Tough competition as digital bank Zand prepares to launch in the UAE


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Dubai, United Arab Emirates – Dubai-based digital bank Zand will seek to attract customers with competitive deposit rates and a digital-first line of products when it launches later this year, and will challenge traditional banking competitors as Covid-19 waves a wave of digital adoption in the United States is powered by the Gulf.

“We believe there is a huge opportunity,” said Olivier Crespin, CEO of Zand, during a panel session hosted by CNBC at the Open Banking Ecosystem Summit hosted by QnA International on Monday.

“We are engaging friends and family on both the personal and corporate side and we should be ready to hit the market in the next few months,” added Crespin, who said interest in the latest bank des Sheikhdoms was “very strong” on the official start date, which is still subject to the final administrative and licensing requirements.

Zand plans to be the first fully independent digital bank in the UAE, serving both retail and corporate clients. Emaar Properties founder Mohamed Alabbar, the developer of The Dubai Mall and Burj Khalifa, has invested in the company and will serve as chairman.

Further domestic and foreign supporters are not yet known.

Zand will offer “around 2%” interest rates on deposits, according to Crespin, to attract users and compete in the UAE’s crowded market, where 48 banks already serve a population of around 10 million people.

For example, large local established companies such as First Abu Dhabi Bank and Emirates NBD offer 0.020% and 0.2%, respectively, on a standard savings account advertised on a website. Prices depend on a variety of factors and a proper comparison cannot be considered fair until details of Zand’s product range are disclosed to the public.

Zand will offer cards, loans, accounts and personal financial management products “comparable to N26 or Revolut” for new retail customers, said Crespin, drawing a comparison with some of the established neobanks in Europe. “We are also focusing on the corporate side, where we will mainly be working on supply chain funding,” he added.

The rollout comes as Covid-19 accelerates the rollout of digital services in the Gulf region. Demand for financial technology products is increasing among its young and mobile-able population, particularly in the United Arab Emirates and Saudi Arabia.

Regional competition

In the United Arab Emirates, Emirates NBD has already launched the digital retail bank Liv and the separate digital commercial bank E20 – using their banking license, large customer base and established brand credibility. Liv claims to have 400,000 users.

Other established banks have chosen to partner with financial technology platforms to expand their digital presence. Large international digital banks like Revolut have also signaled intent to enter the region, promising currency and crypto exchange services, personal payments and advanced personal financial analysis beyond the standard offering.

Increased competition underscores the challenge for Zand – a start-up that must compete on products, services and back-end technology while still subject to the same capital requirements and regulations as its traditional banking competitors.

“The challenge is to combine two DNAs – the banking DNA, which is about risk management, financial expertise and compliance, and the digital DNA, which is about customer focus, better use of analytics and the latest technology goes. “said Crespin, who previously held positions at BNP Paribas, Citi and DBS Bank.

Local response

Zand will be put to the test when it finally hits the market, according to executives at major banks who also took part in the panel discussion on Monday.

“I think it’s a great development,” Bernd van Linder, CEO of Commercial Bank of Dubai, told CNBC. “The challenge that Zand is presenting to the banking sector, and that I am and that I am looking forward to, is to make sure we get as fast and innovative as it (Zand) will be.”

However, he said, “The big challenge for digital banks … is to make money while competing with many established providers who have already developed their digital offerings and who know how to make money from credit.”

“The competition will be fierce,” Boutros Klink, CEO of Standard Chartered Middle East, told CNBC when asked about digital-first rivals in the region. “It’s exciting and we have to do what we have to do to be one step ahead of the curve,” he added.

“Some will surely survive and some will fail.”