When it comes to choosing a bank in the UAE, consumers are certainly not limited by choice. There are 52 banks operating in the country, 24 of which are national and 28 foreign, according to the latest Central Bank figures. However, knowing which bank to choose isn't always easy. Because the market in the UAE is quite fragmented, no one bank has a majority of market share. The top five players have a combined share of less than 50 per cent. Even the largest bank by assets, Emirates NBD, which resulted from the government-sanctioned merger of Emirates Bank and National Bank of Dubai last year, has a market share of around 20 per cent.
While there is no one right bank for everyone, there are many important factors to consider, including coverage, reputation, products, pricing, customer service and security. Dieter Roelen, a partner with the consulting firm McKinsey & Company who works in the banking sector, said the top two factors that customers consider when choosing a bank were coverage and brand reputation. Coverage is the number of ATMs and branches, and their proximity to the customer.
"It's still a lot about convenience - especially with the initial contact - so the larger the branch network, the easier it is to attract new clients," Mr Roelen said. Emirates NBD has the most extensive network with 115 branches and 486 ATMs, followed by the National Bank of Abu Dhabi (NBAD) with 80 branches and 223 ATMs. The other top local banks have in the range of 40 branches and 100 ATMs each.
Sara Mohammad, a 25-year-old sales manager living in Sharjah, said she was lured to Emirates NBD (then NBD) when she was a student because the bank offered a student account with no minimum balance. However, she said the deciding factor was the bank's easy accessibility. "It's very convenient for me because it's close to my house and they've got more locations [than other banks]. They are also present in a lot of malls and the timings are very flexible," Ms Mohammad said. The foreign banks have far fewer branches because of restrictions set by the Central Bank, which allows only eight per bank. In the 1980s, the Central Bank also stopped issuing licences to new foreign banks, a constraint that was not lifted until 2003. Currently, the Central Bank does not allow foreign banks operating in the UAE to set up new branches.
Because of this limitation, foreign banks have had to get creative in expanding their networks. Citibank, for example, has only five branches, but has opened up five financial centres and partnered with UAE Exchange to allow customers to pay credit card bills at any of its 41 locations. The top foreign banks have reasonable ATM coverage in the UAE. Citibank has 52, HSBC has 102 and Standard Chartered has 130, and all are planning to add more in the near future.
A bank's international network may be an important consideration for expatriates or frequent travellers. Although all of the major local banks have international branches, they are in the single or double digits, and are very limited in geographical scope. In comparison, Citibank and HSBC have thousands of branches globally. Not only does this coverage give customers accessibility to their accounts, but also often leads to benefits and rewards worldwide.
"Citibank is in every market of the world," said Sanjoy Sen, a country business manager for Citibank's consumer banking business in the UAE. "This is something that is very difficult for a local bank to replicate, even if they have the best technology and the best people." Brand recognition and familiarity are also key. One HSBC customer, Angela Hopkins, said she and her husband chose HSBC when they moved to Dubai because they had been customers of the bank in the UK. "We're just old-fashioned and stick with what we know," she said, though she complains that there aren't enough branches [in Dubai] and the branches "are in the wrong places for me".
The local banks may not have immediate brand recognition among UAE's expatriates, but they have certainly built reputations among long-time residents and Emiratis. Advertising, promotions, word of mouth, awards and historical presence all play a part in whether a consumer will opt for a certain bank. For example, NBAD is currently running a campaign with the tag line "Security and convenience in banking". It emphasises its 40 years in the UAE and the fact that it has the highest credit rating among UAE banks.
John Malouf, the head of the retail banking group for NBAD, said the bank is not worried about brand recognition, even among expatriates. "They'll very soon become familiar with [the bank] when they come to the UAE," Mr Malouf said. "We're happy to compete with anybody, whether it's a local bank or an international bank." Consumers also have the option of choosing an Islamic bank, meaning that its system of banking is consistent with the principles of Shariah, or Islamic law. Shariah prohibits riba, which means the paying and receiving of interest for profit, and also prohibits investing in businesses that provide goods or services considered haram - unlawful - such as alcohol.
