New UAE partnership to cut red tape of business bank accounts

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Opening a bank account is listed as “the biggest hurdle” entrepreneurs and business founders face in the UAE, but a new scheme is aiming to address this.

A report last year by identity verification platform IDnow Middle East, which surveyed more than 1,000 people, found that nine out of 10 UAE respondents think it takes too long to open a local account.

In a bid to rectify this, Flat6Labs, a venture capital firm which manages seed funds on behalf of institutions across the Middle East and North Africa, has partnered with Abu Dhabi-based Wio Bank to move the process along.

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Under the agreement, startups selected for Flat6Labs’ flagship seed program, Ignite, will be given priority of account opening applications by Wio Bank.

“It is true that opening bank accounts presents challenges for a number of smaller startups and there are many factors that contribute to the difficulties entrepreneurs face in this critical endeavour,” Ryaan Sharif, general manager at Flat6Labs UAE, said.

“These include the specific requirements of the financial institution, the type of business, the financial health of the company, and even improper documentation.

“That said, there are clear steps being taken by government entities to ease these woes.

“For example, the UAE Central Bank has launched several initiatives to support SMEs in the country, including the UAE SME Banking Guide, which provides help on the process of opening a bank account.”

Saad Ansari, founder and CEO of Xpence, a business expense management platform, said that opening an 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.

Naira Bhutta, owner of VersaTile, a company which sells decorative ceramic tiles that was set up in February, said it took her only three days to get a business license but opening a bank account was “the biggest challenge”.

“This would be the one area [where] I feel many entrepreneurs face a huge challenge and could use improvement,” Bhutta said. “I was only able to start trading seven weeks after getting my license due to delays in getting a business bank account set up.”

Sharif has sympathy for new business owners. “There is potentially no other factor that more heavily decides the fate of a startup than its ability to effectively manage its finances,” he said.

“These organisations need banking partners that have a startup ethos, centred around agility, flexibility, and innovation.”

Abu Dhabi’s sovereign wealth fund, ADQ, is an investor in both Flat6Labs and Wio Bank which gives the initiative extra weight, Sharif said.

“There is a clear synergy which we are now leveraging on through our partnership,” he added.

“Among the key terms of our recent MoU (memorandum of understanding) is the commitment to working hand-in-hand to provide a continuous feedback loop that will ensure Wio Bank is aware of the difficulties founders face with banking services.

“This will enable the bank to provide the most relevant solutions and remove or mitigate the hurdles that continue to exist for SMEs in opening banking accounts.”

Prateek Vahie, chief commercial officer at Wio Bank, said: “We are committed to ensuring that our SME customers find the most viable options for the support they need, be it through funding via traditional credits or loans, peer to peer lending, angel investments, or incubators.”