UAE banks recover, but customers remain unsatisfied

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2.6 percent year-on-year rise in insurance sector assets in Q1 2022, according to CBUAE figures.
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  • The sector, according to a KPMG report, scores low on customer satisfaction due to operational issues, lack of timely support, long waiting times and lack of feedback.
  • The most negative net sentiment has been associated with payment methods such as debit cards, credit cards, and loans, highlights the latest KPMG report

The UAE’s banking sector, according to experts, is on the right path to recovery after a struggling period due to the pandemic, with goals to develop digitization in the upcoming years.

According to KPMG’s report titled: “UAE banking perspectives 2022”, banks in the UAE have scored low on customer satisfaction. This is due to operational issues, lack of timely support by bank staff, long wait times, and lack of feedback were the most common issues.

According to KPMG’s study, one-third of online conversations about banks necessitated a response. Priority tweets received an average of 69 percent of public responses, leaving 31 percent of tweets without a reply. Furthermore, the banks took an average of 10 hours to respond, which is faster than the study from 2021, which reported a response time of 13 hours.

The most negative net sentiment was associated with payment methods such as debit cards, credit cards, and loans. Many customers were displeased with the services’ fees and the delay in receiving and activating their issued cards. In addition, there were numerous complaints about debit cards not working without prior notice, as well.

Asset increase

The UAE banks await a promising year in 2022, despite all the challenges. Moreover, in 2021, the top ten UAE banks saw their total assets rise by 5 percent year-on-year, while their net profits soared by 42 percent.

Loan requirements and the application process were the most frequently asked questions by consumers. The need for business banking services was widespread throughout the industry.

Abu Dhabi Commercial Bank, followed by Emirates NBD, received the most inquiries from customers about opening business accounts. Credit and debit cards, followed by loans and credit solutions, were the products most likely to result in cancellation threats.

Future expectations

Abbas Basrai, Partner – Head of Financial Services, says that UAE banks will be focusing on digitization, addressing regulatory issues, corporate governance, and risk management in the future.

A separate report published by S&P expected UAE’s economic activity to accelerate in 2022 due to higher oil prices, supportive government policies, and normalizing non-oil activity. At the same time, the further deterioration of banks’ asset-quality indicators will remain contained as the economy improves and corporate activity recovers.

The report titled: “UAE Banking Sector 2022 Outlook – On the Path To Recovery” mentioned that part of banks’ deterioration will come from deferred exposures once the central bank (CBUAE) lifts support measures and companies in still vulnerable sectors are reclassified.

Yet, S&P estimates the impact of the Russia-Ukraine conflict on the UAE banking system to be limited. Still, the sector should benefit from expected interest rate hikes, assuming banks adopt a pragmatic approach for borrowers by not reflecting the rate increase systematically if it could dip borrowers to default. – Stable and strong capital buffers, good funding profiles, and expected government support should continue to support banks’ creditworthiness in 2022.

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