MK: The banking sector is growing but the retail banking segment is growing higher than the other segments. There are several elements to this growth, and one of the key areas is how the industry is adapting to digitalisation, particularly in the retail banking space. Digitalisation is driving efficiencies, and it’s a combination of growing your top line and reducing your costs. This is coming from automation and innovation on the digital front. Noor Bank has done quite a lot in its digitalisation process over the past two to three years.
One of the threats, up to a certain extent, to retail banking is the rise of Fintechs. The financial technology companies are getting more active. Earlier, the fintech firms were disrupting the western markets, but of late we have seen more such firms in the regional markets as well. With new regulations, fintech firms will become more competitive and will pose a bigger challenge for the conventional banking entities.
Going forward, we will evaluate how we can partner with the fintech firms to offer better client propositions and enhance efficiencies of the banking industry as a whole.
Where would you place the UAE banks as opposed to regional banks in terms of digital transformation?
MK: Compared to the regional peers, the UAE banks are far ahead in terms of digital transformation. When we attend banking forums and conferences, there are always discussions surrounding digitalisation.
In my opinion, digitalisation is not only about having a mobile app, it’s also about digitalisation of the back-end processes, compliance and risk departments. Digitalisation is about all the aspects of banking, and at Noor bank, we believe that it’s our first building block. Recently, our CEO said that we must behave like a tech company with a banking license rather than a traditional bank.
Retail banking has seen several changes owing to digital transformation. What kind of changes have you experienced in the consumer behavior over the past few years?
MK: We have witnessed remarkable behavioral changes and adaptability towards using digital banking services. Most of our younger clients do not want to see the face of the bank, they want to feel the bank on their palms through their devices. It’s part of this whole digital experience. As we go up the chain, the adaptability is increasing across all age groups. Our general money transfers are done digitally without any requirements of signatures.
Noor Bank has introduced an application called Koh I Noor for our front-end sales team to digitise customer acquisition process. Our salesperson can open a bank account for a customer with a proof of residency and Emirates ID in no time, so, that’s the kind of progress we are seeing in our bank.
What initiatives did you launch? How have they performed?
MK: One of the key initiatives was the changes that we did in our mobile banking application. This was the first visible digital change for our customers. Earlier, we had a mobile application and Internet banking, but those services were not different from others. Today, our mobile app, which we keep upgrading, has high ratings and even our competitors have acknowledged its easy-to-use interface and enhanced customer engagement. Our mobile banking app has more than 60,000 users, which is roughly 70 to 78 percent of a usable customer base, and this exceeds the industry average of 50-55 percent adoption for such apps in the region.
We have introduced Noor Bank Infinity Treats app. We have added SkyMiles as part of our tie-up with Emirates Skyward Miles, which is part of our overarching loyalty program. These are all part of the whole package and come with our mobile banking app. We have enabled instant money transfer with ICICI Bank for Indian rupees. Also, we have a partnership with National Bonds. Now you can buy National Bonds through our credit card with extra no charge.
All these initiatives have been launched in the past 18 months and we have revamped the look and feel of our platforms and services.
Also, by virtue of being an Islamic bank, we have certain commitments towards our community. We have tied up with an organisation called Mawaheb for Beautiful People, which promotes art made by the people of determination. We have launched Noor Bank’s art portal where people can buy works by people of determination and from the artists residing in the UAE and beyond. .
If you look at the packaging of our credit cards, the boxes feature a painting made by Mawaheb artists. There is an image of the artist and a QR code inside the box that contains more information about the painting and the artist. This initiative generated a lot of positive feedback from the government, who fund Mawaheb, and from our customers.
What are the initiatives that have proven to be the key differentiators for your brand?
MK: Besides a tie-up with Mawaheb, our initiatives for the SMEs are quite unique. We asked ourselves, what our customers need, and we realized that new companies need a bit of hand-holding and small companies hit roadblocks when it comes to banking. There are also issues such as compliance, rightly so, that make transactions time consuming.
After our due diligence, we did a few things that could help the SME industry. First, we created a specific application. The Noor Trade Business Accelerator app, which could be accessed by our SME clients, brings in a whole ecosystem of shared services that an SME customer might need. The app addresses requirements for services such as PRO, accounting, human resources and marketing, among others. The user of the app earns loyalty points, and this is a unique service that lets customers redeem loyalty points towards services that their business requires.
We have seen a remarkable increase in the transactions through the app. We also bring cross-fertilization of the services as the service providers are also our customers.
