Consumer Finance within GCC and its combat against privacy threats

The Gulf Cooperation Council (GCC) region has been looking to expand its capabilities within the banking and finance industry in hopes to establish itself as a strong leader amongst global competition. And Consumer Finance is one area which can help the GCC to gain a competitive edge.

What is Consumer Finance?

The Consumer Financial Services industry consists of companies engaged in providing the following services:

  • - Personal loan services (e.g. credit card services)

  • - Mortgage lenders and brokers

  • - Consumer leasing providers (e.g. automobiles)

  • - Personal and student loan services

Consumer financing – when a business offers financing to their customers with help from a professional finance company. This allows the consumer to pay for a good or service they couldn’t pay for upfront whether in cash or credit card. Consumer Financing hence value adds to consumers who are now offered flexibility in managing their finances, purchases or loans.

The GCC market currently reflects high consumerism rates with an escalating demand for more innovative financial services. However, the lax in consumer protection efforts and a regulatory framework are negligence that may pose as a threat to its potential growth within the banking and financial services sector in the future   

Why is there a need to tackle protection threats?

  1. GCC region’s fast rising internet usage – The increase ease of accessing information online may overwhelm consumers and lead them to make bad decisions if no guidance is given. Consumers need to be educated on the right financial decisions to make, especially amongst the elderly.

  2. Rise of a sharing economy – Various companies have adopted crowdsourcing business models for the convenience and ease of services provided to its consumers. However, this trend may pose unpredictable risks to the privacy of customer data that is being shared online as well as financial transactions that are conducted via new technologies like blockchain.  

  3. Greater tracking of online behaviour – Currently, there is a bulk of consumers who are unsure of the extent to which their online activities are tracked. Thus, problems arise when corporate interests and consumer interests are misaligned. Hence, this gap in knowledge needs to be addressed.

What are the solutions in place?

Marketplace lending and consumer loans

With changing consumer expectations, financial institutions are enhancing their abilities to provide more sophisticated digital experiences.

Marketplace lending is one innovation – sometimes referred to as “peer-to-peer” or “platform” lending. It is a new kind of online lending platform which virtually and securely connects consumers or businesses who seek to borrow money with investors willing to buy or invest in the loan.

For instance, Maliyya, a Dubai-based fintech company engages in the development of a P2P lending and borrowing platform. It utilises big data, artificial intelligence and blockchain technologies to provide investors and borrowers with optimal solutions for investing or mobilising financing while ensuring that it meets data regulatory standards. While it caters to the majority who seeks ease in making loan payments, it also secures and tracks all processing with tight security systems. 

Tailoring credit card applications to needs of consumers whilst providing data protection

How exactly is the GCC region contending with increased regulations and growing competition? Interestingly, to secure their customers’ trust, banks have become more customer-centric by providing more tailored offerings while ensuring that their data is secured from external hacks.

This strategy has not only promote the use of credit cards within the region, but as a result of better tailored services and perks, the UAE has seen a soar in credit card applications of 65% year-on-year since 2017.

As an example, the premium offering with a minimum salary requirement of AED20,000 (USD$5,444) per month is one of the most popular schemes. While most credit card applications require a relatively high minimum salary and annual fees, the option to sign up is still very welcoming given the plenty of rewards for travel, leisure and dining.

The result of taking advantage of the increased purchasing power of its consumers has proven to be very beneficial to its consumer finance sector of the banking industry and this trend is expected to rise at a steady pace. This will hence push the GCC forward into a favourable position amongst global competition.

Prioritising on online surveillance

In many respects, the UAE's surveillance infrastructure has been built by a network of international cybersecurity experts. They supply the Emirati regime with the tools needed for a modern-day surveillance state. UAE's intention is focussed mainly on developing a surveillance system that was capable of intercepting, modifying, and diverting. This is to ensure that data is secured and protected within the financial sector and all attempts of hacking can thus be anticipated.

DarkMatter is a company that focusses on innovative solutions to tackle security and privacy issues in the region. Currently, it has been hiring a range of top talent from across the US national security and tech establishments, including talent from Google, Samsung and McAfee.

Is there room for improvement?

Customer-service is at the heart of all people-centric businesses. What GCC can do to improve further is to capitalise tools to allow consumers to voice their concerns. These tools could include consumer helplines, digital recall platforms, and interactive online platforms.

Apart from empowering its consumers with tools, banks and financial institutions within the region are also seen to be actively organising training courses and programmes for the next generation of Emirati bankers. This is to upskill them in order to meet today's customer expectations.

Ultimately, accessibility and quick services are pivotal to meet increasing customer demand for instant fulfilment across the world – the Middle East is no different. To stand out from the competition, the region will need to master the art of maintaining its consumer protection strategies whilst capitalising on innovation of its services.

If your company is looking to on-board experts within the field of consumer finance or how the industry is evolving, please kindly email us at [email protected]. Likewise, do visit our website at for more industry-related insights.

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