36 minute read
Neo Horizons
A powerful panel of senior banking executive and regulators came together for a roundtable, convened to discuss the growth of Neo Banking across the region. Hosted by Mambu, in partnership with MEA Finance, and covering key themes including culture, payments, technology and the cloud, as well as regulation, the lively and enthusiastic debate covered the rise of these new institutions as well as the numerous factors involved in bringing them into the world
On the 6th of October this year, Mambu and MEA Finance hosted a group of senior banking executives and regulators, who came together to debate the growing role of neo banking in the Middle East in a roundtable discussion, entitled “Riding the Neo Banking Wave
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in the Middle East”.
Germany-based Mambu is a software as a service (SaaS) cloud banking platform that supports fintech startups, and top tier banks to advance their financial experiences across a range of domains from personal lending, business lending, mortgages, trade finance, digital wallets and currents accounts. The company has more than 200 customers in over 45 countries and counts many diverse banks such as German neobank N26, British SMEs bank OakNorth, British challenger bank Tandem Bank, South Africa digital bank TymeBank, Dutch bank ABN AMRO and League Data among its clients.
Digital transformation has been a key battleground for banks in regional countries such as the UAE, Bahrain, Saudi Arabia and Israel—a competition that was intensified by the pandemic. Industry
experts who attended the roundtable agreed that it is important for financial institutions to understand that they can adapt to the swiftly changing banking landscape.
One of the key highlights from the Mambu and MEAFinance Roundtable is that adopting a digital-first approach creates an opportunity for financial institutions to launch new brands while leveraging the integrity and strength of an incumbent bank to gain a powerful competitive edge over emerging fintechs. Circumstances are also forcing the situation with pressure from customers and regulations such as the European Union’s revised Payment Services Directive (PSD2) pressuring banks across Europe, the Middle East and Africa (EMEA) into digitisation.
The health crisis created significant challenges for all industries, but it also presented an opportunity for the global financial service sector to accelerate and strengthen the digitalization of complex processes and end-to-end customer journeys across the front, middle and back offices, a trend that was already in full throttle across the region.
The discussion was led by Miljan Stamenkovic, General Manager, MENA at Mambu who stressed that neobanks or challenger banks are here to stay because “maintaining the status quo is just not enough in the current operating environment in which the economic impact of the pandemic is still pressuring the bottom line of banks coupled with the changes in the regulatory landscape.”
Stamenkovic was being supported by guest speaker Neale Croutear-Foy, CTO, Digital Banking, APEX Group, who also highlighted that his organisation managed to create a fully digitized banking solution with full digital banking capabilities and onboarding from scratch over the last 16 months using Mambu as its core banking solution.
The roundtable was an opportunity for bankers and regulators in attendance to give their perspective on neo banking and how regional financial institutions can enhance banking with a particular interest in the growth prospects in the region, augmenting user experience (UX) and personalization of products as well as adapting and linking them using cloud Application programming interfaces (APIs).
CULTURE EATS STRATEGY FOR BREAKFAST
– Sonny Zulu Managing Director, Retail Banking, Standard Chartered Bank UAE
The rise of neo banks
Digital transformation in the financial services sector is swiftly changing the field of play where incumbent banks are facing increasing competition from nontraditional entrants who are latching on to customer experience as their point of sale. For several banks in the Middle East, business is no longer about the products and services on offer but about enhancing user experience. Indeed, coming from KPMG, “Digital transformation is no longer a luxury, but a necessity. Banks that are agile, flexible, and willing to transform their business models will be the ones that succeed, and secure their financial strength for future growth,”
Amit Malhotra, General Manager, Personal Banking Group, Commercial Bank of Dubai, provided an analogy of a speedboat, representing a neo-bank, and a bigger ship, the legacy bank. He said that in 2016 the Dubai-based lender launched a digital bank called CBD Now and the bank management, “adopted a strategy of building the speedboat while keeping a bigger ship floating. The bank soon realized that the speedboat was appealing, the speedboat is very good, but it did not have the capacity required. So, we fitted the engine of the speedboat on the bigger ship, and we started converting our bigger ship to become closer to a speedboat, but with the capacity to carry the passengers and the journey over the last two and half years for us has been a combination the two,” he concluded.
