GCC banks looking to Africa for new opportunities
Source: EY , Author: Posted by BI-ME staff
Posted: Wed November 23, 2016 10:08 am

UAE. According to EY’s GCC Wealth and Asset Management Report 2016 ‘Global forces drive regional realities”, the larger local banks in the GCC are approaching saturation in their home market and are starting to venture out to attractive markets such as Africa.

Dubai in particular has emerged as an attractive hub for Africa, as Europe did for the GCC region some years ago.

George Triplow, MENA Wealth and Asset Management Leader, EY, says: “Although market shares between local and international banks may fluctuate, the region is now arguably overbanked. With high levels of protection in the GCC markets, some of the larger local players are starting to focus on markets further afield. The UAE’s strong ties with African markets has encouraged a number of African businesses to use Dubai and the Dubai International Financial Center as an infrastructure hub.”

Local banks increasingly entering private banking
Given the sizable numbers of affluent families in the Gulf, the wealth management market in the region is extremely active and covers everything from family offices, ultra-high net worth and high net worth individuals and, increasingly, the growing affluent market.

European banks have historically had strong market share, serving clients who wished to send money out of the GCC for various reasons. However, people have begun to understand the importance of an onshore presence, and the European centers have lost attractiveness due to regulatory issues and rising compliance standards.

“While the trend to have family wealth managed externally had retreated in recent years, the oil price decline and challenging geopolitical situation in the region has encouraged a return to sending money out. Local private banks have recognized that they need a value proposition across different segments. They have been working hard to compete by recruiting experienced staff, including former relationship bankers from their rivals, and tailoring their offering to local needs, from Islamic investment products to tag-on lifestyle services, ranging from advice on philanthropy, to access to premium airport lounges. They also have an advantage in their ability to book locally, and their knowledge and relationship networks facilitate client onboarding,” continues George.

Focus on regulation to reduce risks
The regional retail wealth management sector faces the ongoing issue of lack of transparency and independence. High fees are often hidden in opaque commissions on funds and other products and advice shaped by narrow sales interests.

“We see many in the industry who would welcome commission disclosure across all financial products. The key would be to provide lower costs, genuinely independent advice and technology-supported portfolio diversification with a focus on passive funds and exchange-traded funds, rather than complex structured products,” says George.

The GCC digital agenda
The wealth and asset management sector has been slow to embrace the digital agenda in the GCC region, but that is now beginning to change across much of the industry. At the simplest level, there is a growing focus on using online and app-based platforms to improve the client experience.

“Many Gulf banks have already implemented sophisticated digital tools for retail banking, often with better capabilities than many Western banks. Some are now extending this to wealth management, although so far largely just for informational rather than transactional purposes,” concludes George.

Photo Caption: George Triplow, MENA Wealth and Asset Management Leader, EY


About EY
EY is a global leader in assurance, tax, transaction and advisory services. The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over. We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. In so doing, we play a critical role in building a better working world for our people, for our clients and for our communities.

EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. For more information about our organization, please visit ey.com.

The MENA practice of EY has been operating in the region since 1923. For over 90 years, we have grown to over 6,000 people united across 20 offices and 15 countries, sharing the same values and an unwavering commitment to quality. As an organization, we continue to develop outstanding leaders who deliver exceptional services to our clients and who contribute to our communities. We are proud of our accomplishments over the years, reaffirming our position as the largest and most established professional services organization in the region.

For more information, please visit ey.com/mena

© 2016 EYGM Limited. All Rights Reserved

 

MIDDLE EAST BUSINESS COMMENT & ANALYSIS

date:Posted: June 28, 2017
UAE. Global defence subsector grew by 2.1% to US$351.3 billion as military spending increases; European commercial aerospace grew by 6.7%, outpacing the US which only grew marginally by 1.3%, for second consecutive year.
date:Posted: June 27, 2017
UAE. 38% of patients have trust in the system; 78% eager to use new technologies to make healthcare decisions.
date:Posted: June 27, 2017
UAE. NOMU is an alternative equity market to the Tadawul, aimed at smaller cap companies although provides the possibility for companies to transition to the main market after a period of time.
dhgate