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UAE Banking: Transition to the digital world

The UAE's new breed of digital banks is staking out their claims

Digital seems to be the only option for banking in the United Arab Emirates. Wio and Zand are among the first wave of digital-only banks to go live, and more traditional banks in the UAE are benefiting from the move. For example, Abu Dhabi’s Al Hilal Bank has confirmed some significant consumer victories since the switch in February.

Another digital-only bank will soon launch in the UAE, although this one has a slightly different target market. Anglo-Gulf Trade Bank, which the Dubai-based company GII (Gulf Islamic Investments) purchased earlier this year from Mubadala, is part of that ambition.

Pankaj Gupta, co-CEO of GII, stated, “We are focused on making it a wholesale bank that would be substantially driven by technology.”

Branches won’t drive it, and our goal is to address the huge financial issues high-growth businesses in the UAE or the GCC have. The goal is to develop companies that will last for many generations.

Everything is technological
Pankaj Gupta emphasises that GII’s investments in technology won’t be derailed by the chatter about how the tech world is staring down a recession and what that would mean for growth.

The largest AR/VR startup in the US that primarily focuses on education, ZSpace, is currently in the last stages of demerger, according to Pankaj Gupta, the chairman of the Silicon Valley-based company. “We have acquired majority ownership in it during the past three years. A listing will eventually result from the demerger, possibly by Q2 of next year.”

Given the cash that the US is now reinvesting in education, Pankaj Gupta believes the time is almost ideal.

The US government supports education with large budgets totalling hundreds of millions of dollars.

Pankaj Gupta said, “In these three years, 2D to 3D “Zspace” numbers—the top-line and other vitals—have grown significantly, and the solutions are available in 25,000 schools. Moreover, with UAE-based educational institutions, we are in discussions about exporting this technology.”

“What AR/VR accomplishes in education is make complex ideas that could only be communicated in 2D more straightforward when presented in 3D. For example, Zspace does provide a 3D version of how to build a car from the ground up,” Pankaj Gupta added.

Sparse Real Estate
GII has a long history of dominating the real estate market, whether in Dubai, London, or Paris. But, except for those related to logistics, it hasn’t had any significant property obligations over the past few months. Technically speaking, conducting a real estate deal in an environment with fluctuating interest rates is impossible, according to Pankaj Gupta. So they have been concentrating on private equity instead.

The UAE’s new breed of digital banks is staking out their claims. And to do that, one must think beyond SMEs or consumers. For instance, the digital arm of the Emirates Development Bank is solely focused on providing development-linked financing, which is what the UAE economy would require moving forward. With GII, small-ticket loans will not derail the opportunity to finance “high-growth firms” to individuals.

They would give high-growth businesses access to funding, a crucial resource.

“We will address a broader segment of the economy run by high-growth enterprises, whether in the region or outside,” Pankaj Gupta added.

The new entity’s anticipated launch date has not yet been determined, but Pankaj Gupta has made it plain that it won’t happen before the end of the year.

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