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Mashreq Bank and Emirates NBD launched digital-exclusive banks for SMEs, NeoBiz and E20 respectively, in September 2019. The unveiling of digital banks for SMEs came exactly two years after both Mashreq Bank and NBD had launched Mashreq Neo and Liv., lifestyle digital-only banks that seek to meet the banking needs of millennials. The country’s first independent digital banking platform, YAP, started operations in August 2021 and it is powered by RAK Bank. Abu Dhabi sovereign wealth fund ADQ is also considering setting up a digital bank using a legacy banking license of First Abu Dhabi Bank, reflecting the
UAE’s positive regulatory underpinning for the starting and operations of neo-banks.
While giving an example of his experience at Singapore’s DBS, Olivier Crespin, co-founder & CEO of Zand, said that when a financial institution builds a digital bank on top of its existing legacy bank, it usually works better in an operating environment where the bank does not have a significant physical presence or in a new market where you are bringing in the new experience.
In Bahrain, Bank ABC launched ‘ila Bank’ in 2019 – an AI-powered and data analytics digital-exclusive bank. ila Bank is expected to launch its services in Jordan this year before it expands into Egypt, and it also started offering credit cards and loans to Bahraini customers in March.
Saudi Arabia’s cabinet also gave the Gulf state’s finance ministry green light to issue licenses for the country’s first digital banks in June 2021. stc pay (stc Bank) will be converted into a digital bank with a capital of $667 million, while the Abdul Rahman bin Saad Al-Rashed and sons’ company-led consortium will set up another digital bank (Saudi Digital Bank) with a capital base of $400 million.
There is also a new crop of non-bank fintech start-ups called neobanks that have emerged in response to a new, digital era and to address the pain points related to the financial services market of yesteryear. Crespin also noted that when an organisation plans to build a neobank from scratch, there is a need to find people with the right culture to strike a balance and this includes bringing on board bankers to protect the DNA of banking, risk managers, financial expertise as well as compliance professionals.
Zand, the UAE’s first Shari’ah-compliant neobank is expected to open its doors for business soon. Israel’s first new bank since 1978, First Digital Bank, started
WHETHER IT’S A FINTECH LAUNCHING A NEOBANK OR TRADITIONAL BANK ESTABLISHING A FULL SPIN-OFF DIGITAL BANK IT ALL GOES DOWN TO CHOOSING THE RIGHT PEOPLE WHO, FROM THE GET-GO WORK BETTER TOGETHER
– Stefan Kimmel Chief Operating Officer, Commercial Bank of Dubai
operations on a trial basis in March 2021 with plans to open to the public in the last quarter of this year.
Stamenkovic said that neobanks are just like small to medium enterprises (SMEs) projects, “some of them will succeed, obviously, and we have some great examples, but some will fail, and particularly, those that don’t get their business model, right.”
He highlighted that when it comes to neobanks or challenger banks it’s not only about attracting the right audience or expanding your market share, but it’s also about the business model, “how you want to create those holistic experiences, how you get that sturdiness across your
product and service portfolio,” while giving an example of N26—which has more than seven million users globally.
Growth prospects
The emergence of new technologies is offering the financial services sector a window to be more innovative and provide more efficient service delivery. While it’s important for legacy banks to build digital banks using their existing businesses or fintech start-ups to launch neobanks— having the right culture to create a new digital-exclusive bank business that meets customers’ evolving demands and expectations effectively.
Daniel Robinson, Head of Wealth & Personal Banking, HSBC UAE highlighted the importance of both internal and external culture transformation while noting that recent studies show that the majority of customers still have the bricks-and-mortar banking mindset. Robinson said that he agrees with other bankers at the roundtable that there is a need for internal culture transformation when approaching digital banking but also noted that financial institutions need to help professionals who talk to clients every day such as wealth advisors and
asset managers to assist their clients to adopt the digital mindset too.
