The cream of the crop for 2020 from the Middle East.
Bank Arab Corporation
While Bank Arab Banking Corporation (ABC) is predominantly a wholesale operation, it has made a dramatic entry into retail banking with Ila Bank, a digital, mobile-only bank.
‘Ila’ is Arabic for ‘to’, because Ila promises to propel its users from where they are ‘to’ where they want to be. Customers will be helped by a voice-enabled digital banking assistant, Fatema, who is live on the web and ready to answer customer questions.
With the help of advanced facial-recognition technology and automated document verification, new customers can register with Ila in five minutes online. An instant virtual card allows immediate online transactions and customers can move money easily between local and international multi-currency accounts within the mobile bank’s app. They can allocate funds to separate savings pots and make direct transfers to selected charities with no commission.
Ila was launched in November 2019. Between January and July 2020, Bank ABC’s customer onboarding increased by 31%, transactions by 56% and account balances by 59%. Debit card spend was up by 71%. Bank ABC says that many of its regional competitors are now copying Ila Bank’s model.
Indeed, many will want to copy the resourceful Fatema, who is fluent in English and being trained to converse in Hindi and Arabic. She will soon be the first digital banking assistant to recognise different Arabic dialects. She can also drive conversations based on emotional cues – showing compassion when a customer is angry, for example.
“Bank ABC will continue with our strategic intention to be the Middle East and north Africa’s leading international bank – and more innovation for our clients should definitely be expected,” says Khaled Kawan, group CEO of the bank. “We are creating our digital wholesale bank of the future, focusing first on transaction banking.”
Ayandeh Bank
As well as its solid performance metrics, it was Ayandeh Bank’s rapid and innovative response to the Covid-19 pandemic that garnered the judges’ attention: it turned its largest asset, Iran Mall, into a 3000-bed hospital.
While still a work in progress, Iran Mall is set to become the largest shopping mall in the world, though its retail component is complemented by a hotel, an exhibition centre, a cultural centre and high-end sports facilities.
During construction, the mall has created employment for some 20,000 people. On completion, it will employ 18,000 and provide indirect employment for 100,000. The bank believes it will increase foreign tourism to Iran by 2.5% to 5% and will therefore have a direct effect on gross domestic product.
Upon the outbreak of Covid-19, the bank initiated the design and equipping – completed in one week – of a 3000-bed hospital in Iran Mall’s exhibition centre.
Iran Mall will be floated on the stock market, and the value it creates should have a transformative effect on the bank’s profitability and soundness. Its other major investment projects are Mashad Mall, Farmanieh Mall and Rotana Mashad Hotel, estimated to be worth a combined IR500,000bn ($11.8bn).
Ayandeh Bank is the first in Iran to have introduced an electronic know-your-customer (eKYC) system. Applicants need to supply their national ID number, birth certificate and a five-second selfie video. Verification, registration and account opening is then entirely electronic.
The bank has strengthened its development of digital and open banking through use of the Finotech platform. It is also developing new applications via strategic alliances with fintechs, and with the help of the Finnova accelerator programme.
“Our main strategies over the past 18 months have included resource management and reducing the cost of money, managing costs and shared revenues, and reinforcing the bank’s financial stability,” says Mohammad Fetanat, CEO of Ayandeh Bank.
Trade Bank of Iraq
After an extended phase of falling profits, Trade Bank of Iraq has returned to growth with some conviction. It has also drawn up a comprehensive four-year strategic plan, which includes doubling the size of its balance sheet by 2022.
In 2019, the bank’s Tier 1 capital remained level, while assets grew by 36%. Net profits reversed the previous year’s 50% slump to rise by a compelling 209%. Other metrics also improved, with return on equity tripling to 24%, cost-to-income ratio falling dramatically to 27% and its non-performing loan ratio dropping to 23%.
The four-year plan hopes to improve earnings on a number of fronts. Financial objectives include increasing revenues by diversifying lending and keeping expenses under control. Product pricing will be reviewed, and insurance products introduced.
Non-financial steps will include the launch of an Islamic finance window and small and medium-sized enterprise lending, while increasing the range of retail products. The bank will add eight domestic branches, as well as expanding into Turkey and China.
It also hopes to improve the customer service experience by introducing retail and corporate omni-channel platforms, improving turnaround times by adopting technology to reduce human intervention.
A series of upgrades mean that the bank can now do real-time gross settlements, and its ATM network is now integrated with the core banking system. As an anti-money laundering measure, it has implemented a new system for transaction monitoring and reporting.
