BANKS & FINTECH

Saudi Arabia 2020 | FINANCE | B2B

The Saudi central bank's flexible and encouraging approach to innovation has enabled banks and fintechs to exist side by side and work together to fulfill the needs of an evolving market.

Abdulmohsen Al-Fares
ABDULMOHSEN AL-FARES
CEO
Alinma Bank
Nabil AlHoshan
NABIL ALHOSHAN
CEO & MANAGING DIRECTOR
Bank AlJazira

You launched the first of what will be a full network of digital branches across the Kingdom as part your program to provide self-service banking solutions to customers. How does this fit into your digital strategy?

ABDULMOHSEN AL-FARES When Alinma Bank became fully operational in 2009, we anticipated great change in financial technology and, therefore, invested in supporting IT architecture. The supporting platform that we built for digital branches is one of our largest projects to date and consists of middleware that allows us to work with all vendors and mobile applications. It is one of our IT infrastructure platforms that connects our applications, including the core banking system, with our customers via any channel, including ATM, POS, digital branches, and smart device applications. We have also added Apple Pay and mada Pay payment solutions. Notably, we were the first bank to have a platform-agnostic mobile solution, making it easier to add new channel interfaces. Alinma Bank's core strategy is to be in the middle of corporate business and consumer banking. Our financing portfolio is 80% corporate and 20% retail; however, more than 85% of our customer base is retail. At present, we have 161 physical branches across the Kingdom. That said, in five to seven years, the reality will be significantly different, and with changing margins, physical branches will become a cost burden. Our latest development is the establishment of digital branches, and we aim to launch three in 2019 in order to occupy a middle ground between traditional banking and fintech. We are also continuing to increase our digital service offerings, which include cardless emergency cash withdrawals, card printing ATMs, and other services that enhance the speed and flexibility of our interactions with customers.

How have operations evolved in the past couple of years, and what are Bank AlJazira's key strategic priorities for the short to medium term?

NABIL ALHOSHAN BAJ continues to evolve as a financial institution. 10 years ago, BAJ was reliant on brokerage as its main driver of income. At present, we are an all-encompassing financial institution serving retail, corporate, private, and treasury customers. This is in addition to our existing brokerage customers. We have particularly strengthened the retail part to give the bank a footprint to compete with other similar sized banks. The branch, ATM, and POS networks have grown significantly to give our retail customers and merchants all the support they need. We are prioritizing residential and mortgage business, REDF solutions, off-plan sales, self-construction, flexible installments, mortgage guarantees, and downpayment support for the military sector. Auto lease will be the latest addition to BAJ's product suit, in line with its corporate strategy that places a special focus on innovation. Alongside this, our Digital Smart App is a class leader and continues to be the best-performing channel for acquiring new customers. We have also introduced a new remittance product, called Fawri, which has quickly built up over 1.5 million customers and taken over 12% of the market share of transactions within three years of launch.

In recent years, SAMA has assumed a more active role toward fintech. What are your experiences as a bank regulated by SAMA?

AA SAMA is a strong, competent regulator for all financial institutions, and it governs the licensing process for any new product or service. This regulatory role has not, however, prevented innovation in the sector, which SAMA supports with a flexible and encouraging approach. SAMA has even gone as far as to create a digital currency in cooperation with the UAE Central Bank. SAMA has been driving technological development since the 1980s, and when compared to others around the world, the Central Bank of Saudi Arabia is among the top 10 for its support of fintech and other technologies.

How are digital services shaping the traditional retail and wholesale banking sector, and how can BAJ stay ahead of the innovation curve?

NA Digital banking is being demanded by every customer, and the entire banking sector is under huge pressure to offer services in an innovative, convenient, and secure manner. In the last few years, BAJ has focused on enhancing its digital banking services by re-launching AlJazira SMART, featuring a simple and efficient interface with a variety of services. These include Fawri remittance services, online credit card application, and online account opening, all of which contributed to increasing our retail customer base by 35%. Similarly, SMEs are also seeking smart ways to fulfill their banking needs, and we are working to support these customers with online services that suit their needs.