Interview: Bernd van Linder
With various economic factors impacting the demand for loans, what do you see as the key growth drivers in the banking sector?
BERND VAN LINDER: The main driver of the banking sector is GDP growth, and the forecasts for 2019 are very positive. Real estate is stabilising, whilst the trade and tourism sectors are increasing. The governments of Abu Dhabi and Dubai have also taken various supportive measures, including increasing the emirates’ infrastructure investment and improving the ease of doing business.
To what extent have higher oil prices had an effect on liquidity, and as a result, how has this been reflected in the economy?
VAN LINDER: Oil prices and the liquidity that is associated with higher oil prices continue to play an important role in oil-producing countries within the region. Higher crude prices translate directly into higher government income and, especially when combined with supportive investment and expenditure programmes, higher liquidity in the system. This is true for the UAE as it is for Saudi Arabia. The increased inflow of liquidity has ensured that high liquidity is also present within the banking system. Combined with existing high levels of capital, this has ensured that the banks in the UAE are ready to support economic growth.
How has blockchain become a game changer in terms of enhancing digital financial safety, banking efficiency and cost competitiveness?
VAN LINDER: Wherever you have a need for a secure exchange of confidential documentation, blockchain technology will play an important role. The public sector will be able to benefit significantly from blockchain, as it will speed up a number of procedures and increase government efficiency. The technology will have an enormous impact on banking services, since the exchange of information is essential to the finance sector.
In the real estate sector, for example, I imagine that the Dubai Land Department will be using blockchain for all of their processes, which will enhance secure access to information. Another area where blockchain will play an incredibly important role is in sharing know-your-customer data, which is something that is already being done in places like Singapore. These are some of the niches where I see that blockchain will be able to add real value.
Regarding other technologies, I think AI, and especially the machine-learning component of AI, will play an important role in the area of finance. In marketing, it has played a key role by allowing for the micro-segmentation of the market. On the cybersecurity front, AI is already providing an important contribution to pattern recognition, which allows financial institutions to identify illegal transactions.
Could corporate and government credit demand compensate for contraction in the retail sector, and which sectors are driving demand for loans?
VAN LINDER: The retail sector has not been contracting; rather, it has been flattening. Overall loan growth has been positive, with all of the key segments within the UAE continuing to do well. We have witnessed solid growth in the contracting and construction sector, as well as in the trade and hospitality industries. The Dubai International Airport, one of the world’s busiest, is showing a record number of arrivals, and hotel occupancy and average room rates are strong, despite the increase in the supply of the emirate’s hotel accommodations. With oil prices stabilising at a higher level, and with the very positive measures taken by the governments across the UAE, I am confident that we will continue to see broad-based economic and banking sector growth over the next couple of years and beyond.
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