Banking in the US and the UAE
The following is a guest post.
Although there are obvious religious and cultural differences between the United States and the United Arab Emirates (UAE), the everyday lives of the citizens of both countries are not so dissimilar. The same wants, needs and desires are evident in terms of peace, security, and protection from crime, good jobs, good schools and the chance of achieving a reasonable standard of living along with opportunities to better themselves. That’s all they ask of their respective governments.
But if only we all live our lives on the same level playing field. Sadly, there’s no such thing. Take banking, for example, and the last Federal Deposit Insurance Corporation (FDIC) survey which found that more than a quarter of all American households either didn’t have a bank account or were under banked a surprising statistic.
Compare that to a World Bank report with figures suggesting every UAE citizen on average maintained at least two deposit accounts. And when the financial spotlight is turned onto nearby Egypt, bank account penetration there is even starker with only 10% of adults having a bank account.
Of course, culture and history have much to do with low banking penetration levels especially in countries where the ‘cash is king’ tradition still holds great sway, as in Egypt. Poverty is another huge barrier for many people, particularly in rural areas where access to banks is severely limited because branches are simply not there or are many miles distant. And there are few incentives either for banks to build the branches because rural workers are often paid extremely low wages. Thus, as the banks see it, they have little need for bank accounts let alone branches.
Yet all across the Middle East, the influence and the strength and depth of the banking sector, both retail and corporate, has been steadily growing over the past couple of decades. Multinationals like the world-famous HSBC bank have done much to help bring modern financial products and services to the masses.
Now credit cards, loans, current accounts, ATMs and online banking are as mainstream in the UAE and other countries in the Middle East as they are in the US. Even mortgage products are more readily available, too, although expatriates are always advised to exercise caution and to do their homework thoroughly. It’s also a good move to obtain accurate legal advice from an international real estate broker before making any property purchase.
The Middle East is not only a magnet for expatriates but also for millions of tourists from around the world who flock to the region annually and bring with them billions of dollars of much-needed hard currency. For example, the Americans, Brits and Russians are the biggest spenders in the UAE, collectively spending around $1.2 billion through their Visa credit cards in 2011 alone. The staggering sum represented almost 30% of the total Visa card tourism spend in the country that year.
Tourists keep on coming to the UAE because it has all the right ingredients for making any holiday there an unforgettable experience. As the Ministry of Foreign Affairs points out, the UAE not only offers an intriguing traditional culture and a safe and welcoming environment, it also has wall-to-wall sunshine, pristine beaches, unbeatable shopping and top-class hotels and restaurants. In fact, there’s not much more any self-respecting visitor could ask for.
You can find out more about the UAE here.