A Comprehensive Insights into Banking in UAE


The banking system in the UAE is known for innovation with digital services, adherence to taxation and other financial regulatory frameworks, and stability. Banking in UAE combines traditional banking services with functions of modern digital banking solutions to meet customer’s diverse needs.

In addition, the banking sector in UAE supports the country’s economic growth and development. Banks offer financing assistance for infrastructure projects: medium-sized, small-sized organizations, and other sectors of the economy. The banking industry in the UAE plays a vital role in promoting financial inclusion, as banks provide services covering diverse populations like low-income households, small businesses, and more.

Furthermore, Islamic banking in UAE consists of local and international banking operations across the country and focuses on offering a range of financial products and services to meet with the evolving needs of the economy.

Current Global Banking

As we know, the current scenario with the global economy signifies instability due to the succession of global crises like the COVID-19 pandemic, supply chain fractures, skyrockets like rising inflation, and more, which has dramatically affected the global banking industry.

In addition, the breakdown of 3 US banks after crash in the value of cryptocurrencies and significant purchase out of Credit Suisse by UBS resulted in financial fall via other global markets and resulted in diverting cash flow from top 6 world banks to prevent potential loss or damage in the banking sector.

These high-volume failures in the banking system have led many countries to scrutinize the loopholes in their current banking system and prevent such scenarios.

UAE’s Initiatives with Global Banking Crash

To act upon the global economic backdrop, banking in UAE has introduced robust initiatives like streamlined taxation regulations, better banking practices to enhance the chances to attract more investments in the country.

However, UAE’s top 10 listed banks have shown increasing profitability, better returns on equity and assets, and improved capital positioning. This has become possible because of the optimized operating model of the banking sector in UAE. And the banking system of UAE practices financial operations with careful steps by following a thorough regulatory procedure which to date has assisted to keep the financial data and other essential assets protected from the potential problem similar to which affected SVB in the New Year.

In addition, banks in the MENA region invest in areas that have a potential risk of lending financial assistance to small or medium enterprises or mortgage finance. Instead, Islamic banking in UAE focuses largely on the public sector and the larger sector, which means approaching established clients. By implementing this approach, the GCC region is less likely to meet with risk, which has affected banks across Europe and the US.

Challenges with Banking in UAE

One of the major challenges in the history of the banking sector in UAE is it had to undergo significant scrutiny procedures. This process was conducted by the Organization for Economic Cooperation and Development (OECD) in 2018, highlighting specific factors related to the transparency and exchange of information standard procedures in the UAE.

This circumstance led to the implementation of certain reforms and regulations, which included signing the Multilateral Convention on Mutual Administrative Assistance with Tax Matters. This resulted in the establishment of new legislation like the Foreign Account Tax Compliance Act (FATCA) and Common Reporting Standard (CRS)

By implementing these reforms and practices, the UAE has shown a dedicated commitment to collaborating with the OECD in order to improve taxation practices and, at the same time, effortlessly facilitate further trade agreements globally with other countries. In addition, other corporate tax regulations have recently been a key aspect of enhancing the regulatory framework for banking in the UAE. It has also assisted in creating a stable, predictable business environment in the country.

Furthermore, the corporate tax regime in UAE marks an essential factor for reducing complete reliance on oil and gas revenues and aids in increasing funds for new upcoming government-based projects and plans.

Lastly, these regulations and reforms have helped Islamic banking in UAE to meet with challenges and enhanced its capability to modernize and adapt robust banking, or financial solutions to sustain its appeal in front of foreign investors.

An Overview of the Banking Sector in UAE

The current situation of banking in UAE, consists of 57 institutions, 20 national banks, 28 foreign banks and other 7 special organizations for financial assistance. However, there are 4 main types of banks in the UAE which include Commercial Banks, Investment Banks, Islamic Banks, and Industrial Banks.

