Are UAE Banks Ready for the FINTECH Revolution? — Lukman Hajje answers us

When is the last time you wrote a cheque? In many parts of the world the answer is likely to be sometime last century. But here in Dubai, it could have been just last month. To pay your rent.

Most banking processes in the UAE were formulated before 2000, and despite the introduction and widespread usage of internet banking and banking apps, the paperwork, policies and procedures that underpin them remain there.

Opening a bank account or acquiring a mortgage in the UAE can at times require monk-like patience. Last month, Will Rankin, a well-known business journalist based in Dubai, urged his readers to abandon cheques. “I’m not getting another cheque book,” he wrote. “Let’s all refuse cheque books and force the UAE’s banking system to accept modern, normal payment systems.

Mortgaged buyers accounted for roughly 70% of secondary market transactions in 2017, or $37.7 billion in value, according to Dubai Land Department. This is a sizeable market. And to the victor of disruption will go the spoils.

Cheques hold more weight than legal contracts. They are contracts for the people, if you prefer. Is it the best system? No. But right now it’s the best we’ve got.

In line with this, anyone who’s been through the mortgage process here in the UAE knows that prior to disbursement you are presented and forced to sign an undated cheque for the entire borrowed amount, plus interest. No doubt the biggest cheque you’ll ever sign; a Sword of Damocles-esque practice and a security measure for the bank. Should you stop making payments and become non-responsive, they’ll bank the cheque, knowing full well it will bounce. With a bounced cheque in hand, they can start legal action. For more, read about the 5 things to ponder if you plan to borrow in 2018.

No doubt Rankin is on to something; the UAE banking system needs to be overhauled and the Dubai government agrees. The DLD recently announced plans to launch Real Estate Self Transaction (REST), an online platform to conduct real estate trading and transactions including end to end online mortgage application and disbursement.

According to DLD, REST will simplify existing legacy laden processes, and aims to facilitate the digitisation of real estate transactions and mortgages by Q1 2020. Any initiative that promotes transparency and eases the process for consumers should be applauded, but a Q1 2020 timeline is somewhat ambitious.

Having personally gone through a mortgage refinance recently, I can attest to the many patience-draining legacies that exist in the UAE mortgage process that will need to be completely rethought and re-engineered. Property Finder Group owns the UAE’s leading mortgage brokerage,, so thankfully 98% of the headache was handled by them.

Some processes are pure legacy, unnecessary and could easily be digitised. Others were petty stalling tactics by my lender to extract a few extra dirhams in interest. But the rest are there for good reason and are specifically designed to protect the bank against fraud and illegal lending practices which could be perpetrated by the borrower, the broker, or even a bank employee.

The US subprime mortgage crisis highlighted the dangers of such practices 10 years ago. But the risks still exist, even in highly regulated markets like Australia, where a government investigation just this year uncovered widespread forgery of documents, ID fraud, and best interest negligence in their mortgage and financial services sector. Many of these offences were committed by commission-hungry bank employees from top to bottom.

If UAE banks are to fully digitise their mortgage application process in line with the DLD’s REST initiative, they’ll need to vastly overhaul their policies, technology and mindset without jeopardising safe lending practices.

Mortgaged buyers accounted for roughly 70% of secondary market transactions in 2017, or $37.7 billion in value, according to Dubai Land Department. This is a sizeable market. And to the victor of disruption will go the spoils.

Trussle, a London-based online mortgage broker owned by Zoopla (recently sold to a US private equity firm for nearly $3 billion USD), aims to be the digital alternative to the offline mortgage search and application experience.

Zoopla invested in Trussle in 2016; at the time a million mortgages were disbursing per annum, 75% intermediated through brokers, mostly offline. Paul Whitehead, the Chief Strategy Officer at Zoopla, says the benefit of Trussle for banks and consumers is a “faster time to yes”; shortening the mortgage application process to a matter of days, rather than months., based in Sydney, Australia, is another online mortgage brokerage hoping to disrupt this space. Co-founder and Managing Director David Hyman says it wasn’t hard to get banks signed onto Lendi because it solves many pain points by bringing processes online. Hyman admits it is a “tech-first but not tech-only” model. Lendi’s aim is to allow customers to do as much as possible online. They then get assigned to a home loan specialist who is there to finalise the mortgage.

The Trussle and Lendi models are possibly what the UAE government hopes to achieve by Q1 2020. But even in the world’s most advanced markets, the end-to-end mortgage experience is not quite there and represents a small percentage of the market.

No doubt in time they will get there, but will UAE banks get there by Q1 2020?



By Lukman Hajje

Chief Commercial Officer, Property Finder Group





This article was originally published in Property Finder Trends, Vol 4. Click here to read the full report online or download the PDF. 


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