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Dubai-based Mashreqbank will close 12 of its branches in the first half of the current year as part of its digital transformation strategy, the bank’s head of retail told media on Tuesday.
“Today we have 39 branches, by the middle of the year we will get to 27 branches and we will have 2 smart branches (recently opened),” Subroto Som, executive vice president and group head of retail banking at Mashreqbank told journalists on Tuesday at the unveiling of the bank’s reimagined branch format in Al Muraqqabat, Deira, which focuses more heavily on automated services.
He added that the bank is planning to launch more smart branches later in 2019, but that there are no further branch closure plans for the second half of 2019.
Mashreqbank has already opened two smart branches so far in Dubai - one at Mercato Mall in Jumeirah and one at Dubai Festival City.
Time for a change?
A significant shift in consumer behaviour to online and mobile banking triggered Mashreqbank to launch its digital transformation strategy.
“In 2015, roughly a third of our customers used to visit branches and the people who visited branches used to do about 12 transactions a year,” Som said.
“Of these people, less than half are visiting branches today and are doing less than half the number of transactions,” he added, noting that Mashreqbank has witnessed a 60 percent drop in customers visiting branches.
The bank began its digital transformation plan two years ago, launching a digital bank, Mashreq Neo, in October 2017.
The new digitally enhanced branch format unveiled in Al Muraqqabat on Tuesday focuses heavily on automation, with self-service ATMs, cash and cheque deposit machines, as well as bulk cash deposit and recycler machines. There are also interactive teller machines (ITM) and video conferencing services allowing customers to speak to staff remotely.
“To support customers’ needs at the new branches, Mashreq has also introduced the concept of a Universal Banker - a highly trained officer who will be available to assist customers for transactions, through digital devices,” the company’s press release announcing the branch’s launch said.
Som said that the bank is investing heavily in mobile and online banking as it is “seeing significant growth in sign up and usage”.
The bank’s chief executive officer, Abdul Aziz Al Ghurair, told journalists at the unveiling of the new branch that the bank needs to keep investing in technology. “There is no option for us if we want to stay ahead, setting the trend, setting the standard for banking in the region,” he said.
Transformation cost
The bank will invest 500 million United Arab Emirates dirhams ($136.1 million) over the next five years as part of the transformation plan, Al Ghurair said, adding that Mashreqbank is not looking to achieve an immediate benefit from the investment, but to first get “the customer experience right”.
Som said that the 500 million dirhams will be spent on technologies, branches, on bringing in new people, on upskilling existing people and on areas such as digital marketing and customer engagement.
“This is not a one-time activity, customer behaviours are changing, we are responding to that and it is a continuous change,” he added.
“We are giving all our employees an opportunity to rescale and upscale…the type of people that you have in retail banking now is also going to be changed, you will have more people with technology (skills), analytics…” Som said.
In its UAE Banking Pulse report published earlier this month, professional services firm Alvarez and Marsal said that Mashreq Bank was among the banks that had seen the steepest decline in net interest margins last year and had lost market share both in deposits and financing. (Read more here).
The company’s net profit to shareholders was flat at just over 2 billion dirhams, despite a 16 percent increase in total interest income to 6 billion dirhams.
(Reporting by Gerard Aoun; Editing by Michael Fahy)
(Gerard.aoun@refinitiv.com)
