UAE Startups and the Banking Challenges They Face
UAE-based entrepreneurs and small business owners are no strangers to the banking challenges of the region. Despite multiple banks — both local and foreign — in the region offer a range of commercial banking services and the country’s infrastructure being inherently conducive to businesses, the actual banking experience for startups and small businesses has proven invariably arduous.
With most banks, opening an account can be a huge hassle. According to a recent report published by the Dubai Chamber, it can take up to three months to open an account. The report also mentioned the lack of guidance banks offer through the course of these procedures, making the entire process a lot more difficult than it should be. The study also highlights the region’s regulatory standards as one of the two key factors in why it’s so difficult to deal with them; the second being the fact that new, up-and-coming companies are nowhere near as commercially promising as other, more established customers, due to the low initial business volume and most startups’ inability to survive and expand.
Dubai Chamber’s report recommends that bank provide basic bank accounts that more adequately meet the needs of business startups, simpler and easier to follow guidelines on banking procedures, as well as experience, well-trained bankers. Another suggestion made in the report was to implement technology that improves banking operations while reducing costs. These overhauls could significantly improve the banking experience for clients.
The final point that the report makes shifts perspectives to look at this through the eyes of the banks, stating that some of the challenges faced by startups are of their own making. The banking sector points to a lack of awareness from startups on the basic requirements on banking.
The report concludes that while banks are obligated to comply with the UAE’s regulatory standards, they should also make pointed efforts to better serve the needs of emerging business, making banking procedures less complex and more accessible to build a system that encourages innovation rather than being a hurdle in its path. Dubai Chamber also placed the onus on regulators, like the Central Bank, to provide guidance to banks on how to achieve a much-needed balance in terms of their customer base.
