In a conversation with Banker Middle East, Soren Kring Nikolajsen, Managing Director of Saudi Arabia’s first operating bank, Alawwal Bank discusses how the IBDA Cafe concept will shape the future of digital banking.
Having launched the IBDA Cafe concept last year, how has it been received by the market?
We did not want IBDA to be one of those digital concept branches that attracts headlines but no customers. Our priority was to create something our customers would enjoy and made good business sense. The traditional branch banking approach hasn’t changed much over time but consumer behaviour has.
Over the past decade the smart phone has changed our expectations as consumers. We are more used to doing things ourselves with the swipe of a screen than waiting to be served. Today the experience you offer is just as important as the quality of your products and services. IBDA was an opportunity for us to challenge the status quo, focusing purely on creating the best possible experience for a bank branch, then looking at the best available technology to help us do that.
With IBDA it was all about doing things on the customer’s terms—not ours. Setting the branch in a cafe environment changes the whole experience. It becomes a social space where you can do something enjoyable as well as your banking. We’ve replaced counters with coffee tables and self-service screens, there is also an interactive kid’s play area. You only need to speak to a member of staff if you request to do so on one of the devices.
We’ve also digitised our processes behind the scenes to offer a range of faster online services. At IBDA you open a new account or credit card in the time it takes to drink your coffee. We are learning a lot from IBDA and welcoming a lot of new customers to the bank in the process. What a branch in the future will look like I’m not sure but it will be closer to IBDA than the traditional model, that I can be certain of.
How should banks adapt to customer expectations for digital banking?
The time when digital was optional is long past us. It is more a question of how fast we can develop services to match the expectations of an increasingly demanding customer. That is particularly the case here in the Kingdom with such a young and very tech savvy population. I think banks across the region need to work much harder at digital transformation.
Yes, we are very complicated businesses, which makes creating simple digital solutions much harder, but we cannot use that as an excuse. Like many traditional businesses, banks have often made the mistake of creating a separate digital strategy, when what they actually need is a strategy that works in a digital world. The whole organisation needs to be thinking about how we can make our services more relevant in an increasingly digital world—that cannot be left to one team.
We also must be careful not to get carried away by the hype around new technologies. We should be thinking about what problem it is we need to solve, then looking at what technology is available to solve it— not the other way around. Instead of racing to be first to use a certain technology, we need to design services around genuine business and customer needs. There are many benefits to be had from digitising the bank. Not only does it make our services more accessible, it also generates data that helps us better understand our customers and offer them better services. That alone should be reason enough to make digital a priority.
We’ve invested heavily in our digital proposition and the response from customers has been amazing. In 2017, our total mobile and online banking transactions increased by over 50 per cent. Digital is important to our customers, so it is important to us. We may have gotten ourselves into a market leading position in this space but that will quickly be lost if we do not continue to invest further in it. If we want to continue to be relevant for our customers, we must be agile to their needs and embrace the new levels of convenience the digital world offers.