Speaking exclusively to Nabilah Annuar, Editor, Banker Middle East, Mubarak Abdullah Al-Khafrah, Chairman of Alawwal Bank discusses the significance of the bank’s recent rebranding exercise and its focus for 2017.
What is Alawwal Bank’s growth strategy for 2017?
Our strategy remains unchanged and we remain focused on creating value for our customers and shareholders. While the operating environment has seen some challenges over the last year, we have experienced growth in key areas, while adhering to prudent risk management practises.
In 2016 we committed to growing our physical footprint and as a direct result of our efforts, we have 65 branches and 540 ATMs across Saudi Arabia. In addition, we have seen a significant increase in mobile banking penetration with 64 per cent of our retail customers now using our online platforms.
Saudi Hollandi rebranded itself to Alawwal Bank in December. What drove this rebranding exercise?
In today’s fast-paced commercial environment, we cannot afford to stand still. While the bank’s past is important, we must embrace the multiple opportunities our future presents. The new brand reflects how we bring a new energy and vitality to banking; one that aligns to the needs of our customers—both our current and the next generation of Saudi leaders; the young, ambitious citizens who will build on the past successes of our nation.
What does the rebranding mean for the bank?
Alawwal Bank’s rebranding demonstrates that we are thinking about the future—a future that involves new ways of banking and new customer thinking. In order to do this we have developed a more distinctive and recognisable brand that both visually and verbally connects with our current and future customers.
Alawwal—‘The First’—speaks to both our legacy as the first bank in Saudi, and to our future. It speaks to our renewed commitment to continually innovate and improve the services we provide through the latest banking technology and by empowering our people to succeed.
What is Alawwal Bank’s focus for 2017?
As a bank, we are transforming to meet the needs of a new generation of leaders, and to achieve this, technology remains a key driver of the bank’s strategy in 2017.
We have a history of technology innovations, from our state-of-the art mobile banking platform to our multi-channel banking approach. Our continued investment in technology will help to deliver unrivalled services to our customers through even more digital channels. By combining traditional banking services and technological innovation, we aim to provide our customers a reliable and efficient banking service.
How does the bank plan to expand this year?
We will continue to grow organically as a bank in 2017. Over the years we have built a legacy of being a trusted, well-established banking partner and as the world changes, so must we to remain relevant in an ever-changing world.
This is why we are committed to providing our customers with more digital products in 2017. Technology is a huge growth area for us, as the way banks used to operate is no longer ‘fit for purpose.’ The banking sector needs to change, to operate a different business model to meet the needs of the modern world.
Much like Alawwal Bank, Saudi Arabia is changing and Vision 2030 creates a new purpose for the Kingdom. We are fully aligned with this vision, a vision that presents a raft of opportunities for us in both corporate and retail banking.
What can the market expect from the bank 2017?
The world is changing, now everyone is connected and demands instant action. As part of our transformation, we aim to provide our customers with integrated, instant banking services. Our focus for 2017 is to place greater emphasis on digital products and payments.
We have a number of exciting product and service announcements in the pipeline which we hope to announce shortly.
With tightening liquidity in the GCC market, will we see Alawwal Bank tap the debt capital market for funding?
The liquidity in the Saudi banking Industry remains adequate on both a regional and a global scale, albeit the decrease compared to previous years’ levels. However, Alawwal Bank has been active in the debt capital market, and as part of our continuous efforts to diversify the sources of funding, we keep the debt capital market as one of the options of available sources for long term funding.
In light of the recent US Fed interest rate hike, how do you see this affecting Alawwal Bank and the rest of the GCC banks in 2017?
Overall, the recent increase in interest rates is likely to have a positive impact on Alawwal Bank and other Saudi Banks in the medium term, as financial institutions in the country have large customer deposits—most of which are non-interest bearing. However, under the current economic conditions, the growth of liquidity has become slow, leading to a higher cost of funding. Thus, the full benefit of rising interest rates would not be expected to fully materialise in the very short term.
As the banking sector enters an era of more stringent and proactive regulations, what is the bank’s approach to this?
The Kingdom of Saudi Arabia is at the forefront of adopting stringent financial regulation. SAMA is regarded as one of the most proactive and advanced regulators, adhering to a very high standard of compliance monitoring.
Alawwal Bank is committed to meeting all regulatory requirements and maintains healthy and strong capital and liquidity positions as a result.
As a bank, it is our responsibility to protect our customers and shareholders’ interests, and complying with regulatory changes makes us better equipped to succeed and deliver the best services possible to our customers.
What is your outlook on the region’s banking and finance sector for 2017?
Across the GCC, countries are focused on diversification and reducing their reliance on oil GDP. This will undoubtedly create new opportunities for all sectors operating across the Gulf.
In Saudi Arabia, the 2020 National Transformation programme and 2030 Saudi Vision will provide growth and opportunity for the local economy and the banking industry. Despite fluctuating energy prices, we are likely to see a rise in the number of merges and acquisitions in the Kingdom, further opportunities in project finance, retail and corporate banking.
In 2017, we also expect to see an increased focus from banks on digital channels, services and products. This is a huge area of growth for the banking sector, and with the relentless speed of technology innovations, the banking sector has no choice but to evolve or risk being left behind.