Digital Transformation & Cyber-attacks in the banking sector of the UAE

The Central Bank of the UAE issued Circular No. 02/2020 implementing its Major Acquisitions Regulations (Regulations). The purpose of the Regulations is to regulate and supervise major acquisitions being undertaken by banks in the UAE with a view to ensure the soundness of UAE banks and contributing to financial stability and protection of retail customers.

Despite volatility across markets and regional challenges, the UAE banking sector remained healthy and continued to grow, although modestly. The UAE’s banking sector remains the largest in the Arab world in terms of assets. It maintained steady asset growth, improved profitability, and asset quality in 2018, and is expected to deliver similar performance in 2019 & 2020.

Furthermore, constant technological advancements are disrupting banking ecosystems worldwide, creating new and challenging paths for economic and financial development. The banking sector is increasingly investing in new technologies, as digital maturity for banks has become necessary to thrive in evolving markets. However, this means that banks are more prone to cyberattacks, and they therefore must strengthen their cybersecurity operations, which comes at an increased operational cost.

These technological changes are accompanied by shifts in the regulatory framework, which require banks to improve compliance and transparency of operations. Within banks, innovative technologies like automation and AI are producing a need for organisational restructuring, and banks are experiencing some redundancies. However, banks are demonstrating their commitment to overcome these challenges, embracing solutions to create valuable opportunities to boost profitability, improve operational synergies, and lower funding costs.

Customers’ needs and expectations are changing, and banks are facing increased pressure meeting them. For instance, customers now expect faster and easier banking services driven by digital innovation. This shift in expectations is producing a challenge for banks to strike a balance between offering convenient services and ensuring secure banking operations.

The mode of payment being digital has its advantages & disadvantages.

The main & primary advantage of digitalization is the speed of service available with the easy of access and payment for the services. The biggest disadvantage has been the increasing number of reports in the UAE in relation to the security of the data, such as credit card details, and the increasing number of cyber-attacks. However, there has been a constant updating and improving their systems to counter-attack these issues.

With the impact of the COVID 19 globally, the UAE faced multiple challenges in terms of delivery of services to the private and public sector. These challenges have led to further implementation of online services and banks are at the forefront of this digital transformation.