Waleed Al Mogbel

Al Rajhi has been a leader in digitalization and the adoption of new technologies. Where does digitalization stand in the bank’s overall strategy?

Digitalization has been one of the main pillars of our strategy; we have been extremely ambitious in our digitalization strategy from the beginning. We set up a digital banking group to consolidate the digital agenda, and the first step of the strategy was to make available most of our branch and phone banking services via our mobile app. After this, we digitalized our key products (personal finance, cards, mortgages, and so on) end-to-end. The results have been outstanding, and today we have more than 85% of new customers joining the bank by opening current accounts via either our internet banking website or mobile app. We see a rapid migration toward digital channels of many of the services offered by the bank including cards such as debit, prepaid, and credit, remittances, local transfers, and personal finance. Our mobile banking app has been the key driver for this success. We started a similar journey in our SME and corporate business, where we see digital growth happening at a rapid pace.

You assumed the CEO position a year ago, just before the pandemic, and managed to steer the organization through a historic crisis and still post a 4% YoY profit. What key changes did you implement across this challenging year?

COVID-19 has been a challenge unlike other economic recessions in terms of the extent and duration of the impacts on our customers and the economy. There was no standard playbook to refer to, meaning our whole team had to adapt quickly. We have, however, kept several things front of mind when making these decisions: protecting our team members and customers; adapting our business operations to ensure we remain accessible to our customers; and supporting the Saudi government in its efforts to navigate the pandemic and ensure a recovery on the other side. To protect our team members, we reduced branch operations during the first wave lockdown, instituted changes to cash handling, and moved our call center operations to remote working. We were able to move quickly thanks to a combination of our recent investments in technology and the tireless work by our team members. For our customers, there was a rapid and enthusiastic switch to remote channels due in large part to the great investment and effort we have made in the last three years to make most service and sales capabilities available over our desktop and award-winning mobile banking app. All our retail banking products are now available for purchase online, which is a first for Saudi banks. These innovations have been greatly welcomed by customers, as seen by the rapid uptake in online account opening and loan applications for Al Rajhi and our new Emkan finance company. Al Rajhi has also supported the numerous government initiatives to support the economy and customers during the pandemic, including fee waivers and support for small business customers. In addition, Al Rajhi’s continued support for the government’s efforts to encourage home ownership in the Kingdom saw our mortgage lending continue throughout 2020.

Regulatory changes in the Kingdom have moved quickly in recent years, with extensive changes that enable innovation. How is Al Rajhi working to take advantage of new regulatory space?

All over the world, the banking community is moving to embrace open banking. Open banking is a technological innovation that enables customers to securely share their data with third parties. In recent years, several fintech companies have emerged, presenting new business models that would benefit from access to customers’ data. This opens the doors to creating and offering new financial services. Therefore, SAMA views open banking as pivotal to the further development of the Kingdom’s financial sector. It represents an opportunity for stakeholders to leverage on the data associated with financial transactions to imagine and access new ways of managing money. In addition, customers will benefit from better financial products and services, ranging from bringing all accounts into a single dashboard to creating smoother journeys into daily banking activities. Critical to the success of this vision is the need for the financial ecosystem to be entirely secure, always available, and operate with no delays.

In what ways has the pandemic shifted the way banks operate, both internally in terms of work norms and externally in terms of contact with clients?

The lockdown to prevent the spread of the pandemic halted economic activity across many sectors, with important repercussions for firms and households. The banking sector was also affected. While banking services can be provided remotely and do not rely on direct customer contact, the linkages of the sector with the real sector as the provider of payment, savings, credit, and risk management services had to operate smoothly without any disruption from COVID-19-induced restrictions. Digital solutions provided a lifeline to households and businesses; for example, the value of POS transactions via mobile increased by about five times in 2020 compared to 2019. At the same time, the banking sector had to support firms and households during this period of lower revenues and incomes, which triggered important policy actions by financial supervisors and governments. In Saudi Arabia, the government stimulated the economy by supporting households and businesses through the banking system; SAR100 billion (equal to 3% of 2019 GDP) in stimulus support was deployed in the banking sector as part of a larger stimulus package. In addition, banks play an integral role in facilitating international trade; essential goods and equipment had to continue to be imported such as food, medicine, and protective equipment. Finally, COVID-19 accelerated digital adoption by necessitating conducting banking without physical interactions. By implementing completely digitalized and remote customer transactions, banks ensured that both everyday and exceptional processes were carried out with limited disruptions. In terms of reaching clients, banks leveraged their pre-pandemic investments in digital infrastructure to continue to run smoothly, offer their services, and stay closely in touch with their customers. During the lockdown, Al Rajhi managed its relationship with its clients through social media with continuous announcements of the most recent developments as well as on an individual level, where emails and phone calls were employed to deal with customers’ needs and the bank’s customers’ support and preventive actions. All these were possible as a result of the bank’s continuous investment in digital channels. This allowed Al Rajhi to continue offering its products and expand its reach to even more clients; for example, it started offering digital cards during the pandemic without requiring customers to visit a branch. Also, in 2020, 83% of all bank transactions were digital compared to 66% in 2019. The number of online financing applications increased by 233% in 2020 YoY. Also, the number of active digital users in 2020 reached 7.9 million users, growth of 39% from the 2019 level. Helping customers and businesses recover from the economic impact of COVID-19 means helping them focus on productive economic activity. Banking must be a seamless enabler of that activity and enable customers and businesses to manage their financial needs in the right way. Increasingly, that means digitally. This trend has proven its effectiveness and convenience to clients and cost efficiency to banks. Banks are expected to expand in AI and analytics-based software for its product offerings in the medium term. The pandemic will further strengthen competition for banks from fintechs, as well as, the trend toward digitalization will only grow further, implying a lesser need for bank branches and a greater reliance on telephone and internet banking.