Abu Dhabi Islamic Bank (ADIB) has made the first venture by an Islamic bank into the Financial Technology (fintech) sector, by partnering with a digital-only bank. The move comes as a response to demand by the younger generation of clients, who want online banking and other more tech-savvy options. ADIB is one of the largest Islamic banks in the Gulf Cooperation Council (GCC) and the world, and this partnership would help it attract the burgeoning millennials demographic. “Our research is clearly telling us that customers are looking in particular for digital banking services that offer a seamless, easy and intuitive user experience. Our proposition will allow users to completely change the way they bank and manage their finances using digital technology to serve all their banking needs,” said Tirad al-Mahmoud, Chief Executive Officer of ADIB.
ADIB’s partnership with Fidor Bank – an internet-only direct bank based in Germany – is the region’s first response to changes in the global banking industry. Banks are increasingly investing in fintechs and developing their own blockchain technologies. According to the World Islamic Banking Competitiveness Report 2016 by EY, Islamic banks have lower customer penetration in mobile banking than conventional banks. Within GCC, mobile banking usage in UAE is 34 percent, 27 percent in Kuwait and less than 20 percent in Qatar and Saudi Arabia. “It is not enough for Islamic banks to introduce new digital channels,” says EY. “They must completely reinvent their customer processes to offer technology-enabled, simple end-to-end experiences.” Right now the region has various avenues it is yet to develop with its digital offerings, including services for private consumers, microfinancing and opportunities to connect local firms with venture capital and private equity firms.