Stamenkovic echoed the same sentiments saying Mambu is currently working with more than 200 established financial service providers ranging from established banks, fintechs and neo banks, and one reason which these partnerships work is “culture”.
Whilst on culture, Sonny Zulu, Managing Director, Head – Consumer, Private and Business Banking - UAE, Standard Chartered Bank, said that when you look at culture, one is external, the other one is internal.
Zulu said that the culture in the banking sector differs by country and region, by different demographics and in other categories, and understanding culture could be a major influence that a financial institution can possess as a player in the market. Understanding culture also helps banks to customize their services and products to enhance the customer experience as well as customers’ digital journey.
“When it comes to internal culture, that is within our control. And as we probably all know, culture eats strategy for breakfast! If you have got a culture wrong, it’s just
not going to work,” said Zulu. One aspect of internal culture that Zulu addressed is that around the innovation that has been built in a financial institution, how ideas are taken up? How do you develop them? How do you take them through up to the end, and ensure that people do not reach a point where they just give up?
Stefan Kimmel, Chief Operating Officer, Commercial Bank of Dubai weighed in saying that whether it’s a fintech launching a neobank or traditional bank establishing a full
spin-off digital bank it all goes down to choosing the right people who, “from the get-go work better together.” A financial institution always has a set of seasoned bankers who are openminded and are digitally minded to start the digitalisation process making the transition a lot easier because “technology can solve everything as long as you get a clear vision on what product and services you want to drive.”
“The real challenge that we have is trying to change the mindset of the people that we have inside every single day,” said Devid Jegerson, EVP Head of Customer Experience, National Bank of Fujairah. “And when you’re thinking in the curve of the adoption of something that is changing, you have always had a latent kind of thing, but if they’re not feeling confident, they will not embrace the change,” said Jegerson.
According to Jegerson banking is necessary but banks are not banking. “Talking about the culture, we’ve talked about the culture of the employees, but also with traditional banks, there is a big issue about the culture of the people at the top, how you can convince the people at the top that this is not the way to do business going forward?” said Mohamad El-Khalil, Director and Head of Banking Supervision, DFSA.
El-Khalil noted that financial services providers are facing challenges of the “culture of the people at the top” from regulators, internal auditors, risk managers and external auditors— “all these people still have the culture of how traditional banks operates so how can we make these people think differently, and that’s a big challenge.”
Crespin also noted that the key issue for many incumbent banks is legacy, “but given the way technology is transforming the financial services sector, you better don’t leave a legacy.” For traditional banks, the transition from a legacy system—which is the core of their business—is almost impossible, he added.
Meanwhile, for neo banks, from the onset they do not have a legacy but later along the way the legacy will come to existence, Crespin said while adding that challenger banks need to set up the phase three guiding principles that you need to reinforce all the time which includes keeping the core as light as possible, work with fintech and solutions providers—a major challenge with most banks and finally leverage the cloud— which gives scalability and the muchneeded computing power.
While reflecting on the challenges that financial institutions are facing in their digital transformation journey, El-Khalil said, “the challenge is how to create an agile organization, whether this is an existing or what we call a traditional bank, or a neobank.”
Payments
Globally, payments remain one of the best performing financial services products but unfortunately for banks— traditionally the main providers of payments services—this momentum is no longer extending to most of them especially under the current operating conditions.
Challenger banks typically use a different business model than incumbent banking institutions. These digitalexclusive banks receive most of their revenue from interchange, the fees paid by merchants when customers make purchases using their debit cards.
Salim Awan, Managing Director, Institutional Payments Solutions, Magnati highlighted that it is the consumer who is shaping the future of banking while adding that the most
important element that is advancing digital transformation within the financial service sector is “payments”.
Customer demands and competition, backed by digital technology and innovation means that the payments sector is the fastest evolving area of financial services.
The growth in the payments sector in the Middle East is also being accelerated by several factors such as the shift towards e-commerce, by both customers and businesses, following the outbreak of COVID-19 as well as by banks’ quest to meet customer expectations and cut back operational risk.
