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Faceless Banking Hits The Middle East

Dubai bank first in the region to completely digitize

Branchless and faceless, the Commercial Bank of Dubai (CBD), recently unveiled its plan to create the region’s first completely digital banking system, known as CBD Now. Launching in early 2017 and operating mainly on smartphone applications, tablets, and computers, this revolutionary bank makes the bank teller obsolete.

“We are delighted to bring the first digital-only bank to the region,” Walter Lironi, the general manager of digital transformation at CBD, said in a press release. “There is no bigger convenience than bringing the branch to the palm of our customer’s hand.”

Traditionally, banks have had branches where customers would go to deposit and withdraw money, check balances, and transfer money all through a teller. Many larger banks worldwide like Chase and Wells Fargo in the United States, have introduced mobile apps in the past few years that allow users to monitor and transfer money from accounts online as well as pay credit card bills. Users are still required, however, to go into branches to set up accounts and online accounts and still have the option of visiting a local branch.

CBD Now, on the other hand, is a new, totally digital bank in addition to CBD. The bank is built not by bankers, but by technology. “What the big banks have done is that they have added the digital function so it looks like it’s digital but it’s not, so you don’t really get a digital experience, Chris Skinner, author of the blog The Finanser, told The Media Line. “The digital bank is a bank built on the internet and the whole organization has a digital base.”

“This is not the same as moving from paper to electronics,” Jim Marous, the publisher of the Digital Banking Report, told The Media Line. “This is a complete rethinking of all operations to reflect a digital era.”

According to “Sara”, CBD’s virtual assistant, the online banking system will allow customers to access their account information as well as pay bills and transfer money– all with what the bank is calling “the highest security measures.” The upside to digital banking, “Sara” says, is that users can access their information in real time at any time. CBD is planning to offer special accounts and credit cards that are digital-banking friendly.

Some larger banks like BBVA that are looking to digitize have started buying startups to help with the virtual upgrade. According to Christa Hainz, a senior economist at the Center for Economic Studies in Munich, this is because it is easier to integrate a new company than to change the existing one. “The new trend is to try to buy startups because their organizational structures are much more flexible to develop apps for digital services and to later integrate them into the bank,” Hainz told The Media Line.

On the other hand, many startups also use larger banks as backup when creating their own online banks. CBD Now was created to assist the government of Dubai, one of the seven emirates of the UAE in the economic aspect of its 2021 vision, which is seeking to make the “city of gold” the capital of the Islamic economy, as well as a pivotal banking and investment hub. According to the press release, CBD is looking to attract millennials and the digitally-savvy, which is important in Dubai as it continues to develop into a technologically-based society.

“It’s a way to attract a different demographic,” Mehir, a New York-based financial analyst who asked that his last name be withheld as he did not have permission to speak to the media, told The Media Line. “These banks are cool and they are customized to deal with the population they want to attract.”

Before completely launching the new service, CBD plans to introduce a pilot service known as the CBD Now Co-Founders program that will allow some the new customers to help develop the completely digital banking service essentially tailoring it exactly to their needs. For example, there is a new digital bank in London also geared towards millennials that not only tracks what users have spent but also shows future cash flow based on the user’s lifestyle. It essentially acts as both a bank and a financial advisor, something users wanted.

“Fintech firms are largely gaining momentum by meeting needs traditional players have yet to address,” Marous said.

While completely digitizing allows users full control and access at their fingertips, some analysts say that by eliminating branches and employees, communication is still a challenge.
“If you are totally digital, then the communication channels are different in the end,” Hainz told The Media Line. “At the retail banks, you at least have some service counters where you can still interact on a personal level with the customers, which you don’t have if you go fully digital.”

The Media Line was unsuccessful in reaching both the Commercial Bank of Dubai as well as other digital banks like the UK-based Atom Bank.

Founded in 1969 as a joint venture between Commerzbank, a German bank; JP Morgan Chase in Manhattan; and, the Commercial Bank of Kuwait, CBD developed into a national public shareholding company in the United Arab Emirates (UAE). The bank operates with over one hundred branches and ATMs only within the UAE.

CBD is not, however, the only UAE-based banks looking to digitize. Emirates NBD and the Abu Dhabi Islamic Bank have also stated that they have plans in the works to digitize.

Katie Beiter is a journalism intern at The Media Line.