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08 May 2019

Mashreq: Digital Simplicity

Subroto Som, Head of Retail Banking, Mashreq, on what retail banks must do to stay ahead of the game in the new era.


Tell us your projections this year. For the remainder of 2019, we believe non-oil activity, including government spending in Dubai and robust economic activity in trade and financial services, will support growth in the UAE economy. The construction of major infrastructure projects in Dubai in preparation for the 2020 World Expo will also contribute to growth.

What would you say are the key ingredients to stay ahead in retail banking?

Powerful forces are reshaping the retail banking industry. Customer expectations and technological capabilities are creating an imperative to change. Today, we are increasingly seeing banks looking to create efficiencies and find innovative ways to stay relevant to customers.

There is a shift from banks looking to win the ‘battle of the balance sheet’, towards a focus on the ‘battle of the customer’. The fate of any banking institution largely depends on the quality of personalised customer experience it provides.Mashreq has always placed its customers first and personalisation is very much what Mashreq is focused on right now. By combining new technology, new expertise and new ways of banking,

 Mashreq’s transformative retail proposition network represents the future of banking in the UAE. Mashreq Bank has already embraced the new advent in digital banking and payments with open arms. We became the first bank in the UAE to introduce Samsung Pay, and one of the first banks to bring Apple Pay and Ali Pay, enabling customers to make day-to-day payments in-store and online in a simple and convenient way.

The technology available today helps to better understand individual customers so there is now the ability for banks to make their relationships with customers very personal and meaningful, offering products that can be relevant based on where the customer is as well as what they are doing.

Customer experience personalisation will be the biggest single area of differentiation that you will see in the market over time. To this end, our retail banking segment witnessed a significant achievement this year with the launch of Mashreq Neo has been a tremendous success with over 75 per cent of all new accounts in Mashreq being opened on the Neo platform—the UAE’s first digital bank.

Looking ahead, our strategy is to continue to digitise the bank, making customer experience seamless, personalised and omnichannel, and to lead into the future, where banking goes entirely branchless.

From your point of view, what are the top three challenges facing the retail banking sector globally?

Banks are facing challenges in several areas, but there are three that stand out in today’s globalised marketplace.

Tougher operating environment:

Despite all the headlines about banking profitability, financial institutions are not making enough return on investment. Profits and assets growth are under pressure from economic headwinds linked to persistent low oil prices and a slowdown in global trade flows. Geopolitical issues and rising regulatory requirements are other factors contributing to this.

Consumer expectations:

Today it’s all about the customer experience, and banks are looking to deliver the level of service that consumers are demanding, especially in regard to technology. Customers expect digital innovation and banks are working to transform their value proposition to meet these distinct, emerging customer needs.

Consumer demand:

Against the backdrop of reduced margins, retail banks today face significant challenges to growth and profitability. In search of growth opportunities, banks are focusing on deepening their share of wallet with existing customers. Being customercentric instead of product-centric is the only way to thrive in the current environment. Digital technology gives banks the options to enhance the customer experience with relevant, intuitive and personalised products, driving long-term relationships and profitability. At Mashreq, we aim to be the retail banker of choice for customers looking for simple, digital-first banking innovations that empower their lives.

What challenges would you say are unique to this region and how does this compare to global trends?

As more customers use their mobile phones to do their banking, the relevance of the mobile experience is becoming a crucial aspect of the digital strategy that banks must address. The one-sizefits-all approach in banking does not work anymore. Most banks are moving towards digital, and but the interplay of digital process and banks’ legacy system is a challenge in itself.

Mobile phone penetration in the UAE is now at a world-record high of 233 per cent. McKinsey’s latest research reveals that at least 80 per cent of urban consumers in the UAE now prefer to do a portion of their banking through digital channels.

The digitisation of retail banking is not a new development, and we believe in the coming years, mobile will become the epicentre of digital banking. Secondly, the credit bureau in the UAE has come into place for the last couple of years, and that has shown that there are segments and pockets of the economy where there is high leverage, and de-leverage is happening.

That has its own stresses and challenges. Mashreq uses information provided by the Al Etihad Credit Bureau to assess each customer’s creditworthiness before supplying any loans. In the long term, what the credit bureau will do is bring down bank charges and interest rates for lending as banks will have a more comprehensive assessment of credit risk than is currently available. Customers that are a good credit risk will end up paying less for credit while at the same time, people that pose a higher credit risk will only be able to borrow in a higher price bracket.

