Neobanks in the UAE are not expected to have a significant impact on the migration of customers from traditional banks, according to a report by S&P Global. The report states that neobanks are still in the early stages of development in the UAE market and that most customers in the region still prefer traditional banks. Neobanks attract customers by offering products and services at a lower cost, but their current offerings are limited to raising deposits and issuing credit cards. The regulatory environment for fintechs in the UAE is supportive of neobank emergence, but their limited product range compared to traditional banks is a challenge. However, globally, the number of neobank customers has been increasing, reaching 188 million in 2022, up from 19 million in 2017. This number is expected to exceed 350 million by 2026, accompanied by an increase in the number of neobanks to over 500 in 2022. The UAE has a high number of bank customers and a strong propensity for digital banking services, with a smartphone penetration rate of 96.2% in 2022. Lower-cost and higher-speed money transfer services are in demand, particularly from the UAE’s large expatriate population. Neobanks have the potential to attract some of the money transfer operations from traditional banks and exchange houses by offering lower fees, better exchange rates, and faster transfer times. However, exchange houses still dominate remittances in the UAE. Neobanks provide digital banking solutions and user-friendly interfaces but have fewer product offerings compared to traditional banks. Their focus is on basic banking services such as payments, deposits, credit cards, and money transfers. While the digital-first approach offers convenience, it poses challenges for customers who prefer face-to-face interactions. In the UAE, corporate lending, which relies heavily on relationships, accounts for over 70% of banks’ lending activities. The Central Bank of the UAE (CBUAE) recognizes the importance of traditional banks in financing the local economy but also acknowledges the potential benefits that neobanks bring. The CBUAE supports financial innovation through regulations and has launched the “FinTech Office” to develop the fintech ecosystem in the UAE. The CBUAE, along with other regulatory authorities, has set out guidelines for financial institutions adopting technologies such as APIs, big data analytics, AI, biometrics, cloud computing, and distributed ledger technology. Despite neobanks’ efforts to gain market share in specific product categories like deposits, credit cards, and remittances, a mass migration from traditional banks to neobanks, especially in segments like corporate banking and retail mortgages, is unlikely. The report suggests that a coexistence of traditional banks and neobanks is more likely, with each serving specific customer segments and providing unique advantages.