Embracing change in the Middle East

Efma feature

14 March 2019

Syed Zubair Ali and Raheel Vakeel of Efma outline various ways in which Middle Eastern banks are adapting to change.


The global financial services industry is in the midst of great change in its value proposition, strategy and offerings, driven by the need for better customer experiences and the entrance of non-banking players. Banks in the Middle East are not shying away from the challenge – they are coming up with unique solutions, using new technologies and offering personalized products and services to cater to their customers’ needs.

Banks in the region are transforming themselves to emerge as fully-digital entities. They are creating innovation labs where they test new technologies and develop new and innovative products for their customers. They are focused on partnering with fintechs and other non-banking institutions to come up with new propositions for their clients. And they are inspiring individuals within their organizations to develop their skills and become up-to-date with newer technologies, aligned with the bank’s path towards successful transformation and satisfied clients.

Innovating to improve the customer experience

Banks are testing new technologies and seeing how they can be utilized to improve their products and services. A few key markets in the Middle East stand out in adopting this change, including UAE, Saudi Arabia, Bahrain, Kuwait and Qatar. Banks all over the region are setting up innovation labs to up their game and walk hand-in-hand with other regions.

In 2018, Commercial Bank of Dubai launched CBD Lab. This will help the bank provide an exceptional customer experience through collaboration with fintech start-ups to leverage emerging technology.

Similarly, Commercial Bank (Qatar) launched Chamber of Innovation, which strips away the corporate, formal idea-sharing and planning initiatives and instead encourages millennials to use their entrepreneurial and innovative skills to pitch in ideas or initiatives.

Another example is the Innovation Lab set up by Bahrain Islamic Bank (BiSB). It is a dedicated space that will allow the bank to explore new and improved banking products by testing them before they are deployed in the market. Banks are catering to the needs of their customers and striving to be agile and innovative at the same time. The Middle East market shows a great deal of potential, with institutions exploring multiple different areas of potential and developing inspirational initiatives that are bearing fruit.

Al-Rajhi Bank in Saudi Arabia completed the first cross-border transaction using blockchain technology. Riyad Bank, another major institution in the Saudi market, launched ‘Riyad’, a robot that interacts with customers and responds to enquiries, providing them with information about products and services offered by the bank. Similarly, Jordan Ahli Bank launched the ‘ahli bot’ chatbot service in Jordan, and one of the major players in the Kuwaiti market, Kuwait Finance House, rolled out a wide range of innovative digital banking services, including ‘KFH go’, the first fully-automated 24/7 e-branch with an advanced and wide range of technical devices and self-service tools. The e-branch provides more than 30 services, representing about 80 percent of the services offered by the traditional branch.

Redesigning branches

Traditional branches need to be transformed otherwise they will become obsolete. Banks are seeking to offer the same agile solutions for customers who prefer to visit branches as those who do day-to-day banking online. Banks are working aggressively on improving their branch experience by introducing robo-advisory and state-of-the-art teller machines which cater for all banking needs without human intervention.

Following successful branch transformation models from countries like the UAE and Saudi Arabia, National Bank of Egypt is set to launch five new digital branches in Egypt. Similarly, two banks from neighboring country Lebanon have also introduced digital branches: Byblos Bank launched its first Satellite Branch in 2018, in Beirut, offering teller-less banking; and Banque Libano-Française has implemented a new e-branch concept in Mar Mikhaël, aimed at offering an optimized digital banking experience to clients and visitors to the area.

Empowering the workforce

Banks understand that to drive a successful digital transformation they need technology but, above all, the organization needs to develop a culture of innovation. This requires a common understanding of how technologies work. Banks are now encouraging staff across all departments to take inhouse and external training. Some banks are even coming up with innovative ideas to make sure that the whole institution is on the same page.

For example, Alawwal Bank from Saudi Arabia is offering AI training for all staff to ensure a culture of innovation. Similarly, Blom Bank from Lebanon has introduced The Blom Retail Quiz Night, a competition between branch employees to test their knowledge of retail banking products and services in a fun and interactive manner. It not only keeps the workforce updated on the latest products and services, but also motivates them in an entertaining and engaging manner, reinforcing a team spirit.

National Bank of Oman hosts an annual event, Ibtikar, an internal innovation day that encourages employees to develop creative solutions that add value and create superior customer experiences.

Partnering with fintechs

Collaboration between banks and other nonbanking institutions is needed to achieve complete transformation. Regulators in different markets are adopting a framework for fintech firms to operate within and making exemptions to encourage collaboration between institutions.

Some key players in the market are already leveraging this opportunity to experiment. Emirates NBD’s digital lifestyle bank for millennials – Liv. – has signed a long-term innovation services deal with Australian payments fintech Verrency, enabling payments innovation for one of the pioneering digital banks in the United Arab Emirates.

Similarly, RAK Bank UAE has partnered with Inpay, a European payments fintech, to offer customers the lowest remittance fees in the market when transferring euros to 25 European nations – a charge of 25 UAE dirhams per transfer through RAKMoneyTransfer. Likewise, it allows customers to send money via the digital banking platform from any one of the bank’s 38 branches, where the euros are credited directly to the beneficiary’s bank account on the same day, with no hidden fees or back-end charges.

And Kuwaiti bank Ahli United has partnered with Ajar Online to grow the volume of rent and property-related payments via digital banking channels. This service allows tenants to pay rent through new collection points in any of the bank’s branches, or online via mobile or personal computers, automating the rent payment process through Ajar Online’s fast and secure method.

If you want to know more about retail banking in the Middle East, please download the 2019 Efma Middle East review

Keywords : Innovation , Fintech , Branch , Customer experience , Business strategy/Model

Geography : Saudi Arabia