Finally, the UAE ranks foremost among regional economies most rapidly moving away from cash. Accessibility of financial services, level of technology available and the extent of consumer participation in the formal economy are key determinants in a country’s readiness to move to a cashless society, and the UAE fares extremely well on all these counts.

Despite this, the UAE is still a far way off from being a totally cashless society as we have many tourists and visitors coming in, who are not part of the existing local banking community. The transient nature of this population compared to other developed markets make the journey to cashless more challenging.

Our initiatives are aligned with the UAE’s vision to become a digital economy, and in time we do believe that e-wallet and mobile banking will replace cash to a larger extent with digital money.

Seeing how rapidly technology is evolving, in terms of competition, how do you see this changing in the next five years?

The retail banking industry faces disruptive challenges as technology enables newage innovators to come up with customer value ideas and propositions that will shake up the whole industry. I think in the financial sector we keep looking at our competition and we look at the banks. Over time, I am afraid banks will not be competing with banks anymore.

There will be new competitors coming in and we have to prepare for that day. Banks that hope to prevail must urgently pursue digital simplicity. That is why at Mashreq, our focus is to invest in digital and data capabilities that radically simplify the business while dramatically improving the customer experience through greater efficiency, quality, and speed.

We believe the key to creating the best possible experience and the most engaging customer journey is building a solid foundation on data. Having said that, while digital is undoubtedly on the rise and will be the core of retail banking in the future, customers want human interaction too. Branches will continue to play an important role, albeit a different one. The good thing is that technology has helped us to transform the branch banking experience.

In your opinion what is the unrealised potential for the advancement of retail banking in the UAE, Egypt and other markets that Mashreq operates in?

Our retail banking business is present in three markets: UAE and Egypt, but the bank is present in 12 countries along with an extensive network of correspondents in more than 60 countries worldwide. We at Mashreq are very keen to tap into new markets leveraging on the growing trends of digital innovation across the world. We see a lot of potential opportunity in the wealth management sector. A few years ago, a number of our clients were moving their assets overseas. However, the current tendency is to invest that money locally. As a bank, we not only recognise this trend but are also enhancing our portfolio solutions to create the right proposition to wealthy clients who increasingly invest excess funds through local banks. We believe that Dubai is a credible wealth centre and the growth opportunities for wealth management in the GCC are immense.

Finally, we see a lot of promise in business banking despite past challenges in the SME sector. In the last year, we significantly engaged with SMEs in cash management, trade financing, trade transaction, foreign exchange and insurance. While there is a good level of activity in this segment, capital lending to build capacity expansion is something we plan to do more.

Our focus is on finding the right proposition to lend to SMEs, who are the drivers of the economy in terms of job creation and economic output. With the implementation of VAT, SMEs will have to maintain their books making the process of obtaining credit easier.

How are you developing Mashreq’s offerings for the future?

We are making significant investments in artificial intelligence, robotics and future technology over the past two years. By combining new technology, new expertise and new ways of banking, Mashreq’s represents the future of banking in the UAE. We have undertaken an intensive transformation agenda to digitise both our internal and external capabilities.

On a branch level, this includes automation of requests through front-line staff which we hope will help avoid manual paperwork and save on recurring costs every year, and self-service kiosks that make everyday banking transactional processes simpler and quicker for customers.

Our strategic focus is on customer centricity to provide the highest quality of customer services through state-ofthe-art technology. Today, customers are willing to switch loyalties to enjoy a superior experience. Size is not the only factor to determine the winner—speed, agility as well as superior customer experience can make even a smaller player the biggest winner in the race.

Last year we successfully launched Agile at Mashreq and are already reaping the rewards in terms of increased customer centricity, greater collaboration, and shorter turnaround times. To become a digital banking leader, we are deeply engaged in the transformation to suit customer's changing needs and behaviours. Collaboration in the emerging ecosystem is key to success as opposed to direct competition.





CPI Financial was established in Dubai in 1999 to meet the needs of an ever-expanding financial community, offering a comprehensive portfolio of market-leading products and services tailor-made for the banking and financial services sectors.

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