How is your bank navigating the digital transition?
Julian Wynter Standard Chartered is investing heavily in the digital space with the ambition to build the digital retail bank of the future. To support this ambition, last year the bank announced an investment of USD1.5 billion across its network to deliver a better banking experience to clients using digital technology. In the UAE, we have rolled out cutting-edge fingerprint technology on our mobile banking service and enhanced the online banking user interface so that clients can securely and seamlessly access their bank account balances, cards and investments. We have also enhanced our fund transfer limits to suit the needs of our clients. The bank will also introduce voice biometric technology for phone banking services for clients by early 2018. We are bringing the latest digital technologies to all our markets so that we can offer easy, convenient and secure banking to our clients. These digital investments reaffirm our commitment to the UAE's digital agenda.
Abdul Aziz Al Ghurair In order for cashless payments to grow, both the customer and the merchant must have the respective hardware (e.g. mobile phones and contactless terminals) infrastructure. However, for cashless payment products to be successful, the customer must adapt their thinking and behavior patterns to go digital and trust the new technology. On our end, we must ensure that this is a more flexible, convenient, and secure method of payment. We are optimistic about this trend because we are seeing it progress. At Mashreq, 85% of our transactions are taking place on our mobile banking platform, either from online, our smartphone app, or at an ATM. Several years ago, banking transactions only occurred in the branch with a banker. Today, customers are rapidly adopting to new ways to pay without ever visiting a branch. Our customers are increasingly younger and increasingly looking to do business and execute transactions digitally.
What macro-economic fundamentals make the UAE such a good market for Standard Chartered?
JW For us, the UAE continues to evolve and extend its business and consumer offering, which in turn creates new opportunities for Standard Chartered to keep up with innovative financial services and solutions to meet our clients' needs. Undoubtedly, the economy is a bit softer; however, the response from the UAE has been to maintain its diversification agenda, which has already been in place in Dubai for some time. There are many ongoing infrastructure projects, world-class ports, airports, and the free trade zones, all of which are complemented by rapid population growth. The UAE government continues to be engaged in improving the business environment that supports FDI inflows into the country. Our expectation on the macro side is for growth to pick up in 2017 to 3% from our previous estimate of 2.4%. Preparations to host Expo 2020 will shore up a great deal of activity through 2018-2019, supporting our positive outlook for the medium term.
How has the new bankruptcy law affected the banks' balance sheet in terms of loan-loss provision?
AAAG The bankruptcy law has made the banks' balance sheets more structured, and facilitated organized liquidation, protected by the UAE Banks Federation, in the case of a necessary exit from a business. Before the passage of the new bankruptcy law, our voluntary joint approach was to encourage all banks to agree on decisions and loans rather than acting unilaterally on an SME. We called this the “mini bankruptcy law," and cooperation between all the banking institutions helped to stabilize the sector. The fact of the matter is, if we or the federation can help the customer restructure their loan over two or three years and provide a manageable avenue of payment, this works in the interest of both parties. This is a far better alternative to chasing the customer back to his home country with phone calls and follow-ups. The bankruptcy law provides a legal framework for enhanced security and transparency between the customer and the bank. In the future, this could mean each customer is assigned an auditor and is overseen by a federal banking governor. Over time this will help businesses, the banking system, and the overall economy mature greatly.