Awan said that payments are one area where there is a lot that needs to be done as he cautioned that digital banks that are not addressing the payment element of the aftermarket, “probably are missing the whole story and the whole piece.” The fact that payments represent the most frequent touchpoints between banks and their customers makes investment in the sector more important than ever.
New technologies and changing customer needs are purveying financial institutions information that provide a chance to innovate and become more
– Mohamad El-Khalil Director and Head of Banking Supervision, DFSA
efficient when providng services. There are hundreds of fintechs offering hundreds of value-added services to financial services providers and as the payments market is evolving, positive customer experience will be what really makes a bank standout from the competition.
Saad Ansari, Chief Executive Officer, Xpence, said that one of the biggest challenges being faced by fintechs is forging a working relationship with the incumbent banks, particularly in the UAE. Ansari said that the way payments services providers look at themselves is that they’re trying to solve a problem for business owners. “If you take some of the world’s leading digital banks such as Revolut and Monzo, they all started as prepaid cards, they took a traditional product, and they emulated an entire banking experience on top of it,” said Ansari.
Customer experience
The three trends that are underscoring banks’ urgent need to embrace digital: are strong customer adoption, increasingly multichannel consumer decision journey and customers’ openness to purely digital propositions. Magnati’s Awan said that it is evident that it is the consumer who is driving the evolution in the financial services sector as far as the market is concerned. “It’s not primarily the institutions which will decide how the consumer will do banking in future,” Salim added.
Before the outbreak of coronavirus accelerated the change to digital, making it the leading factory when choosing a bank, the Middle East financial service sector was already seeing a dramatic shift in channel preferences from people of all age groups and demographics towards digital.
Post the pandemic, digital banking champions are those banks who are (will) successfully offer a wide range of functionalities that meet their customer’s expectations, providing an intuitive user experience.
While giving an example based on his experience at TymeBank, Robert Webb, SVP, Core Customer Technology, First Abu Dhabi Bank said that looking at the SME market around digital banking, particularly in the underserved and the emerging markets, “the sector will be naturally led by customers, it would have to be given the amount of friction it takes to get into the SME line.”
El-Khalil said that the changes that are happening in the financial services sector are being driven by both the clients who are looking for a convenient way to use banking services and banks who are looking for ways to do business at a lower cost.
Customer insight plays a critical role in product development and customer communication in the banking sector. Gaining insights into customers’ preferences remains on top of every management’s priority list as the preference for banking products have become more diverse. McKinsey said, “Understanding what leads to a superior customer experience also enables banks to make thoughtful and efficient trade-offs.”
Manzar Zaidi, Senior Account Executive, MENA, Mambu, said that customer lifestyle banking is the future while adding that whether it’s a neobank or traditional bank, “I think all of those banks that are tracking or can be where the customer is along their lifestyle are the ones that are going to be successful.”
“Meanwhile a lot of the structured and unstructured data that is required by financial services providers to make some actionable insights are required to be able to get them from the cloud, for example,” Zaidi added.
“Customer insights, say through call center demand analytics, should feed into banks’ plans to help them increase response times and better serve customers,” says EY.
The Cloud
IBM, a leading cloud-based services provider, has said that beyond cost reduction and scalability, speed to market is perceived as the major benefit by the cloud users. As the demands from digitally savvy corporate and consumer customers increase amid competition and increased regulation, financial services providers are being forced to fundamentally calibrate their operating and business models.
Asked by Stamenkovic about the state of cloud enablement in the region, Bhaskar Dasgupta, Head of Markets, Digital Assets & Institutions, VC/FinTech, ADGM, said that “in this day and age, if you’re still debating whether or not you should be in a cloud, it’s not the right place.” He highlighted that regulators are not much concerned about technological development rather they are concerned about how companies are managing that technology.
The cloud is an enabler of advanced analytics in banks as these computer system resources provide space to both store and analyse large quantities of data in a scalable way, including through easy connectivity to mobile applications used by customers.
El-Khalil said that from a regulatory point of view, technology advances institutional work. He said that regulators are accessing how they can have realtime access and full-time access to a balance sheet of the bank that is under the supervision or operating within a certain jurisdiction.
