The loan aggregator is an intermediary organization that gathers an individual’s personal and financial information on a loan application and notifies them of those who might offer an individual a loan. These aggregators charge a certain amount to provide the end-to-end individual service in their entire loan application process. Online loan aggregator is gaining rapid acceptance in underdeveloped regions, for example, around the United Arab Emirates, online loan aggregator has become one of the fastest growing sectors. The effective growth of tie-ups with several banks supporting buyers in loan pre-application and post-application procedures has increased the need for online loan aggregators.
What are the UAE Loan Models?
Containing loans to government, commercial and industrial sector, public, retail and financial institutions, gross credit outstanding around the UAE reached AED 1.7 billion in 2019, registering a CAGR (2014-2019) by about 5%. Occupying the largest share of around 50%, loans to commercial and industrial units increased mainly in the Dubai and Abu Dhabi region, while the Northern Emirates region witnessed a decline throughout 2019. With ~2x higher interest rates charged by financial organizations, loans in the United Arab Emirates are mainly registered by banks which obtain more than 90% of credit disbursed throughout the country. The second most requested loan category was retail lending with a share of around 21% of total credit outstanding.
Personal loans – second most popular loan category in the uae
Retail lending in the UAE involves loans made to individuals for personal consumption, including personal loans, mortgage/housing loans, car loans, and several others. After the 2016 oil crisis, the banking sector experienced an increase in the NPA rate and rejection rates, which led to a continuous fall in outstanding retail loans to reach AED 361 billion by 2019 However, trends such as declining interest rates, property prices, increased regional needs (Dubai and Northern Emirates) have helped retail lending requirements pick up. magnitude in 2019.
Highly concentrated competitive landscape
The main actors of UAE Online Loan Aggregators Market greatly focus on innovations in technologies to advance skill level. The growth prospects of the industry are captured by confirming the continuous advancements in the procedure of the players and the optimal strategies adopted by the organizations to combat the COVID-19 situation.
The competitive landscape around the UAE online aggregator industry is highly concentrated with around 90% market share occupied by top 4 players comprising YallaComapre, Souqalmal, BankOnUs and Paisa Bazaar competing on the basis of parameters such as conversion rates, traffic generated, After Loan Assistance, loan providers, tools and consulting services provided. The main strategy adopted by the players is to diversify the product portfolio, provide comparison services in the fields of insurance, telecommunications, education, real estate, etc., with the aim of becoming “One Stop Solution Provider”. With partnerships around all the major loan providers in the country, the most distinctive aspect of the players is the level of personalized advisory services provided as part of the loan selection process.
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Covid 19 impacts the lending industry
A COVID 19 pandemic outbreak is expected to leave a prominent place in all industries. Adding to the woes, the United Arab Emirates suffered from the fall in oil prices in April 2020, thus contracting the country’s GDP by -3.5%. In order to reduce the impact of the double shock, the CBUAE launched a targeted economic program offering flexibilities around loan categories. In order to meet cash expenses and working capital needs, the need for personal loans, credit cards and SME/business loans is expected to increase significantly in 2020.
A major shift in customer behavior can be projected post-pandemic, with people preferring contactless online services providing opportunities for online aggregation services. On the competition front, major players are expected to invest in artificial intelligence and machine learning to match consumer needs with solutions and comprehensive customer segmentation.
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