Tuesday, Apr 03, 2012

Dubai: In an industry that gorges on hundreds of millions of dirhams daily, the operating margins can seem pretty thin for its players. As if that was not enough, the competitive pressures have been stoked further by the presence of more operators intent on creating significant presences of their own.

Even then, Mohammad Al Ansari, owner of the currency exchange that bears his family name, is willing to be generous about it.

It is true that there are many new entrants coming into this market, he said.

Presently, there are around 120 exchange companies and the competition is definitely stiff.

But the UAE is a large market; with over 80 per cent of its population being expatriates and the fact that it is an attractive tourist destination, there is sufficient space for all.

By that I mean remittances as well as the foreign exchange business.

Even while the local marketplace has hosted a multitude of exchange houses over the years, two relatively recent entrants could do a lot in re-jigging the established dynamics.

Of the two, one belongs to the Emke Group, which operates the LuLu branded hypermarkets and supermarkets. The other is owned and operated by Joyalukkas Group, the jewellery retailer.

Both of them have known the value of maximising territorial advantages in their core operations and plan to do the same with the money exchange side of things.

Al Ansari Exchange is up to the challenge. It currently operates out of more than 100 locations.

Such a saturation presence is now seen as the bare minimum to get customers to walk through the door and, more tellingly for the business, keep doing so frequently. Yes, there are pressures on margins because of the competition, said Al Ansari. But costs alone are not the determining factor.

This industry, let me emphasise, works on volumes. It is important to win loyalty and attract new customers through good service and your credibility.

Reliability matters most in this industry as it is the hard-earned money of the remitters that is at stake here.

Volumes

As to whether the presence of more operators has meant his transaction volumes have got hit at some level, Al Ansari replied in the negative. As I said, there is room for everyone.

Al Ansari's business acumen and his emphasis on linking it with a basic set of core beliefs and principles have placed him among the 10 business owners shortlisted for the Ernst & Young Entrepreneur Awards. The winner will be announced this month.

"We want to provide maximum convenience by coming closer to them through opening conveniently located branches," he added.

"This has been our strategy and has met with success so far. Hence, we will continue to expand based on the same strategy."

An expansion outside the comfort zone of the home market is also on the agenda. In fact it has been there for some time. "We are looking into its feasibility as also the regulatory requirements of the target countries," Al Ansari said.

"But we do have tie-ups with banks and financial companies in most of these countries which take care of our present requirements."

Transactions

While walk-in customers will represent the biggest chunk of the transactions for his firm and that holds true for the rest of the industry as well Al Ansari is making a play for the corporate market as well.

"We already have such arrangements with quite a few companies and offer them services to not just meet their foreign exchange and remittance requirements, but dedicated financial services for their employees," he said.

Going hi-tech

The money exchange business seems to have a time warp element about it. One heads for an outlet, money is handed over and then it reaches the intended party at some distant location. That's the basics of it.

Whatever changes have come through are more on the tech side of things, which have made ever quicker transactional deliveries possible.

Now, it is the turn of the industry to utilise smartphones to do its bidding.

"Mobile money transfers are the latest development for which we have to gear ourselves both technologically and from the regulatory angle," said Mohammad Al Ansari. "But challenges are what make us more active and efficient.

"I would prefer to call them challenges rather than as threats. And we do have many both internal as well as external."

By Manoj Nair, Associate Editor

Gulf News 2012. All rights reserved.