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The assignment is about the driving forces (along with the definition) with a specific emphasis on the driving forces within banks in the UAE and the strategies used within them. Two relevant articles have been attached (please read them and use whatever is applicable to write about the driving forces for the UAE banking sector. Additional research and sources of information may also be used). Please use illustrations wherever applicable





            Changes are always being experienced in the banking sector globally. Most changes are shown in the provision of services in a bid for the banks to pull more customers and improve on their profits. There are many banks in United Arab Emirates (UAE) thus the need for banks to change their services in relation to customers’ expectations. The driving forces are external attributes that prompt change to occur, hence different factors either external or internal are the cause for major and minor changes within the banking sector in UAE.

UAE Banks

The banking segment within the UAE is almost fragmented as it has involved both the local and banks from abroad. Banks within the Abu Dhabi region get more of the domestic assets rising to over 90%. Market for the banks was being regulated by laws that prohibited banks to have over eight branches within the region. The regulations were changed in 2003 hence presently banks have the right to build as many branches though through specific guidelines. The region has a good number of foreign banks as the laws are not prohibitive (Squalli, 2005).

The Central Bank of UAE is the main agency that regulates the marketing function of banks. Its main responsibilities include coming up with relevant financial policies, a government adviser on financial matters, looking after money reserves, giving out money to banks and supervising the implementation of the policies. Islamic banking is allowed in the UAE and the laws guiding it vary from the normal ones for instance the interests are founded on division of profit and loss. The United States dollar is the main currency in UAE thus central bank cover a little role in policy formation process (Iqbal & Molyneux, 2005).


Technology has a great power in influencing choices thus all fields of economic development, including the banking sector are undergoing change due to technological aspects. All businesses are developing adaptation mechanisms in relation to technology that enable them to sustain the increased competition. Technology allows the transformation of service provision as it encourages the development of new services like mobile banking; it improves on the efficiency of existing services and encourages adequate delivery options. Technology has played a greater role in making banking information easily available and making it cost effective (Awamleh & Fernandes, 2005).

Even though some regions have not adopted advanced technological culture banks are forced to implement technological sensitive services to capture the middle age population that is the largest in the UAE. The interventions of government in supporting electronic ventures have seen many banks shift into the program to avoid lagging behind regionally. Most banks are embracing the technology concept as the government has also done so by allowing the privatization of communication sector. The old information policies within banks have been changed as they have been a prohibiting factor to change and presently private information has become more public (Singh, Chhatwal, Yahyabhoy, & Heng, 2002).


Regulations may either derail or promote economic growth of businesses and sustainability depends on the available policies. Most of the banks are making strategies to ensure that they meet all regulatory aspects in a cost effective manner. The era of financial repression is over and modern policies are being formed according to global requirements. Many policies being set up within the UAE are based on protecting the consumer rather than the banks and have enhanced efficiency by making competition viable (Grais, & Kantur, 2003).

Competition and Growth

Banks are business entities and like other businesses they are involved in profit making measures. For the business to be feasible, they need competitive proceeds thus banks are considering changes in prices of services to attract many customers. Even though banks are struggling to make profits they are doing so with a caution to avoid prohibitive measures for their customers. Also policies being put by the government are to sustain the market by ensuring that consumers are not fleeced (Grais, & Kantur, 2003).

Banks are facing competition with one another and this has made them to come up with strategies for sustainability. Competition has become a global attribute and the substitutes that are taking the role of banks in the market make more choices for the consumers. Competition has increased equity in pricing of services offered by banks hence eradicating monopoly and inefficiencies within the banking systems. The earlier differences within the banking sector have been eradicated by the implementation of policies that encourage competition.


            The banking sector is a dynamic field requiring all those involved to change according to changes in the market. The forces that have propelled changes within the banks is essential as it has made banks to come up with customer centered services. The future of banking sector is not known as many entities are coming up in place of banks. Banks should thus come up with strategies that enhance their sustainability within the market that is completely competitive.

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