Not long ago, a case made headlines in the UAE. In this case, a bank’s client sued his bank, claiming that 1.5 million AED (approximately $409,000) was withdrawn from his account without his authorization. The court ruled in favour of the bank’s client and ordered compensation for the client, as reported by Khaleej Times. The judgment shows how the soon-to be-eradicated OTP system is vulnerable to attacks by thieves. The thieves will intercept the sms withdrawal authorization code and withdraw money from a victim’s account. This is what the CBUAE wants to cap in its statement authorizing all banks in the region to eradicate OTP systems. The question becomes: how safe are the new systems? Are there any loopholes that hackers can use to manipulate the new system?

Why OTPs Became a Systemic Risk in UAE Digital Banking

One financial analyst in the UAE was quoted as saying, “If done right, this transition can make digital banking in the UAE one of the safest and smoothest in the world.” Traditional verification methods like email OTP and SMS OTP, among others, have many shortcomings, thereby mounting pressure on the financial systems in the UAE to embrace digital banking portals, 3rd-party biometric verification, and e-signature platforms to identify, verify, and process transactions. The former system was vulnerable to phishing attempts by criminals, resulting in banks losing money. Last year, bank-related scams grew by 79% as thieves exploited outdated systems to cash out funds.

The old system was challenging because it relied on a single point of verification, and if someone bypassed the entire transaction, it was deemed legitimate. To add salt to the injury, when that single point was delayed or compromised, the system would flag the whole transaction for manual verification. This would cost the client more time. Enter the digital online portal that has an in-app verification process that renders the above challenges obsolete. This begs the question: what does this new system have that is so precious that the financial system would quickly embrace it?

What Will Replace OTPs in the UAE Banking System

Financial systems in the UAE are shifting towards in app banking portal. The banking portal does come with various security features. Some do include

Biometric verification

Biometric verification uses unique physical traits, such as fingerprints, facial recognition, or iris scans, to confirm identity. For banks, it provides strong, user friendly security. It reduces fraud and account takeovers, removes password risks, and speeds up secure access. This approach also improves customer trust, compliance, and the overall digital banking experience.

Passkey:

Passkeys are a new way to log in that replaces passwords with cryptographic keys saved on your device. You log in using biometrics or a PIN. For banks, passkeys reduce phishing, prevent password theft, lower fraud risk, and make logins quicker, safer, and easier for customers. They also help with compliance and build trust in digital banking.

3^rd party authentication

Third-party authentication allows users to confirm their identity through trusted external providers rather than relying on bank-managed passwords. Banks gain stronger security, less fraud, and quicker onboarding. Common apps for this include Google Authenticator, Microsoft Authenticator, Okta, Duo, Authy, and Apple ID. These services provide multi-factor protection without requiring internal management of sensitive credentials. They also help improve compliance with regulations.

How UAE Banks Are Implementing These Changes in Practice

Many banks in the region have either run a pilot digital banking system alongside their traditional systems or fully embraced digital banking. They do so to iron out the not-so-perfect implementation that the new system may not seem to cover, and to ask their developer to improve it.

Abu Dhabi Islamic Bank (ADIB) uses facial recognition to enable instant, secure digital account opening by matching user selfies to government biometric records. It is allegedly rumored that it was the first bank to use face recognition to open accounts, as reported by ffnews

Emirates NBD allows identity verification through contactless NFC scanning of the Emirates ID and capturing a selfie in its mobile app. This process makes onboarding easier. The bank’s TruID solution uses NFC technology to read information from chips embedded in registration documents and automatically completes a digital account application. The customer is asked to take a selfie in the app to finish the process.

Emiratrust Bank has positioned itself with the UAE Central Bank’s broader goal of building strong, borderless digital banking well before the official phase out of one-time passwords. Instead of relying on telecom based authentication methods, the bank has focused on security frameworks tied to devices and aware of sessions. This design supports clients who move internationally while avoiding unnecessary complications. It allows legitimate cross-border activity to flow smoothly while keeping strict controls on access and transaction integrity. By emphasizing account stability, service continuity, and fewer false security alerts, Emiratrust Bank reflects the direction UAE regulators want the sector to head. Its digital framework assumes clients may operate across different borders, time zones, and networks. This makes static, one-time codes less practical. In this way, EmiratrustGroup is not just responding to regulatory changes but showing how modern UAE banks can lead in creating digital security models that fit a global client base.

Strategies for Building Lasting Customer Loyalty: What challenges the banks clients are facing and how to resolve them

Bank clients value a smooth experience, including faster transactions, less paperwork, and stronger account protection through biometric authentication and multi-factor verification. These systems have clearly updated banking, making daily transactions more efficient.

However, there are valid concerns about security that rely on devices. If someone steals a phone with verification apps, they can gain unauthorized access, especially during non-business hours when banks cannot respond right away. The risk increases if thieves disable SIM cards, making it harder for SMS-based tracking or alerts to work.

Some of the solutions discussed in forums are that banks should instead use layered defenses. This includes device-level encryption, the ability to deactivate apps remotely, setting transaction limits during off-hours, using behavioral biometrics to spot unusual activity, and 24/7 fraud monitoring with the option to freeze accounts instantly. Requiring users to re-authenticate periodically, even with saved credentials, adds an extra layer of security.

The best solution combines convenience with strong, backup security measures. This means not giving up on customers or modern systems but continuously improving protection methods. Banks must find a balance between accessibility and security through smart system design, real-time monitoring, and constant response capabilities, ensuring that customers enjoy simplicity alongside strong protection.