Can you elaborate more on your work with SMEs and its significance for Jordan's economy?
More than 95% of the companies and institutions operating in Jordan are considered SMEs, and in terms of value, SMEs are also quite significant. Jordan has recognized this and realized that we need to enable SMEs to do more business and grow. Over the past six or seven years, the ecosystem around SMEs has improved significantly. Capital Bank has had significant focus on this sector. A few years ago, we established a specialized team to cover SMEs, and we have 30 bankers who only focus on SME banking. We also have specific programs that are only offered for SME banking. Our focus is on cashflow-based lending, while most banks do asset-based lending, which is not very helpful for SMEs because typically they do not have large assets to pledge to the banks. With a cashflow-based approach, we are able to facilitate these loans and capital for SMEs to grow their business. We also utilize technical assistance provided by global development financial institutions
What is Capital Bank doing in terms of digitalization efforts and technological innovation?
We have allocated more than USD60 million for investment in technology. Admittedly, we were behind—the entire market was behind. However, we have all come to understand financial inclusion; a few years ago, it was less than 27%, and now it is about 32% because banks have woken up and understood the importance of digitalizing. More investment in technology is the key for improving efficiency. We have also invested heavily in omni channels. Starting in summer 2019, we will launch our digital platform. We aim to launch products quarterly and automate internally so our people can focus on value-added services instead of doing manual, repetitive work.
How else does Capital Bank distinguish itself in Jordan's competitive banking sector?
We are undergoing a digital transformation that is unlike other banks in Jordan. In Jordan, there are two major banks, and the rest have historically been asset-takers. The power of the larger banks will be disrupted by the digital transformation that we and a few other banks are implementing. We are doing it in a slightly smarter way because of the technologies in which we are choosing to invest. If a client that historically had its cash management or trade business with one of the big banks takes an asset from us, the loan is not highly profitable for a bank like ours. We want all the ancillary business. We hope to get more of their business with our new digital products, such as on-premises check deposit machines to remove the need for clients' movement between their premises and the bank. We also have the strongest investment bank, which adds tremendous value to clients. Jordan has been given preferential treatment from Iraq for 184 imported products, but not all Jordanian products are exempt from these taxes. Jordanian manufacturers or producers wanting to sell or invest in Iraq need financial advisors. We are able to do that because we have the best corporate finance and brokerage teams in the country. The advice we give clients is based on our track record and knowledge, which gives our clients a huge value-added bonus.
How do you evaluate the main challenges and opportunities in Jordan's financial sector?
The SME side is interesting because banks that have grown over the past years are those that were focused on the SME sector. However, on the corporate and retail banking side, the markets are quite saturated. In retail, the best thing to do is start going after the unbanked through digital products. Zain Cash, the biggest wallet today, has more clients than most banks. It started operating in 2017, so that should be a cue to all of us. Banks need to think outside the box and look at the opportunities outside the market.