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Opening a bank account still the ‘biggest hurdle’ for UAE startups

The report found that customers were unhappy with having to go to a branch and physically hand over documents. Source: Creative Commons
  • Some bank accounts taking up to a year to set up
  • Startups waiting, despite obtaining a business licence
  • Lack of consistency on requirements, rules for new businesses

Opening a bank account is “still the biggest hurdle” entrepreneurs and business founders face in the United Arab Emirates (UAE), with some waiting as long as a year to get the green light to start banking.

The continuing challenge was highlighted in a recent study, which found that nine out of 10 UAE respondents think it takes too long to open a local bank account.

The report by identity verification platform IDnow Middle East, which surveyed more than 1,000 people, also found that 82 percent of bank customers were unhappy with having to go to a branch and physically hand over documents. Among non-bank account holders, 86 percent said they had started a bank account application but quit the process because it was too complicated.

Saad Ansari, founder and CEO of Xpence, a smart business expense management platform, told AGBI that opening a bank account for his fintech startup in the UAE took nearly a year, and a hefty deposit of half a million dollars.

“[Difficulty in opening a bank account] is one of the unfortunate things about entrepreneurship in the UAE, which is a shame considering the efforts that the government is putting in to promote entrepreneurship, golden visas, and making doing business easier,” Ansari said.

“Banks are obviously not living up to expectations. I’ve heard of startups that have cheques from investors and they can’t cash the cheques because they don’t have a bank account.”

Jen Blandos, CEO of Female Fusion, a community for women entrepreneurs with more than 21,000 members, added that waiting for months to get a bank account also impedes new business owners from transacting for months, despite obtaining a business licence.

“You cannot set up a payment gateway, you cannot accept payments, you can’t do anything without a bank account,” she said.

“The banks really need to do better. They say that they want to help businesses, but they don’t. Small businesses in this country are unable to trade and contribute to the economy because they do not have a bank account.”

According to Blandos, time frames should be on a par with global banks, and not take longer than 10 days.

“For example, in the UK you can apply for a bank account and upload all of your documents digitally and they will have AI in place and approve within a day or a couple of days,” she said.

“That technology exists, so why are they not doing that here?”.”

Blandos stressed that banks are “not clear” or consistent about the information they need from a business.

“It’s unpredictable and it’s really hard to know what the bank is going to ask for,” she said.

Ansari added: “One way to look at [the bureaucracy] is that it’s protecting society from money laundering and people who are going to use it for nefarious purposes. The unfortunate thing is that most hardworking aspiring entrepreneurs get shot in the crossfire.”

SURVEY: Nine out of 10 UAE bank account holders think opening a bank account takes too much time

  • Nine out of 10 UAE bank account holders who responded to a survey IDnow and YouGov think approval processes for accounts take too much time and require too many details and documents.
  • 86 percent of UAE non-bank account holders said they had started an application but gave up as the process was too complicated.
  • 54 percent of people polled did not want to have to provide physical documentation or identity verification in-branch, but would rather prefer a digital alternative.
  • More than 8 out of 10 people said they were dissatisfied with needing to physically go to a branch and hand over identity documents in person.
  • More than half of those surveyed are less likely to apply for a bank account if they have to go to a branch to provide physical documentation or identity cards