The other initiative for SMEs is the Noor Business Council (NBC). The NBC holds two big events and four business breakfasts in a year. Regional and international speakers attend the events where several topics are discussed either in a panel discussion or other formats. These events give our customers a great chance to learn and interact with their business peers and also drives the industry towards positive territory.
Noor Bank’s net profit was AED410 million in H1 2019 – a 29 percent increase from H1 2018. What is your forecast for H2 2019?
MK: We are on our way to achieve good growth in H2 2019 as seen in our recently released financial results. The momentum that we have now is very encouraging, and it’s a result of our hard work that our teams have put together in the past 18 months. Our balance sheets are much healthier now and the initiatives, especially on the digital front, have worked in our favor. I think the momentum of H1 2019 will be sustained well in to the second half as well.
What segments – credit cards, loans or savings accounts - are driving growth in the retail banking sector?
MK: Last year, we’ve had some transformational changes. One of it was looking at our segments not from a product-centric standpoint, but as segmental businesses. We have business segments such as high-net worth, premium customer, SMEs and basic customers. So, we look at customers in three segments, the fourth segment is by default. In terms of product proposition, even our sales delivery is focused on these segments.
The highest growth is coming from premium and wealth segments, and we’re able to offer multiple products in a package form. In our current size, our focus is on high-net worth, premium and SME segments.
Through our Koh I Noor app, carried by our sales team, we were able to make decisions on wholesome premium banking packages based on credit history and liabilities within 30 minutes and as a result we have seen a significant uptick in customer acquisition in the past few months. Once the process is complete, customers receive their cards within 48 hours, however, by the end of 2019, we’ll be able to add a virtual card on the phones of our premium customers as soon as the decision is made.
Also, from the product perspective Noor Bank is a big player in home finance, and we’ll continue to focus on this.
How do you see data analytics and artificial intelligence affecting the banking industry?
MK: A huge amount of data is generated these days, and unless we know what to do with the data or what artificial intelligence could do for us, it’s all meaningless. The banking organizations are realizing that making meaningful use of data is an art.
Within digitalisation, we’ll see data analytics playing a big role in enhancing efficiencies and helping in issues such as risk and compliance.
How would you compare the growth of your Islamic business to conventional banking? What are the growth drivers?
MK: The Islamic banking continues to expand. One of the reasons for the growth of Islamic business is that we are in an Islamic-oriented region. Besides Muslims, customers from other faiths are also looking for Shari’ah-compliant banking services.
All banks, whether Islamic or conventional, are competing over fee and customers are looking for value even though products and services offered by the two types of banks are different. In terms of services, the structuring of home finance and personal finance are different at Islamic and conventional banks, and our cards do not offer certain services due to Islamic principles, but we do not see this as a huge disadvantage.
There are several reports suggesting that the Islamic banking is growing better than the conventional banking.
What is the status of Noor Bank’s proposed acquisition by Dubai Islamic Bank?
MK: All the information we have regarding the acquisition is public knowledge.
It is business as usual at Noor Bank and we are focused on delivering against our strategy and meeting our targets for 2019.
What kind of challenges do you see for the banking industry over the next three years?
MK: As the industry is moving towards digitalization, one the biggest challenges is cybersecurity. The problems such as stolen identities and digital thefts are getting complicated. Most banks have increased spending on cybersecurity to address challenges of the digital world.
Today, you not only have to know your clients, but you must know your clients’ suppliers and their businesses, and that’s a huge challenge on the compliance front. Macroeconomic factors and regulations will be the other challenges for the industry.
Mufazzal Kajiji, Head of Retail Banking, Noor Bank
Mufazzal Kajiji is Head of Retail Banking at Noor Bank. In his role, he is responsible for overseeing the bank’s retail banking franchise. This includes the entire branch network, as well as wealth management and retail products and segments. He brings to Noor Bank 22 years of C-suite banking experience across the retail banking space, in segments such as Liabilities, Bancassurance, and Financing. Among his previous roles, Mufazzal served as Executive Vice President and Global Head of Wealth Management and Affluent Banking at First Gulf Bank, a position he held for more than 10 years. Most recently, he was the Chief Marketing Officer at First Abu Dhabi Bank. His earlier roles also included positions with multinationals such as Citibank, Standard Chartered and Alliance Capital (Bernstein).
A former member of the United Bank’s Federations Committee on Consumer Banking and Wealth Management, Mufazzal is holder of a Bachelor’s of Commerce and an MBA in Finance from the University of Mumbai in India. He also obtained a Chartered Financial Analyst Charter from the American-based CFA Institute, as well as a Financial Risk Manager Certification from the Global Association of Risk Professionals (GARP), United States.
© Noor Bank 2019