The UAE banking sector is set to benefit from the emirates’ project pipeline of construction and infrastructure-related initiatives, which forms a key component of the country's drive to diversify the economy away from oil, said senior experts.

The key roles that both digitisation and diversification will play in shaping the future of the UAE’s banking industry were highlighted by Ahmed Saad, Deputy CEO, Sharjah Islamic Bank (SIB), and Saeed Al Amiri, the lender’s Executive Vice-President and head of investment group, in interviews given recently to Oxford Business Group’s online broadcasting channel, Global Platform.

In the wide-ranging interviews, both SIB representatives also charted the growth of the Islamic banking segment, which has seen its market share within the UAE rise to almost 25 per cent.

"Without doubt, digital banking represents the future, and investment in technology is “a must” for banks," Saad told Global Platform in the interview.

He pointed out that while digitisation was being driven largely by client demand, the benefits would be broad-based, ranging from a better customer experience to an improved cost-to-income ratio.

“So this will be focus for banks in the coming short and medium term, which will make for a lot of changes in the banking sector,” he stated.

Saad stressed that banks had sharpened their focus on diversifying its customer base in different economic sectors, with a particular emphasis on small and medium-sized enterprise (SMEs) and startups.

“The SME and the startup is the backbone of any economy, and it’s a good way of diversifying the risk in the financial sector. There are a lot of benefits of supporting and financing SMEs and startups,” he added.

Amiri in his interview told Global Platform that the banking sector was the biggest beneficiary of the UAE’s project pipeline of construction and infrastructure-related initiatives.

"We are lucky in the UAE that the country is having many upcoming events, such as Expo 2020, and these are bringing many infrastructure-financing opportunities," stated Amiri.

“We are seeing new companies opening, new buildings and new infrastructure, also government infrastructure, happening,” he added.

Amiri also reflected on the broader outlook for Islamic banking, which is outpacing the conventional component of the industry when it comes to growth and forecast to increase its market share.

“People trust Islamic banking because it’s always asset-backed banking, and there is more security and it has a lower risk than conventional banking,” he told Global Platform. “… they are happy to go with Islamic banking finance because of the vast liquidity which is available now in the market,” he added.

Marc-André de Blois, OBG’s director of PR and Video Content, said the interviews had highlighted the critical part that lenders, and the Islamic banking segment in particular, were expected to play in taking the UAE’s plans for a more diversified economy to the next level.

“The emirates’ efforts to shift the focus away from oil have now reached a new phase, in the form of a raft of mega-projects and infrastructure development that present significant financing opportunities,” remaarked de Blois.

“I’m delighted that we’ve been able to provide viewers with a fascinating snapshot of the myriad openings that this huge project pipeline presents, both for banks like the SIB, and investors keen to contribute to the next phase of the UAE’s growth story,” he added.-TradeArabia News Service