UAE’s bank branch network shrinks amid digital push

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The number of bank branches in the UAE is expected to decline by 10 to 15 percent in the next two years.

Between 2019 and 2022, 157 branches merged or closed due to digital transformation, according to German strategy consultancy Roland Berger.

“The UAE has been one of the leading countries in reducing the number of bank branches by relying on technology and digital transformation over the past three or four years,” the UAE state-run Wam news agency reported, quoting Saumitra Sehgal, head of financial services in the Middle East at Roland Berger.

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He said there is still the possibility of reducing branches by 10 to 15 percent within two years, expecting 80 branches to close in the Gulf state in the coming years. 

Digitalisation enabled the Gulf banks to reduce their branch networks by 328 branches from 4,067 at the end of 2019 to 3,739 at the end of 2022.

The UAE topped the list with 157 branches merged and closed during the period, followed by Saudi Arabia at 82, Bahrain at 57, and Qatar and Kuwait at 20 each. However, banks in Oman increased their branch network by eight.

Sehgal expects consolidation to take place across the Gulf, with the number of branches falling by 623 in the coming years. 

Bank branches cater to more complex matters, such as obtaining mortgages, with simple transactions being conducted online.

Sehgal said that the cost of bank branches in the GCC remains high, with annual expenses hitting $14.8 billion. 

“GCC banks can save more than $3 billion per year in branch costs by merging branches, reducing their number and accelerating the adoption of digitalisation.”

The revenue from UAE bank branches was the highest in the GCC region at $19 million per branch for retail services, up 27 percent at the end of 2022, compared to its levels at the end of 2019.