New 'no frills' bank account among proposals to speed up banking access for SMEs
The process of setting up a corporate bank account for small and medium-sized enterprises in the United Arab Emirates can be ‘painful’, taking up to three months, according to a new white paper published on Sunday.
The white paper said the primary pain points during the banking setup process were inadequate transparency, inconsistency around what documents are required and ‘insufficient guidance by bankers throughout the account opening process’.
While the need to comply with stringent banking regulations - to combat terrorist financing, money laundering and tax evasion - was suggested as a reason for the slow process, recommendations were made, including greater transparency around paperwork and processes, offering a ‘one-stop solution for a trade licence and bank account’, and a ‘basic no-frills’ bank account providing an IBAN number with a limited service, including caps on transaction amounts and offering domestic transactions only.
The white paper was produced by Dubai Chamber in coordination with the UAE Ministry of Economy, the UAE’s Council of Small and Medium-Sized Enterprises and global consultancy firm Roland Berger. Its findings were debated at a recent Dubai Startup Hub event.
“Clear and readily available step-by-step guides should give transparency from day one of the process, timing and documents required. This - along with better trained and more responsive banking personnel - will make a real difference,” the white paper said.
A panel at the Dubai Startup Hub recommended that a new working group consisting of both public and private stakeholders should be set up to address banking challenges faced by SMEs, Dubai Chamber of Commerce and Industry(Dubai Chamber) said in a press release issued on Sunday. The organisation will head the new working group.
The white paper also suggested that a digital approach could help to cut costs for banks and allow customers to access services via chatbots and video calls.
“The UAE already has success stories in digital consumer banking. It is time to apply the same logic to opening a startup banking account and the provision of subsequent banking services that are amenable to new businesses. Countries like Estonia can illustrate the way,” the white paper said.
It also acknowledged that while the startup and SME segment may not be an ‘attractive client segment’ for banks due to initial low business volumes, banks had a duty to contribute to innovation.
In a call to action, the paper noted: “Banks have a duty to comply with regulatory requirements, such as Know Your Customer (KYC), but within these constraints they need to do a better job when it comes to startup banking and contribute to an ecosystem conducive to innovation.”
Neil Petch, chairman of UAE company formation specialist Virtuzone said opening a corporate bank account can be a challenge for UAE entrepreneurs, and can sometimes lead to start-ups looking elsewhere for places to set up their businesses.
“We welcome the report’s call to make the account opening process ‘simple, transparent, and fast, while meeting compliance needs’. To maintain the UAE’s image as a country that is open for business, we also fully support the Dubai Chamber’s suggestion that banks publish a clear, readily available, step-by-step guide to provide transparency on the banking process, timing and documents required to open an account,” he said.