Figures: Customer deposits in QIB have increased to a total volume QR33.4 billion as of end-June 2012, a growth of 26% above the figure from the end-June 2011. Retail banking represents approximately three-quarters of QIB’s total deposits

What people are saying?

Head of Retail Banking at Barwa Bank, Hussain Al Abdullah: “Competition always works to the advantage of customers, but the differentiator is the service. With the projected population growth, I believe, in the long run, there will be enough for everyone to carve a niche in their respective businesses.”

Country Manager at Mashreq Bank, Howard Kitson: “Under the recent QCB regulations, we focus on service to differentiate Mashreq from other banks, keeping the customer at the centre of our offerings with bundles and well-rounded financial solutions.”

Acting CEO at Qatar Islamic Bank (QIB), Ahmad Meshari: “Customers place a lot of importance in finding a bank that is readily accessible and offers them a distinctive level of service. We believe that we have the right products, and we also believe we have the right team in place.”

Are the Retail Banks servicing our needs?

How do you decide where to bank? Are you more interested in earning interest on your savings or does a bank which offers convenience and classy customer service do it for you? It’s probably a bit of both. Well, with most banks offering almost 0% interest ratings on savings, you’re going to want a service with a smile. Which of the options out there can best serve your acute financial needs?

Qatar’s Retail Banking segment seems to be showing signs of confidence. There are over a dozen retail banking options currently serving a population of less than two million people. Innovations in online and mobile banking, customer service and product diversity have given customers a chance to shop around. Qatar’s Central Bank (QCB) said last month that it wanted to keep interest rates low to support lending to the real economy, and also reported that local banks had little exposure to the euro-zone. 

“Inflation rates in Qatar remain much lower compared to other GCC nations,” said Sheikh Abdullah bin Saud al Thani, Governor, QCB, last month. “Qatar’s inflation rate will be around two to three percent this year. The Central Bank is very comfortable with current interest rates and is not concerned about hot money inflows,” Lower interest rates helped to boost growth margins in 2011. With lower interest rates, there was more money floating about, but inflation levels remained static.

With such optimism circulating in the segment, Qatar Today caught up with three retail banks to see what they were doing to bump their profits and draw more customers. The recent directive from the QCB to shut the Islamic windows in conventional banks meant that some customers were forced to close their bank accounts and look elsewhere. We asked them how important retail banking was to their overall enterprise and how they were innovating to attract customers, from an information technology perspective, through internet and mobile banking to the security of their services.

Service with a smile?

Acting CEO at Qatar Islamic Bank (QIB), Ahmad Meshari said: “Retail banking is immensely important to QIB, forming as it does one of the two main strands of our operation (the other being wholesale banking). The bank’s commitment to the retail sector is total, and our branch expansion programme is evidence of this. Further, we see great opportunities in the expanding private banking and private asset management sectors of retail banking, so it’s a sector that continues to thrive for us. Customer deposits to the bank have increased to a total volume QR33.4 billion as of end-June 2012, a growth of 26% above the figure from  end-June 2011. Retail banking represents approximately three-quarters of QIB’s total deposits.

“Providing a good customer experience is one of QIB’s stated strategic goals,” he continued. “This is evidenced by our branch expansion efforts, our unending quest to innovate and bring new, attractive products to market. We have had a busy year in terms of the bank’s IT resources to enhance the security of our customers’ data in line with the requirements of the times. These developments will help us towards our goal of increased automation, and, additionally, we have enhanced our internet, phone and SMS banking facilities. QIB is now looking a lot more solid and productive in the application of current banking technology. 

“Our contact centre offers a variety of services to our customers and is available 24/7. You also have the option to complete your enquiries and transactions on our Automated Phone-banking service (IVR). The services include general enquiries about the bank’s products and promotions, accounts and cards balances and transactions, placing and changing maturity instructions for your fixed deposits, paying your utility bills and making cards payments, transfers and requesting cheque books and statements by email or fax. 

“QIB is currently developing its mobile banking application which will offer a range of conveniences. The application is enriched with a range of services including Branch and ATM Locator as well as currency calculator and we will continue adding more services as we go. The application will be available on a wide range of mobile operating systems and smart phones this November.”

Country Manager at Mashreq Bank, Howard Kitson says: “We are a full service provider in the retail banking segment and have been growing at a steady rate of 30% year-on-year. 

“We have invested heavily in technology to provide our customers with user-friendly e-banking solutions which provide flexibility to manage finances from the comfort of their homes or offices. Our online banking platform was awarded the Best Internet Consumer Bank in Qatar by New York-based Global finance magazine for four consecutive years. Its services offer comprehensive banking and payment solutions based on individual customer preferences spanning services that include utility bill payments, local and international funds transfers, account opening, investments, loans and deposits in addition to standard account servicing.  

“Mashreq was the first banks in Qatar to introduce a fully functional mobile banking service, where customers can access their accounts, check balances, transfer funds, request cheque-books and effectively manage their financial affairs. 

