What The UAE Is Teaching Global FinTechs About SMB Banking

It’s not easy being small — especially in business, and often when it comes to banking and payments. The bigger players take up more space at the table, and, for various reasons, often face fewer barriers to market entry and expansion than small- and medium-sized businesses (SMBs).

That can hold especially true in wealthy countries, such as the United Arab Emirates (UAE), as discussed in a new PYMNTS interview with Evans Munyuki, chief digital officer of Emirates NBD, a UAE banking group. However, that’s changing. The story he told PYMNTS was one of FinTech’s global impact, and how the contributions of SMBs are being recognized for their importance.

“[SMBs] are the backbone of many economies,” he said. “Here in the UAE, they are underserved, yet they contribute strongly to the economy.”

Such businesses don’t always find it easy to access the banking and payment services they need, among other things. When it comes to a country such as the UAE, demographics can play a role on that — some 80 percent of the population is made up of expats, and they don’t always have the best luck in navigating the local financial, banking and regulation landscape. That is among the reasons why Emirates NBD recently launched the first digital bank for SMBs in the UAE, a launch that could inspire similar efforts in other parts of the world.

New Venture

The new venture, E20, is geared toward entrepreneurs and SMBs. It will have a mobile app, and provide different services necessary to carry out banking needs.

A recent study on the region showed that almost 65 percent of entrepreneurs in the UAE think banking is their biggest challenge. It also takes about three months, in some cases, to open a bank account.

E20 wants to let customers open accounts quickly and easily, and allow them to perform not only local but international transactions, as well as pay bills — all through a smartphone. Customers will have access to checkbooks and debit cards as well, and be able to use Emirates NBD ATMs for daily banking needs.

Munyuki told PYMNTS that things are starting to loosen up in regard to the attitude toward SMB financial services in the country. The government, for instance, has set up funding meant to guarantee and encourage more lending to those smaller operations. The country’s relatively strict laws on bankruptcy are becoming less severe as well, he noted.

“The government wants to graduate more entrepreneurs,” said Munyuki.

Even so, massive challenges remain for SMBs in the UAE — challenges that roughly reflect other hassles that those businesses face in different parts of the globe.

“You need to have a [trade] license to open a [bank] account,” he said, “but, in many cases, the criteria for getting a [trade] account was not that friendly, making it difficult to [do].”

He even compared that to a chicken-and-egg situation. However, Emirates NBD, via its new E20 digital bank, hopes to alleviate such problems by offering a fuller suite of SMB-friendly business services beyond just bank accounts, he told PYMNTS.

“We want to help them start a business and manage a business, and expand a business,” Munyuki said.

More Improvements

Indeed, he noted, not only is the UAE government looking to improve the trade license process (Emirates NBD has been involved in those discussions), but the banking group is working with blockchain in a data-exchange effort with the government to further improve the process of getting SMB banking accounts.

As all that happens, companies such as Emirates NBD are working more closely with FinTech firms, among other partners, Munyuki said. The path is still long, given the history of little help in the region for SMBs, and the fragmented nature of the regional market — to say nothing of the varying regulations in each country.

“But things are changing,” he told PYMNTS.

Throughout that change, the efforts that led to E20 can offer lessons for other payment players in various parts of the globe. For one, listening to a customer and learning about their main pain points are key, Munyuki said. In addition, such efforts tend to go better if tied to the idea of financial inclusion, which is indeed the case for many small businesses in this region of the world, along with other places.

This effort from the UAE bears watching in 2020, as it may offer more lessons, and even best practices, in bringing SMBs up to speed with payments and banking.