However, at the same time, El-Khalil noted that technology brings with it a lot of problems. “I think the question is not if
something goes wrong, but it is when it will go wrong? And how we are prepared to deal with the situation when something goes wrong?” Globally, financial institutions are finding themselves a step behind as their existing approaches to combat cyberattacks cannot adequately handle the several threats and burdens, they encounter. Hence leaders in the region’s financial service sector should constantly change their operating models to obtain a holistic view of the evolving landscape of financial crime.
While giving an example of one of “the most rigorous data protection regimes” in wider region that was rolled out by the ADGM, Dasgupta said, “You can just imagine the shock and horror on the faces of CEOs of software solutions companies or the firms that are regulated by the Abu Dhabi international financial center.”
Cloud solution providers offer financial institutions an opportunity to synchronize their enterprise; break down operational and data silos across risk, finance, regulatory, customer support, and more. Office signed an agreement with Amazon’s cloud service unit to establish three data centers in the UAE in the first half of 2022.
“In terms of the cloud providers, Abu Dhabi just signed a deal with Amazon Web Services and we do encourage more provision. But as far as I’m concerned, you got to be on the cloud, it makes you much nimbler,” he added.
Saudi Arabia is also fully investing in the development of its financial services sector as part of the Gulf state’s economic transformation program under its Vision 2030. Last December, Saudi Arabia’s stc Group said that it will invest $500 million in its cloud services in partnership with eWTP Arabia Capital and Alibaba Cloud while Saudi Aramco also joined forces with Google Cloud Services to supply cloud solutions and services.
Dasgupta said that after the global financial crisis and anti-money launderingrelated (AML) issues, “regulators do have a responsibility of admitting that we did encumber with a large incrustation of
– Saad Ansari Chief Executive Officer, Xpence
The cloud offers a dynamic platform to develop, trial and offer innovative services—driving operating and business model transformation.
As part of Abu Dhabi’s broader efforts to attract investments that build technology capabilities and accelerate innovation, the Abu Dhabi Investment
rules, regulations, etc onto the banks.” He noted that from a regulatory perspective, “we found ourselves also as a start-up regulator, in another interesting situation that we decided we have to start leading the market as well in the way that recognizing that we had put more regulations on banks, but it also then becomes incumbent on us to encourage our banks and firms to be sort of forward-looking.”
Dasgupta also highlighted that several regional firms are going through the ADGM RegLab, adding, “we are seeing some very, very interesting propositions.”
Viji Varghese, SVP, Head of Global Payments and Clearing, Mashreq posed a question asking why is it a challenge for vendors to find your solution? Croutear-Foy said, “if you think about core vendors, what they do, they serve as a mass-market to an extent where they will service the core flow in like any way you try and develop and evolve your processes.”
Vendors always go for the core of their distribution curve and tail ends because they are looking at dealing with the maximum efficiency, Croutear-Foy said while adding, “So they are looking for the bigger problems. And there absolutely will be unique solutions, unique services that are required, even in the Middle East region.”
Big data, machine learning (ML), and cloud computing can play a big role in helping banks to understand their customers more and be in a position to make business decisions in real-time including learning about a customer’s spending habits as well as enhancing the agility of financial institutions.
The Mambu and MEA Finance Roundtable was attended by representatives from several financial institutions and regulators including
FOR TRADITIONAL BANKS, THE TRANSITION FROM A LEGACY SYSTEM, WHICH IS THE CORE OF THEIR BUSINESS, IS ALMOST IMPOSSIBLE
– Olivier Crespin co-founder & CEO of Zand
Miljan Stamenkovic and Manzar Zaidi from Mambu, Neale Croutear-Foy from APEX Group, Sonny Zulu, from Standard Chartered Bank, Amit Malhotra and Stefan Kimmel from Commercial Bank of Dubai, Olivier Crespin from Zand, Saad Ansari from Xpence, Daniel Robinson from HSBC, Viji Varghese from Mashreq, Devid Jegerson, from National Bank of Fujairah, Salim Awan from Magnati, Robert Webb from First
Abu Dhabi Bank, Mohamad El-Khalil
from DFSA and Bhaskar Dasgupta from ADGM.