Islamic banking is one of the fastest growing segments of world finance. In the UAE, Dubai Islamic Bank, founded in 1975, has the distinction of being the world's first Islamic bank. Other Islamic banks in the country include Abu Dhabi Islamic Bank, Emirates Islamic Bank and Sharjah Islamic Bank. Many conventional retail banks in the UAE have launched Islamic products, such as Shariah-compliant accounts, insurance policies, loans and credit cards. HSBC Amanah, Standard Chartered Saadiq, Mashreqbank's Badr Al-Islami and Commercial Bank of Dubai's Attijari Al Islami are all examples of Islamic banking divisions.
In terms of products and services, most banks in the UAE offer the basics, such as credit and savings accounts, credit cards and consumer loans. Surprisingly, HSBC has yet to offer debit cards, but said that one is being developed. Most banks in the UAE offer phone and internet banking. They also frequently compete on promotions, offering various rewards, benefits and miles with certain products to capitalise on the fact that the UAE population is big on consumer spending and travel.
UAE residents spend nearly US$20,000 (Dh73,000) per capita on goods and services - more than any other Arab nation - according to an Arab Monetary Fund report released earlier this year. Every week, there are 1,760 flights departing from the UAE, and 47 per cent of passengers are travelling for leisure. Citibank, the world's largest credit card issuer, tied up with Emirates Airline in 2000 for a series of credit cards that give Skywards Miles as a reward for card usage. On average, a typical Emirates-Citibank credit card holder earns enough miles every year to qualify for a free flight, according to Citibank statistics. In a promotion that started in October, new customers who sign up for the Emirates-Citibank Ultimate credit card and a Citigold account with a deposit of least US$100,000 will automatically be rewarded with 100,000 Skywards miles. Both the debit and credit cards will then earn the customer additional miles.
"Our spend per card is double what the market is. Our premium card spend is three times the market," said William Keliehor, the Citibank cards division head in Greece, Pakistan, the Middle East and Africa. "A lot of people like miles - 100,000 miles talks, especially in this market." Banks also differ in the target group on which they are focusing. Generally, foreign banks tend to prioritise the upper affluent market, while national banks tend to target all segments of the population.
Buzz words like "premium", "exclusive", "lifestyle" and "gold" are often indications that the products are designed to entice high earners. Banks will also attract high-end customers by providing them with personal relationship managers and meeting with them at their offices. "The premium card holder segment contributes to more than 45 per cent of the total card spend in the UAE market," said Abdulfattah Sharaf, the HSBC chief executive of personal financial services in the Middle East. "In the Middle East region, our premier customers are in excess of 50,000 and are projected to grow faster than other customer segments."
The factors in choosing a bank are different than the factors that influence a customer to stay with a bank. Mr Roelen, of McKinsey, said that how a bank resolved problems, typically having to do with customer service and security, would essentially determine customer satisfaction. "The key driving force is going to be the experience along the key moments of truth," he said. "A banking client will interact with his bank in many different situations, but some of these situations are very important and some are not very important."
Another HSBC customer, Daniele Machado, a 30-year-old marketing executive, said she was extremely frustrated that she did not have access to her account for months. "I've had my account for eight months and I just got my card three weeks ago. I had to call like 15 times for them to deliver my card," said Ms Machado. "It's really bad customer service." HSBC said it was working on improving its customer interaction through staff changes.
"We have started hiring more front-end staff from the hospitality field, and are in the process of changing our employees' ownership from sales focus to more of a customer-service focus," said Mr Sharaf. Poor customer service is a prime complaint of consumers, and it seems to plague many banks in the UAE. However, Mr Keliehor, of Citibank, said the problems are often beyond the bank's control. "Most of our customer service issues are related to third-party fulfilment and that's just a strain and a phenomenon that is Dubai. Aramex, DHL, Empost - they're all stretched and we have to deliver cards," he said. "There are a lot of complexities in the market that we try and overcome, and we're getting better."
Effective problem resolution quickly gives a customer a positive association with a bank. Suzi Foster, who moved to the UAE from New Zealand six years ago, said she was very happy with the National Bank of Abu Dhabi due to its security measures. "When we got our card scammed in Sri Lanka, they reinstated all of the money. And it was a large amount, around US$30,000 (Dh110,000) ," Ms Foster said. "They have very good security."
The challenge now for banks is to accommodate a population that is becoming more discerning and demanding better customer service. While miles and perks may be a good hook to reel you in, they are not the most important factors you should consider when deciding where to deposit your cash. Nada El Saway is a personal finance reporter who writes from Dubai