Along with personal, investment banking, or corporate banking options, there are a huge number of offshore bank facilities. They offer low to 0 tax rates and other financial incentives and furthermore offer a range of financial services like wealth management, asset protection, succession planning, and organization formation.

UAE’s Innovation with Banking System

Bank mergers in the UAE are established with the aim of creating larger, more competitive banks, achieving cost savings and operational efficiencies, expanding customer base and product offerings, and enhancing technological and organizational infrastructure.

UAE bank mergers aim for competitiveness, cost savings, and tech enhancements.

One of the largest mergers was created by First Abu Dhabi Bank after the official merger between the National Bank of Abu Dhabi (NBAD) and First Gulf Bank (FGB). This merger created assets of around $200 billion and a market share of around 25%.

First Abu Dhabi Bank was formed from the merger of NBAD and FGB, creating assets worth $200 billion and capturing a market share of 25%.

Another merger that had a significant impact was the acquisition of Noor Bank by Dubai Islamic Bank in 2020. This resulted in the establishment of the largest Islamic Bank in the UAE, with collecting assets of around $75 billion.

The acquisition of Noor Bank by Dubai Islamic Bank in 2020 created the UAE’s largest Islamic Bank, with assets totalling around $75 billion.

In addition, UAE has embraced innovation with new technologies like digital banking virtual assets, established the concept of digital banks – Naqad, WIO- and launched HAYVN, which is an Abu Dhabi-based virtual asset trading platform.

UAE embraces digital banking innovations with platforms like Naqad and WIO, along with the launch of HAYVN, an Abu Dhabi-based virtual asset trading platform.

A Comprehensive Insights into Banking in UAE

Digital Banking in the UAE’s Banking System

A few banks in UAE enable non-residents to open corporate accounts and facilitate digital banking services, which are made easier and streamlined in a way that aids in efficiently managing financial endeavours even from outside the UAE. Isn’t that great?

Some UAE banks allow non-residents to open corporate accounts and access digital banking services, simplifying financial management from anywhere in the world. Great, right?

In addition, Abu Dhabi Commercial Bank, Emirates NBD, and Mashreq Banks have begun providing banking services for cryptocurrency-based businesses, and Abu Dhabi-based crypto exchange BitOasis has collaborated with Mashreq Bank to provide users a secured method to purchase, sell, or exchange cryptocurrencies using the bank accounts.

Abu Dhabi Commercial Bank, Emirates NBD, and Mashreq Banks now offer banking services for cryptocurrency businesses. BitOasis, an Abu Dhabi-based crypto exchange, has partnered with Mashreq Bank for secure cryptocurrency transactions.

Emirates NBD introduced a blockchain-infused platform to assist start-ups and SMEs, and ADCB partnered with a blockchain-based trade finance platform to optimize trade finance operations. Another significant recent merger – WIO offers business-based customer cash and cheque facilities throughout ATM and CDM networks, and fosters elevated digital banking solutions.

Emirates NBD launched a blockchain platform for start-ups, while ADCB partnered with a blockchain-based trade finance platform. WIO, another notable merger, provides business banking services and digital solutions.

Lastly, with increasing awareness of sustainability and environmental protection practices, many banks in the UAE are gradually initiating green finance products to support sustainability-based projects. These projects include loans and financing options to support renewable energy projects and implement robust environmentally friendly projects.

Lastly, Banks in the UAE are introducing green finance products to support sustainability projects, including loans for renewable energy and environmentally friendly initiatives.

Financial and Banking services

Final Thoughts

Banking in UAE has introduced varied regulations and practices in recent years. However, these practices showcase the country’s dedication to streamlining banking operations, preventing risks, and facilitating better financial services with stability.

While the recent regulations are for the welfare of the country’s economic landscape, it can get confusing for businesses to ensure adherence to compliance at the right time.

If you want to know more about corporate tax regimes, banking facilities, or other regulations – our financial experts in N R Doshi and Partners can help you with the right consultation. Get in touch with us today to learn more!

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