New products include a relaunch of Tistahel savings certificates, a non-interest-bearing savings instrument with the opportunity to win prizes. A new annuity savings product for parents to save for their children’s education includes life insurance for the child’s guardian.
“We want the bank to provide more services to Iraq’s principal trading partners,” says Salem Chalabi, Trade Bank of Iraq’s president and chairman of the board. “Our new branch in Riyadh is an example of that, and we are also taking steps towards a presence in China, Turkey and the UK.”
Bank Leumi
In January, Bank Leumi broke new ground for Israeli financial institutions by issuing its first international bond. After a roadshow in the US and UK and calls into Europe and Asia, the $750m subordinated issue attracted orders of more than $4bn.
The bonds were structured as Tier 2 subordinated notes with a 3.275% yield and listed on the Tel Aviv Stock Exchange. Until now, Bank Leumi’s debt investor base has been limited to Israel institutional investors. The bank said that the deal demonstrated investor confidence in its leading position in the market.
Pepper, Bank Leumi’s mobile-only challenger bank, launched a new investment app in September 2019. Pepper Invest allows customers to invest according to their resources without having to buy 100% of an expensive share. Instead, they can buy fractional shares of big US S&P 100 companies such as Facebook, Coca-Cola and Nike with a minimum investment of NIS50 ($15).
This has made the US capital market available to a younger, wider audience, who pay only a quarterly management fee. The app is user-friendly and carries comprehensive information and analysis on all the available stocks. Pepper Invest has since expanded the share offering to include trading in leading US exchange-traded funds.
After the Covid-19 outbreak, the bank was the first in Israel to offer a remote mortgage process. With the Total Digital Mortgage, customers can take out a mortgage without having to visit a branch, even to sign the papers. The entire process is secure and strictly compliant.
“Before Covid-19, we prepared for tomorrow’s banking, assuming the process would take close to a decade, but the pandemic has significantly shortened the transition period,” says Bank Leumi president and CEO Hanan Friedman. “So, we have swiftly adapted our operating model in terms of customer experience, technological capabilities and banker skills, in order to maintain our position at the forefront of Israeli banking.”
Arab Bank
Arab Bank is not alone in its desire to accelerate its digital transformation as a way of modernising its infrastructure and creating a better service experience for its clients. What is unusual is how it has created an ecosystem that encourages innovation both inside and outside the bank.
This ecosystem has three pillars, which connect the bank’s staff with fintechs and venture capital. AB Innovation Hub brings its employees together with fintechs to foster new ideas and to experiment side by side. It is also an awareness and education centre that brings staff up to speed with the latest technology. Last year the bank launched Jordan’s first Fintech Bootcamp to provide entrepreneurs with mentors within the bank.
AB Accelerator engages with global fintech start-ups, providing them with an opportunity to test their solutions and accelerating the integration of relevant innovations within Arab Bank. The third pillar, AB Ventures, is the bank’s venture capital arm, which typically makes series-A investments in global fintechs. While it hopes for an investment return, it also hopes to learn from new technologies and digital business models.
In spite of political and economic challenges across the Middle East, Arab Bank managed to grow its business across the Middle East and north Africa region in 2019. It grew its Tier 1 capital by 6.3%. At the same time, it increased its assets by 4.2% and its net profits by 3.2%.
The bank was well-positioned to respond to the Covid-19 crisis. “The global pandemic has tested us all, as individuals, institutions and countries,” says Arab Bank’s CEO Nemeh Sabbagh. “We made sure to stand by our customers, staff and communities during these trying times to help them deal with the ramifications and alleviate the burdens. We are facing the challenges of the pandemic with solid capital adequacy, high liquidity and an unwavering commitment to invest in our digital transformation journey.”
Kuwait Finance House
One of the largest Islamic institutions in the world, Kuwait Finance House (KFH) had a solid financial year in 2019, growing its assets by 9.1% and its net profits by 10.4%. In a region sometimes described as lagging in financial technology, it is determined to lead in this field and has made some inventive digital advances.
The bank created its first fully automated self-service e-branch, available 24/7, under the brand name KFH-Go, and now has 10 of them in high-traffic areas in Kuwait. In co-operation with Microsoft, it has launched a chatbot service which uses artificial intelligence (AI). Among other applications, it can complete consumer finance transactions, reducing the turnaround time from one hour to 10 minutes.
