Impact of Digital Banks on Conventional Banks in the UAE

The rise of challenger banks and fintechs have threatened the longevity of conventional,
incumbent banks in the UAE. As consumers rapidly adopted digital products and services
during the COVID-19 pandemic, a new era of disruption began in the banking sector, marked
by the ever-changing capabilities of technology and the increased demands of the consumer.
In the wake of the pandemic and wave of disruption, conventional banks must reevaluate
their priorities and offerings. Academic literature indicates that the buy vs build paradigm,
talent scarcity, role of regulatory authorities, and organizational structure are key variables to
be addressed when transitioning to become digitally relevant and resilient. This research
employs qualitative methods in determining the sentiments of bank leadership as well as the
current strategic directions of the leading 10 conventional banks in the UAE attempting to
compete with digital challengers. Results indicate that larger banks are able to withstand the
competition for now; however, none of the sampled banks are actively enacting complete
organizational structure changes. Though conventional banks are surviving in an immediate,
post-pandemic landscape, their failure to address organizational structure changes away from
complex hierarchies and product-oriented processes will likely diminish their survivability
among digital banking competitors in the long term.