Digital banks and financial disruptors in the UAE can grow faster by focusing on a niche and targeting specific customer segments. Experts say this approach enables deep expertise, cost efficiency, and quicker, profitable scaling.

Saadaat Yaqub Bajwa, Director and Co-founder of Kamel Pay, which offers banking services to blue-collar workers, said that the company decided on the vertical because of the potential it offered.“In the population of 10 million in the UAE, 50 per cent falls into this category,” he said.“They are underbanked and underserved. It had the biggest potential to expand.”

He added that niches were important because competition to cater for UAE's relatively smaller population was tough. Kamel Pay has now expanded its offerings.“We have now gone more deeper offering more products, via tributaries, increments, microfinance and loans,” he said.“We are also doing more on the B2B business as well, for the same group of foreign workers' segment. We are getting into B2B financing, and we are going to be expanding business.”

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He was speaking on a panel discussion about the rise of digital banks and open finance on the first day of the Banking Innovation and Technology Summit. The fifth edition of the three-day event, organised by Khaleej Times, kicked off in Dubai on Tuesday bringing together thought leaders, fintech founders and other industry insiders.

However, Vibhor Mundhada, CEO of Neopay said that while niche was important to them, it was also essential to be available horizontally to its customers.“Given the large scale of Neopay in our core business, which is merchant acquiring, we want to make sure that the platform offers every payment method that's needed for a merchant.”

Some of the experts said that technology helped smaller institutions compete with larger incumbents by automating compliance and scaling operations efficiently. Fazil Badrudeen, Head of Brand and Marketing at Vision Bank explained how tech was the driver for the company.

“In today's age of AI, cross manual processes can be automated, from customer due diligence to certain KYC and transaction monitoring systems,” he said.“This has helped us scale transactions with a small compliance team structure without compromising on any of the regulatory requirements that is required.”

Mohamed Roushdy, CIO of Reem Finance credited the UAE for actively fostering innovation and supporting banks and companies that are transitioning from financial services to full banking. He said the process was well-structured and balanced and that the Central Bank is very supportive, approving fintech partnerships, sponsorships, and licences regularly. He added that the UAE's regulatory environment makes it feasible for companies to transition into banking while meeting the compliance requirements for specialised licenses.

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