Our thanks to all panellists and to Mambu for making this an enjoyable and memorable occasion.
Al Muzaini Exchange, Leading from the Start
Hugh Fernandes General Manager, Al Muzaini Exchange Co. K.S.C.C.
Al Muzaini Exchange Co. was first incorporated in 1942, now with more than 117 locations in operation and 2 million customers. Throughout this time, it has continually been providing customers dedicated and top-quality services. Al Muzaini Exchange offers a host of remittance services to customers which include retail transactions, cash currencies and corporate transaction at the best rates and unmatchable service. Through the company’s state of the art technologies, adherence to quality benchmarks, secure processes and customer-oriented services, Al Muzaini strives to enrich customer experience. This includes Al Muzaini’s online application, which provides a platform for customers to conduct their transactions with ease and security, from anywhere, anytime.
Al Muzaini has a multinational team able to cater to you in your native language. This enables not only to ensure a pleasant customer experience, but to also avoid communication challenges. The company is run by teams of highly experienced staff, who bring with them unique expertise and knowledge gained from their banking track records. The team is service-oriented and undertake regular training to remain abreast of the latest developments in the industry. Al Muzaini focus is to offer impeccable service to customers, making transactions as quick and effortless as possible. The company uses the latest technologies for secure and quick transactions.
Al Muzaini’s vision is to make financial services accessible to all. Along with its Strong Network across Kuwait, Al Muzaini’s Digital Payment platform, available in App Store, Google Play & App Gallery, provides a secure and simplified one-stop financial solution to its customers. It offers unique features, the only financial exchange company in Kuwait that uses the video chat feature for new registrations, which what makes Al Muzaini stay ahead of its competitors. Hugh Fernandes, General Manager, said: “We are extremely honored to have received awards from such reputable publications. These recognitions strengthen our commitment of exceeding customer expectations with the development of new processes and systems. We aim to stay ahead in our industry, and to create sustainable relationships with our customers through detailed strategies and high standards.” Al Muzaini reinforces its commitment to bringing its clients the best services every time, and establishing solid relationships based on deep-rooted, socio-economic values. Closing in on 80 years of service, the company operated
including registering new customers, adding beneficiaries, setting rate alerts and trends, and reviewing transaction history. The application also allows Western Union transfers, creating widgets to track rate fluctuations, for easier access, and live video chats for new customer onboarding and reaching Al Muzaini agents for better quality services, all without visiting a branch. Al Muzaini is with three main values: quality service, strategically designed processes, and a customer-centric approach. The company converts every challenge into an opportunity to grow, and utilizes its 79 years of operational experience in Kuwait to the advantage of more than two million customers.
For more information about Al Muzaini Exchange, visit www.muzaini.com/
Olivier Crespin Chief Executive Officer, Zand
Together in Strength
Olivier Crespin Chief Executive Officer of Zand, sat down with MEA Finance and explained the thinking behind their name and logo, what led him to open a new digital bank in the UAE and how digital can grow into corporate banking
What is the story behind the name Zand and the meaning of your enigmatic logo?
That’s a great question. I really believe that branding is very important. We wanted this brand to represent what we stand for and what we want to represent. Zand is a contraction between sand - and I will explain why sand later - and strength in Arabic, which is “zend”. We wanted strong sand. So, we called it Zand. Why was this? Because obviously here in this country you have a lot of sand, but when you look at any particle of sand, they are all unique and beautiful. To us that represents our customers; they are all unique and beautiful. It also represents our partners with whom we are working with, and it represents the employees as well.
And what is so unique about these particles of sand? It is that when you bring them together, you start creating a community, you start creating an ecosystem. You can build cities, you can build bridges. You imagine a dune, it just keeps moving, and it can never stop. So, bringing that all together represents really what we want to do. We want to bring ecosystems together, we want to bring different people with different skills together to address different needs. And you look at our logo which is, as you mentioned, an enigmatic logo. You end up with an orb that is not complete, because we will be always evolving. This is our brand, and what we stand for is to be always evolving. Another very important point on this is that sand is silicon, and so is digital. And when you read Zand backwards, DNAZ, which means that what is part of us, is a newer generation of company, very modern and advanced. Obviously, as well, with sand, you have the cloud of sand, which is also a reference to digital and new technology.
