeople mostly employed on commission basis.”
While the business is ample for brokers today, most of the business sourced is still physical. Post Covid-19, the customers prefer instant digital solutions where they can compare, apply, and get their product requirements full-filled instantly, as opposed to a traditional sales officer visiting them in their personal space and time. In time, there will be more digital platforms such as GoFinance, servicing consumer banking requirements.
GoFinance will provide customers end-to-end solutions to search, compare, choose, apply, and receive digital fulfilment of financial products. It aims to offer best real time deals and options for financial products such as personal finance, property finance, car finance, credit cards, etc. In addition, car, health and other insurance products will be listed on the platform further down the line. GoFinance has already tied up with several government institutions, corporations, banks, and valuation companies in the UAE to provide the best retail banking and insurance deals to customers.
According to Imran, the advantages of FinTech companies and brokers go beyond just increasing revenue. Some key benefits of FinTech and broker collaboration include instant fulfilment 24X7, increased ease-of-use through a simple digital seamless customer journey , broaden consumer base, building up brand reputation, offering additional services to customers like bill payments and insurance among other factors reduced costs and ability to scale quickly.
Globally, partnerships between FinTech and banks are transforming to be a profitable proposition with an increasing number of financial services companies turning to FinTech to grow their company’s revenue. As such, experts suggest that banks, brokers and FinTech companies should find creative and innovative ways to collaborate, in order to simplify the banking experience for customers and help Middle East FinTech ecosystem reach its full potential.
GoFinance (licensed under GoTech Limited) is a first of its kind finance and insurance marketplace that will provide neutral advisory and address existing customer pain points by digitising the end to end customer journey for all banking and insurance products and services.
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