As you were appointed Group CEO of KFH in October 2014, what have been some of the key elements of your executive strategy thus far?
The board of directors would like to see improvements in efficiency, customer service, and achieve a better integration of the group as a whole. The key focuses were to align all the businesses that KFH owns, making sure that they add value to the KFH bank and provide significant, sustainable revenue to the group. We continue to look at ways of unloading assets that are speculative in nature or not core to our business lines and improve our asset quality by getting rid of heavy risk-weighted assets. This is one method that we use to give us room for our capital to support future growth. Beside our core competencies of real estate and financing, we are in many businesses in many areas such as energy, healthcare, human resources, and IT.
KFH is one of the leaders in Islamic finance worldwide. What is your assessment of the development occurring internationally in the Islamic finance space?
The development in Islamic banking products on the liability side has reached a level that is comparable to conventional banking but we have not yet reached the same level of product diversity on the assets side. The financing vehicles that are available on the Islamic side could see further improvement. We have seen a significant amount of sukuks outstanding because of their acceptability by the issuers and by governments. We've seen the government of South Africa, for example, issue sukuks because it can access the market and get the right type of funding with the right price. Investors whose confidence was shaken after the 2008 financial crisis feel more comfortable dealing with sukuks because they are asset based. Borrowers are willing to provide asset-based collateral for the sukuk instruments and thus both the issuer and the investor are happy. We are working to introduce more products on the asset side to a level where we are comparable to conventional bank.
Focusing on Kuwait, how do you view your role in raising the bar of banking technology and improving efficiency in the Kuwaiti banking sector?
We need to invest heavily in technology that provides a positive user experience in order for KFH, and all Kuwaiti banks, to operate more efficiently. If we can automate the transactions that currently go through call centers or physical branches and make products available in a self-service, user-friendly manner, more people would migrate to those channels and this would significantly decrease our operating cost base. It is a win-win model: better service for the clients and cheaper for the banks. KFH is the leader in online banking across all Kuwaiti banks with an excess of over 250,000 active online banking users. We are looking for payments to be easier with the likes of Apple Pay or Google Wallet, whereby you are replacing your credit card with the mobile phone, or facial recognition technologies whereby you make a payment based on your features or other biometrics such as fingerprint, palm print, voice recognition, or iris recognition. If these potential technologies are developed well enough, we want to be the first to adopt them. We recently rolled out an idea during Ramadan whereby customers could donate to Zakat Al-Fitr at KFH ATMs. We received an amazing amount of appreciation from customers thanking us for making it easy to donate simply with the click of a button. It was very positive and we are continuing to evolve in this manner.
How have you seen the Basel III regulations impact KFH and the banking sector as a whole in Kuwait?
Basel III had a significant impact on all Kuwaiti banks, specifically on KFH and NBK. Due to our size, regulators could potentially impose a premium for us over and above the thresholds set by Basel III of 15% in order for us to sustain future growth. This puts us at a disadvantage because at every loan, we weigh risks to assess the minimum equity or capital we need to finance it.