I worked on this with Phillip Stark, who in fact happens to be a friend of mine, and when I got the opportunity to start the bank here, I gave him a call. I said: “Look, I would like you to help me define a name, or logo, and from where everything is going to flow. How we engage with our customers, how we look like, our products.” We have a lot of products around ecosystem-linked financing because it’s always building. It is the way we build the organization as well because we didn’t build everything ourselves, we are partnering with fintech startups who are complementing the offering we provide. And I think that when we summarize this logo, and what I mentioned about bringing unique skills
together, or people together working in an ecosystem, being digital, having the cloud, being modern, it is really our mission statement in a very visual way. So, that is how we can explain what our logo comes from, or where our brand comes from, and obviously it is very important to be able to explain it to the people who work here, and people we want to engage with.
Why were you motivated to build a digital bank, and why launch in the UAE?
Why I was in fact, motivated is because I think it’s pretty much a once-in-a-lifetime opportunity to be able to build a bank from scratch like this. I have been working in banks previously, but it was always on top of an existing bank, in India, Indonesia and Vietnam, and here I was with a white page of paper, a blank page.
So, what was the advantage of this? The advantage of having a white page of paper is that you don’t have legacy. When we say legacy, it’s not only technology company versus traditional banking, because people always think that legacy is an issue, but it’s more the mindset; legacy that you can really change. Another aspect is that you can redefine processes, customer experience, journeys, policies and really have a chance at building something totally new. The second reason why I think this is a great place to build a digital bank, in the UAE, is because we have a very strong ecosystem around us. We have
strong shareholders as well who are helping us a lot. And you know, when you build a digital bank, it’s very important to be able to link to different ecosystems, and have a great digital environment. And even at the government level, I think the infrastructure we are getting is so amazing, and they give a lot of capabilities and open a lot of opportunities to build something pretty unique.
The third aspect is, we can get a bank license here. I think sometimes people ask why licence another bank when there are already a lot of banks here. I think it’s primarily because the UAE has a very aggressive digital agenda and understand that to be able to support digital transformation, and to keep supporting the digital transformation of the UAE and become one of the most digital countries in the world, you need a native digital bank built on new technology, built around data that will be able to connect to the digital players that we have here like
the e-commerce companies or the ridehailing companies.
Not only this, but it is also traditional banks, or corporate organizations who are also transforming themselves. So, it’s very common that you go to a traditional corporation and you’re going to meet people who join them from Amazon or the latest technology companies, because they are also transforming themselves. So, that is the first aspect, to go direct and support that transformation, but also to push other more traditional banks, to maybe transform even faster. If you have a digital bank in your country, then the thinking is that the others need to transform as well.
The fourth aspect is that to be able to have the opportunity to hire the right people, because a digital bank is about combining two DNAs: the DNA of banking, around risk management, financial expertise, compliance with regulation. So, for that, you don’t want to compromise and you need to bring people who have banking experience, particularly around compliance, business and legal areas and risk. People who are obviously coming from traditional banking but who are ready to change. And we need to combine with people who are coming from and with the DNA of digital, which is based around customercentricity, leverage of analytics and use of different technologies. So, for that we have been able to find a lot of talent in this area as well, which is a good reason to build something like this here.
The next aspect is, as I mentioned previously, being able to create a brand. Because we started from scratch (and it’s not often that you’re thinking about your brand before you even start your business) and the business has been built around the brand.
And the last aspect is the location of the UAE, is the way which it connects easily with Asia, Africa, Europe, and even the US and Latin America. I think it’s really at a central location and you can pretty much take the best of all worlds always and be able to establish these want to extend digital further. And at DBS, it was key because I got the opportunity, after a few years working as a banker in DBS, to start the digibank initiative for DBS. That was in 2013 or 2014, and it was a turning point in my career, and I would say a turn for the best because it gave me the opportunity to be able to put in place what I’ve learned across Citi and DBS in those days and be able to bring new technologies and a new look into what a bank can do. It was an amazing opportunity. So, it was a helpful synthesis I guess, all this learning from DBS and Citi.