The bank has upgraded a centralised Swift network system for global payments at the group level. It has also introduced a fast cross-border transfer service, KFH Xpress, and an instant remittance service using the blockchain-based network, RippleNet.
Smartphone-based Skiplino is a new system that helps customers avoid queues by finding the least busy branches and booking appointments. It is the only one of its kind in Kuwait, according to the bank. Also unique is a mobile cheque deposit service, developed with ProgressSoft. Customers simply upload photographs of both sides of the original cheque and the funds are deposited in their account via the KFH Online app.
Abdulwahab Al-Roshood, KFH’s acting group CEO, acknowledges that Covid-19 is changing customer behaviour. “The pandemic has accelerated KFH’s strategy of digital transformation in terms of providing high-quality mobile banking services without interruption and focusing on health and safety,” he says.
“The bank is working on minimising manual work to near zero,” continues Mr Al-Roshood. “We want to move forward in our digital strategy to keep abreast of the latest developments in the banking industry. In addition, we are relying more on AI and robotics in all our business operations.”
Blom Bank
These have been harsh times for Lebanon and for its banks. Blom Bank, which has always stood out from the crowd, nonetheless managed to make some headway on the financial inclusion front and with technological innovation.
Last year, it became the first commercial bank to collaborate with the USAID-funded Livelihoods and Inclusive Finance Expansion (LIFE) on a new financial inclusion initiative. Called Bringing Peace of Mind to LIFE, it aims to bring unbanked and disadvantaged rural groups, particularly women, into the formal financial system.
As part of the initiative, Blom Bank introduced the Start Savings account. Accompanied by a free pre-paid card, the account has no minimum balance and offers a preferential interest rate starting at a low balance level. Monthly deposits can be made via the bank’s ATM network or OMT Lebanon, the country’s largest agent network.
The bank already offers its customers Blom Pay, available through the eBlom app, which allows the holder of any Blom Visa card to make quick, safe payments via an Android mobile phone. With the spread of digital banking spread, person-to-person payments were the obvious next step, but such automated real-time transfers were prohibited by the central bank.
Blom Bank led a successful industry-wide campaign to change the regulator’s stance and is now piloting a mobile app that offers cardless and cashless money transfer (push) and money request (pull) options.
The health crisis simply added to the country’s woes. “Not surprisingly, Covid-19 has disrupted our business, but the bank was able to adjust quickly its service delivery modes to ensure continuity,” says Saad Azhari, Blom Bank’s chairman and general manager. “It provided a safe on-site environment for our clients and employees to conduct business. It expanded and enriched its e-commerce services. And it waived late payment fees and granted loans at 0% interest rates.”
Bank Muscat
Bank Muscat believes that putting the customer at the centre of all it does is one of its strategic pillars, and it has a fully-fledged customer experience department. Customer-centricity is an essential part of its DNA, it says.
Last year, it implemented a new customer experience management framework and governance mechanism. It sought to identify customer ‘pain points’ and find solutions for them. A new feedback system showed satisfaction ratings improving year-on-year.
The bank upgraded its internet and mobile banking platforms at the end of 2019, providing a new omnichannel experience for customers. For convenience, they can now use the same user ID and password for both internet and mobile banking. Alongside more conventional features, both channels allow ‘Speed Transfers’ to India, Pakistan, Sri Lanka, Philippines and Bangladesh – more than one million expatriates from these countries work in Oman.
The internet bulk payments feature used by government and corporate customers for salary and vendor payments has been simplified and made more user-friendly. A new Personal Finance Module, integrated into both platforms, lets customers create a budget, track spending and get enhanced statements with more details.
Bank Muscat was the first to incorporate the Central Bank of Oman’s mobile payments system in its mobile banking platform. This promises interoperability and unified switching and clearing between different mobile banking systems, and opens the door to push and pull payments.
The bank has launched a range of near-field communication-enabled contactless cards – debit, credit and prepaid. The feature-rich ‘Just Tap’ prepaid card can be loaded via the digital channels or at a branch, and have proved popular with retail customers. Some are using it to give pocket money to their children, whose spending habits they may then track.
“Customer behaviour will be key to shaping our future strategies and plans,” says CEO Sheikh Waleed K Al Hashar. “We will continue to focus on strengthening business continuity plans and digitising our services with the best-in-class security standards.”
Qatar Islamic Bank
In 2019, Qatar Islamic Bank (QIB) set out on a bank-wide digital transformation programme to improve customer experience, modernise its offering and improve profitability. The benefits have included higher revenues, increased digital penetration, significant efficiency gains and a rise in customer satisfaction.
