|21 September, 2016

Reaching the masses

UAE's Mashreq sets strategic vision for Egyptian arm

People walk out of a branch of Mashreq bank at Dubai Internet City in Dubai.

People walk out of a branch of Mashreq bank at Dubai Internet City in Dubai.

REUTERS/Nikhil Monteiro

Banker Middle East sits down with Shaker Zainal, Head of Retail at Mashreq Egypt, to discuss his strategic vision for Mashreq's promising Egyptian arm
Embarking on a journey with a goal to penetrate all layers of the Egyptian market, Mashreq Egypt has orchestrated a plan, capitalising on its strengths, bringing the bank to each customer's doorstep. With a population of approximately 94 million, Egypt's banked population makes up about only 17 per cent of the entire population--an alarmingly low percentage for a large nation.

Tell us about Mashreq's presence in the Egyptian market.

Our first Cairo branch opened in 1978 focusing mainly on selective corporate transactions. We began to focus on retail in 2007 and 2008 and opened 10 branches in prime locations in Cairo and Alexandria supported by a full-fledged call centre. Since then our corporate business has been doing very well and our retail arm turned profitable at the beginning of 2015.  Branches are key for retail banking so we plan to expand to 15 branches in the coming 12 months with a focus on digital banking, particularly internet and mobile banking. Despite the current market challenges vis-a-vis foreign currency shortfall, effects of a global slowdown, low oil prices and limited foreign investment--we are doing extremely well.

In terms of products, we have quite a few--our 'Dining Card' is a market leading product that offers a five per cent cashback offer on dining across Egypt; we have several transactional and saving products that offer different fees structure on transactions and different interest payment options putting the power in the hands of our customers. We have many lending programmes for individuals as well as our SME customers such as personal loans up to EGP 1 million and small business loans up to EGP 3 million.

In addition to trade and working capital facilities for our big SME customers, insurance is another important need for our customers. We signed with a very reputable name in the field of insurance, Allianz, and our customers can now enrol in many saving and insurance plans as well as medical, motor and property insurance. We just launched our famous 'Mashreq Millionaire' programme running in the UAE since 1995, giving our customers the chance to win the grand prize of AED 1 million every three months. We are proud to be the first bank to launch a saving scheme in the UAE and we are aiming to replicate this in the Egyptian market. This creates a savings culture in an actively spending market.

We have three main strategic objectives for the coming three years. The first is to focus on the SME segment, which is also aligned with the Central Bank of Egypt's mandates; and we plan to grow our balance sheet from five to 20 per cent in asset allocation to this strategic segment. Our second critical objective is to focus on our Gold customers, the high-income customers [the middle-class and above]. Thirdly and finally is technological innovation such as digital branches, internet banking, mobile banking, smart branches and customer service as a whole. This is what will differentiate Mashreq from the others.

What are your views of the country's current economic standing?

There are many initiatives by the government to attract investment including a strong focus on SMEs and on the local economy to promote exports. The market holds a lot of opportunities for banks as there is quite a large 'grey' market, made up of SMEs that are still unbanked. There are approximately 390,000 SMEs in Egypt and they are the engine of growth for GDP as well as exports.

Additionally about 80 per cent of the country's workforce population is employed in the SME industry. Therefore by supporting SMEs, the rate of unemployment will reduce and the economy can grow at a faster pace. The SME sector in Egypt requires tremendous support to further assist them in establishing themselves. There is also a need to educate these businesses on the benefits of banking, attracting them into the system. I think these things will take time but all the indicators right now are positive as the market is improving gradually. There are also initiatives on growing the agriculture and industrial sectors.

Currently we have an exciting proposition coming up, which is to create a solution for Egyptian expats living in the UAE, facilitating inward remittances to Egypt, encouraging savings, and providing better liability products. For example, we've recently launched the 'Mashreq Millionaire' campaign, a draw to win AED 1 million. This is targeted towards the middle to lower income bracket.

What are the hurdles of this North African market?

There are several challenges facing Egypt--first is the foreign currency shortage and the restrictions surrounding it; and second is the challenges affecting the ability for SMEs to join the corporate world. There should be more support from the government for SMEs making it easy for them to establish and grow, although this has improved over the past 12 months. Another challenging issue is attracting talent into the banking sector. Presently in the Egyptian market, there is a talent shortage and quite often we search abroad to fill up the various positions we have available. 

In addition to these challenges, the level of customer service in Egypt's banking sector is lagging and we as banks must in our capacity aim to bring a major shift to digital and quick/quality service. Mashreq is positioning itself as a market leader in this area. Studies have also shown that customer service is an important element in gaining more market share. Particularly in a country with a large population and a busy capital, being able to provide alternative channels for customers
via telephone, internet, ATMs and CCDMs will positively assist and accelerate the growth of a bank. Customer service and technology always goes hand in hand. Furthermore, the global trend is not to open more branches, but to leverage on alternative channels--particularly in the 21st century where internet and social media is an important medium of communication. We aim to provide our customers as many channels as possible for them to connect with the bank.

For instance, we are the first bank in Egypt to introduce the 'Fawry' service where our customers are able to pay their credit card bills through a national utility payments system available at any outlet such as in supermarkets, pharmacies, etc. We aim to expand our payment services at Fawry outlets to include other loan and credit payments to the bank. Through Fawry service as well, we plan to extend the service to Egyptian nationals living in the UAE, enabling them to pay their utility bills in Egypt through our online
banking platform.

What are your plans to improve the bank's performance moving forward?

As previously mentioned, for the next three years the bank will focus on the following main areas in the Egyptian market, namely SMEs and Gold customers as well as Technology. Seventy per cent of the Egyptian population is already on social media. We therefore intend to ride on these platforms to promote our bank and products. Our marketing strategy is solely digital, focusing on social media platforms and on the internet.

The bank has achieved a double-digit growth in the first six months of 2016. Moving forward we intend to continue with our healthy growth trajectory, keeping customers at the centre of everything we do--banking technology transformation and execution in line with the strategy shared above.

© Banker Middle East 2016

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