Commercial banks in UAE and the entire Gulf Region have had numerous challenges. These challenges have affected their operations and service delivery to the customers. The economic foundation of UAE as an oil-producing country has made financial institutions to always try to align their operations with oil trade as the main economic activity in the country and the region. As such, when banks try to innovate in the country, they have always considered the possibility of such innovation to pushing them away from the market that has been dominated by proceeds from the oil trade (Dmello, 2017).
Interestingly, policymakers in the country have been involved in the oil trade. These policymakers influence the banking industry since they decide how the banks should sell credit and the legality of operations in the banking industry. Given this reality, innovation becomes a challenge to financial institutions operating in UAE such as Abu Dhabi Commercial bank.
In the banking industry, innovation entails designing of services in a way that attracts customers and that uses minimal resources. Innovation aims at achieving efficiency in service delivery, keeping the customers loyal and adapting to the changing environment in the financial industry. Various authors have explored the issue of innovation in the banking industry and its relationship to efficiency and customer satisfaction. For instance, Holloway (2016) asserts that the inability to innovate leads to poor customer service and that may make a bank lose some of its clients.
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In this case, customers are likely to complain and that can make a bank fail to attract potential customers. Without innovation, banks are likely to lose competitive advantage because their competitors will become the choice of their customers (Hatami, 2016). Besides, inability to innovate is likely to render a bank ineffective when launching new products. In this case, a bank fails to consider the strategic positioning and use that as an advantage to attract customers or enter new markets. Given these challenges, it is evident that the existence of barriers to innovation is likely to make it hard for Abu Dhabi Commercial Bank to keep some of its customers or launch products in new markets.
The fall of oil prices has made UAE financial institutions to grow at a fast rate as they finance other activities through lending. As such, the banking industry in the country has grown to be one of the profitable sectors in the country (Dmello, 2017). However, challenges such as government regulations, harsh economic environment, and cultural consumer behaviors make it hard for banks in the country to innovate (Dmello, 2017). Abu Dhabi Commercial Bank is one of the players in the country’s banking and financial sector. The bank is one of the top ten lenders in the country and its SWOT analysis is as discussed below.
One of the strengths of the Abu Dhabi Commercial Bank is its reputation as a trusted lender. Also, the bank operates in many business segments such as property management, consumer banking and treasury banking. The bank’s weakness is that it is yet to diversify its operations through innovation. Concerning opportunities, the bank can invest in other Gulf States. Also, the bank can invest in technology and innovation to enhance efficiency. The bank is under the threat of competitors such as First Gulf Bank and Emirates NBD.
References
- DMello, S. (2017, January 02). UAE banks on a digital reboot. Retrieved January 30, 2018, from https://www.khaleejtimes.com/buzzon/jobs/banking-financial-services/uae-banks-on-a-digital- reboot
- Holloway, L. (2016). Poor Quality of Customer Service Proving Costly for Banks. Retrieved January 30, 2018, from https://smallbusiness.yahoo.com/advisor/poor-quality-customer-proving-costly-banks-213527476.html
- Hatami, A. (2016). Can Banks Innovate? The FinTech Book, 170-172. doi:10.1002/9781119218906.ch45