Customers can now bank with QIB 24/7 via the channel of choice, though this is increasingly the mobile app. Processes have been simplified and turnaround times reduced. It takes five minutes on average to open a new relationship with the bank, or to accept a financing offer and receive the money in one’s account.
With the introduction of advanced analytics, the bank can better understand behaviours and needs, and so can personalise what it offers to each customer. The hit ratio of marketing campaigns has increased by three to five times as a result.
The bank has introduced a completely new version of its online corporate banking platform, via both portal and mobile app. Features include user access control, account and beneficiary management, payments and transfer control and credit card management.
Retail banking has been upgraded with a new five-minute digital onboarding process that does not require a branch visit. QIB believes it is the world’s first Islamic bank to offer instant finance through an app. An instant credit card service has proved popular and more than half of QIB’s cards are now requested and approved digitally.
“Since the start of the pandemic, our priority has been the safety of our staff, our customers and the community in general,” says Bassel Gamal, group CEO of QIB. “As such, the most common need of our customers during these times is to be able to fulfil their banking needs remotely. Thanks to our recent investments in digital banking, our retail and corporate customers have been able to satisfy all their banking needs through their mobile apps and online.”
Riyad Bank
One of Riyad Bank’s strategic goals is to be Saudi Arabia’s number one bank by 2022. To help it get there, it has carried out the first major upgrade to its core banking system for more than a decade.
Key features of the upgrade included the use of services-based architecture, paving the way for more dynamic customer experience, and ease of access to real-time data. This in turn has provided better data analytics and allows the use of third-party tools, such as personal financial management and artificial intelligence.
The bank continued to expand the range of its retail services and products in 2019, growing both the number of retail customers and the volume of their transactions. It launched the Tasheel instant finance facility for customers needing urgent short-term finance, without the need to visit a branch, and is about to launch an updated version of its Hassad rewards programme.
Riyad Online now has an Easy Transfer app, to allow international express transfers to be made around the clock and from anywhere. To round out the offer of 24/7 banking, 20 self-service devices have been installed in branches around the country, with plans for an additional 80. The ATM fleet of more than 2500 devices, including 14 foreign exchange machines, is being modernised.
In corporate banking, Riyad Bank has launched its ‘Off-the-Shelf Lending Scheme’ for small and medium-sized enterprises (SMEs), which gives fast-track approval to credit applications for 14 different borrowing options, including working capital and capital expenditure.
The bank was able to increase its Tier 1 capital in 2019 by 10%. It grew its assets by 16% and its net profits by 32%. By year end the spot balance of loans was 62% above the average volume of loans during 2018, and by July 2020 the balance of loans to SMEs was 51% higher than the 2019 average.
Emirates NBD
The most significant strategic move in Emirates NBD’s recent history was its acquisition of Turkey’s DenizBank. Not only does this expand its geographical footprint but it also brings increased exposure to the agriculture and small and medium-sized enterprise (SME) sectors.
The 740-branch bank was bought from Russia’s Sberbank for $2.7bn. It is the fifth largest privately owned bank in Turkey with around 5% market share, and also has a presence in Austria, Germany, Russia and Bahrain. The deal expands Emirates NBD’s customer base by another 14 million accounts.
DenizBank is one of its region’s leaders in technologically advanced products, which should sit well with Emirates NBD’s own progress in this area. In 2019, the UAE institution became the first global bank to implement SAP’s Financial Services Data Platform. It believes this will help it to harness the power of data to drive its own continued customer-centricity.
Emirates NBD’s standalone digital bank Liv is the UAE’s fastest-growing online lifestyle bank, built by and for millennials. During 2019, it added some key features such as Liv.Sure, a mobile insurance product that is completely paper-free, from policy purchase to claims. It is available through Liv, as well as Olivia, the bank’s conversational artificial intelligence chatbot that answers queries and provides customers with account information.
Liv also issued a first-of-a-kind credit card, which allows customers to create their own unique card based on their preferences. Most notably, they can choose how they wish to receive rewards, whether as cashback, air miles or loyalty points.
The DenizBank acquisition helped Emirates NBD to become the third largest bank by assets in the Gulf Co-operation Council region. It was also the region’s second most profitable bank in 2019, when it was able to deliver a robust financial performance. The bank grew its Tier 1 capital by 34% in the course of the year, while increasing its assets by 37% and its net profits by a convincing 44%.