“We have embarked on an ambitious project of replacing our existing core banking system with the state-of-the-art “FlexCube” platform, which benefits customers by allowing them to perform all their basic banking transactions online with just two clicks. Our goal is to continuously offer convenient banking solutions and we are on the path to achieving that. The project was pilot tested in Qatar and is being rolled out to other Mashreq locations around the world. 

Head of Retail Banking at Barwa Bank, Hussain Al Abdullah says: “Across the globe, retail banking has witnessed a spectacular innovation in the commercial banking sector in recent years. The growth of retail banking, especially, in this region, is attributable to the rapid advances in information technology, the evolving macroeconomic environment, financial market reform, several micro-level demand and supply side factors. Retail banking business, on non-financial contribution, adds substantial brand strength to commercial banks, thereby making it significantly important to any commercial bank and Barwa bank. 

“We have a customer loyalty model within retail banking whereby we, through our different channels, ensure customers are delighted at the time of acquisition. Then we endeavour to deliver great experience consistently throughout this journey by way of various initiatives (financial planning, advisory, cross sell, event invites) especially in the first twelve months of relationship.

Differentiating products

Interest rates on savings account are almost negligible across the board. Forget customer service and mobile banking, customers want their money to work while it’s in the bank and not sit there earning no interest. Or do they? Does customer service really matter? How big a challenge is it to attract customers when there’s 0% interest rate on savings?

Barwa Bank’s Hussain Al Abdullah says: “With a diminutive target market and an overbanked country, it is indeed challenging but with our proactive product innovations (i.e. tweaking working mechanism of product and bundling it with extra benefits) we were able to manage our liability needs quite smoothly. You can present the same thing in a ‘different way’ or a different thing in the ‘same way’, but what brings customers or generates loyalty is ‘the way’, i.e. your capabilities to deliver service excellence.

“Competition always works to the advantage of customers, but the differentiator is the service. With the projected population growth, I believe, in the long run, there will be enough for everyone to carve a niche in their respective businesses,” he added.

QIB’s Ahmad Meshari believes it’s no more a challenge for QIB than it is for other banks. “For one thing, if you have money to invest then there are many alternatives to savings accounts that can offer potentially superior rates of return. Secondly, as discussed above, customers place a lot of importance in finding a bank that is readily accessible and offers them a distinctive level of service. We believe that we have the right products, and we also believe we have the right team in place.”

Mashreq Bank’s Howard Kitson believes that attracting new customers is always a challenge and it requires an innovative approach. “However, we have in place an Easy Saver account that offers one of the best rates in the market and it can be opened by the customers online in real time. We also create special structured notes and deposits for our customers based on their financial objectives, which offer higher returns than the normal savings account. With such innovative products and offerings, we have been able to grow at a steady pace.

“In a small, but growing market like Qatar, all banks are competing for a share of the customers’ banking needs. Under the recent QCB regulations, we focus on service to differentiate Mashreq from other banks, keeping the customer at the centre of our offerings with bundles and well-rounded financial solutions, coupled with lifestyle benefits, 24x7 convenient accessibility and excellent customer service,” said Kitson.

Private sector assistance

There’s a drive on in Qatar to encourage entrepreneurship and promote private sector growth. But these businesses need to have confidence in their banks to provide credit when they need it most. The first couple of years are the hardest for start-ups and SMEs (small-to-medium enterprises) are always looking to grow further, so how are these banks helping these businesses get the financial assistance they need?

 ”After assessing the trade and financing requirements of our SME customers, Mashreq offer financing solutions up to QR20 million,” said Kitson. “We have also partnered with QDB (Qatar Development Bank) in its Al Dhameen finance assurance programme where we offer financing facilities to the new startup ventures.

“Our leading product is the Small Business Loan, through which we give SMEs up to QR2 million in lending with minimum documentation - just a copy of a bank statement is all that’s required.  In addition, our SME relationship managers also provide customers with competitive pricing and best in class service on branch banking, transaction banking, trade finance and working capital finance, LCs, LGs, guarantees, discounting, Keyman Insurance and other financial needs,” Kitson added.

Ahmad Meshari said: “The Qatari authorities know well the importance of SMEs in diversifying the economy away from its current reliance on hydrocarbons, and QIB is completely aligned and supportive to this position. It is for this reason that we have developed a suite of financing products specifically tailored to the SME sector so that we may give this market the attention - and support - that it demands. It’s certainly an area special attention for us.”

“According to reports, Qatari market economy is now standing at 28%, out of which 55 % comes from trade and 16% from industry, the sector is poised for big gains,” said Al Abdullah. “With the awarding of the 2022 FIFA World Cup hosting rights to Qatar, the growth of SMEs is expected to further improve due to heightened economic activity, in several sectors of the economy. Volumes will only increase from here as SME business confidence in Qatar reflects an extremely positive environment for business growth.”