What are the biggest opportunities and challenges facing digital banks in the region?
I would say the opportunities are enormous because there is really a need, both at the retail level and at the corporate level. At the retail level, when we look at opportunity, we look at what are the jobs to be done. And I think the job to be done is around making sure that things are simpler, immediate, instantaneous and easy for clients. That’s the first area you need to address.
connections. So, that’s the key reason to build a digital bank here in UAE.
Did time spent at Citi and DBS influence your vision for Zand?
Definitely, yes. I spent a lot of time in Citibank, and when there I had the opportunity to work across many different countries and across all types of business from retail, corporate, brokerage, front, middle and back. So, it was fantastic training toward understanding what can be done if you
People don’t want to spend time waiting to open an account, or hold when they are dealing with a call center.
Secondly, people want to be recognized, and I think that is an unmet need by banks. You know, often you will have a saving account with a bank, but the day you want a mortgage, they’re going to ask you again where you work, what you do, etc., and they will rarely call you by your name.
The third aspect is to be able to bring the client the best products that are almost made just for them, and we solve this with our analytics tool, and what we’re able to do, because our costs are lower than a traditional bank, we will be able to bring some of our best offers to clients.
And the last point is, obviously, at the same time, because we have a bank license, we should be able to give peace of mind to people. So, this will allow you, on the retail side, to start getting embedded with the bank, with us being very present with people, but almost invisible because we’ll be there when you need us. So, on the retail side, we should be able to help people achieve their lifetime goals and we should be there to help people in their day-to-day lives. That’s what we can do in retail.
On the corporate or commercial bank side, I think, because we are going to leverage a very strong data analytics platform, we should be able to better understand the needs and the ecosystem in which the respective SME businesses are participating. If we understand these two points, we will be able to be very precise on the product offer rate we should be able to give them, because we will understand the risks better than other banks. So that is why we have a business area, because there is definitely a very strong need to provide financing for SMEs in the UAE market.
And so, for both retail and corporate, what are the risks, opportunities and challenges? The challenge; I would say is that there are so many things to be done that the key challenge is to keep focus on how we are going to be able to keep delivering great services. And keeping focus means not going into products that cannot be digitalized, because then we are going to end up being distracted from our core. So, we will focus on products that can be digitalized. So, for example, mortgages cannot be digitalized for the time being, so we are not going to provide mortgages. But the day we can tokenize a mortgage, we will go into it. So, focus is a challenge.
And also, the second aspect is how we can optimize our capital as well. We have two kinds of products; interest products, loans and also have a fee income kind of products. So, we move into some fee products as well.
How do you think digital banking can grow into corporate banking and help to improve it?
So, there are a lot of opportunities for a corporate bank. First, I would say that it’s very important to understand that from day-one we have not created silos between retail and corporate. You know, in traditional banks you have a corporate management P&L, and you have a retail P&L. That limits you in what you can offer to clients, because very often even your retail clients are employees of corporates. So, you can really engage in a different way if you understand this. We have a holistic approach around corporate and retail. And I think another area we can always transform, is what I mentioned in the beginning, the ecosystem. The ecosystem is how we are going to engage and a lot of services we are going to provide are going to be linked to this ecosystem so, we call it ecosystem-linked financing to support the corporates. And the same on the retail side. We will engage with customers whatever digital services they are using, because we are there to provide the financial pipes, if you will. So, you can imagine, you will have an ecommerce focusing on dealing with the client, and we can facilitate the financial transactions of this client.
Where will Zand be in five years from now?
Zand, in five years from now will have a great position in the UAE. We will help to support the digital transformation of the country. We’ll leverage the best technology available in this market. We will be critical in supporting some trade activities between countries and we would have expanded, either directly or through white-labeling or franchising in other countries where there is need, and where we can give support to UAE corporates and companies.
