Rafik Nayed, group CEO, Al Salam Bank Bahrain, discusses the bank’s digital strategy in the Covid era with Gulf Business What impact did Covid-19 have on your business operations? This pandemic has forced us to re-think our priorities. From an operational perspective, we have found ourselves focusing on availability, zero-latency and efficiency, while ensuring the offerings that are so important to our clients – value creation, wealth preservation, liquidity and growth – are still available to them. From the earliest of stages, we put strict health and safety measures in place across all our branches to ensure a Covid-19 free network. As well as introducing multiple worksite zones to strengthen our business continuity, we implemented a comprehensive work-from-home plan to protect our staff while streamlining the shift to remote working. Interestingly, there have been certain departments and functions where being home-based has worked better than being in-office and we’ve seen output and productivity maintained, if not even improved – this has certainly given us something to think about. During these unprecedented times, support for our clients has become a key focus. We were one of the first financial institutions in Bahrain to offer a relief scheme to clients, launching our ‘Al Salam Initiative’ in mid-March. This included profit-free loans, automatic increases in card and overdraft limits and a boost in spending through our various CSR programmes. In short, during Covid-19 our focus and direction has shifted significantly. However, we have been able to minimise disruption to our operations through careful planning, forward-thinking and a response that is rapid and flexible, yet decisive. How did your existing digital infrastructure help cope with the resultant disruption? Fortunately, we had already begun implementing our strategy back in 2019, which focused heavily on boosting our digital capabilities. This meant we had the groundwork and the infrastructure in place to quickly adapt to a climate that called for the rapid digitisation of communication, collaboration and operations. By the time the pandemic struck, we were no longer even using the term “paperless”, but were already focusing our discussions around “touchless”, “branchless”, and “zero-ops models”. Through crisis-planning, we knew that the pandemic would be a turning point where most client interactions would be remote, and we were able to respond to the new digital needs of our customers quicker than most. We rolled out various initiatives including virtual branches, WhatsApp Banking and dedicated relationship managers to serve customers offsite. We also debuted our new banking app – a customisable app that combines digital onboarding with a full suite of mobile banking features. Even our relief efforts were carried out in the digital space. Almost all the initiatives were geared towards digital communication and autonomous execution. We were able to get customers signing up for these multiple relief initiatives through digital channels from day one – a testament to the strength of our strategy. Our existing digital infrastructure also allowed for enhanced collaboration and communication between key business and support units, between individual employees and – crucially – with our customers, despite the paradigm shift of remote working. This has stood us in good stead for responding to even the most unprecedented of shocks. What gaps have you identified that need to be plugged to thrive in the “New Normal”? From an industry perspective, there can be a geographic disparity in banks’ digital offerings. This is particularly true of major, global banks, which have to deal with the complexities of operating within multiple international jurisdictions. Faced with a range of different variables, from market conditions to customer requirements, global names can have very advanced digital offerings in one region but are perhaps behind in another. For this reason, banks that are home-grown in the region are sometimes considered ahead of global peers in terms of their focus on digital experience. What the global banks have done well is employing technology to run a cohesive business around the globe, handling centralised liquidity and risk exposures within different time zones and settlement channels. We often see global names trying to strike more deals and partnerships with third-party FinTech businesses to ensure agility and to also be able to cope with different market dynamics wherever they operate. These partnerships have had many successful implementations and we’ve seen many FinTech startups grow into unicorn businesses at record-breaking speed. This is where banks in this region lag behind and could be doing more. There are reasons for this. For one thing, market dynamics and regulatory standards can vary considerably from country to country making it costly to implement initiatives at scale. Moreover, the false notion that banks can “do it better alone” clings stubbornly on. That is why initiatives carried out by the Central Bank of Bahrain like the Regulatory Sandbox and Open Banking are so important, as well as regional initiatives such as the GCC RTGS. Bahrain has put the necessary regulatory frameworks in place for collaborative innovation to flourish. It is now up to the banks to accept the challenge and drive this innovation forwards. Are you planning to invest more in digital solutions based on this situation? How much more in percentage do you plan to invest in digital solutions in the coming year? We will consistently allocate the bulk of our transformational budget to digital initiatives – at the moment its well over 60 per cent. However, we won’t spend just for the sake of spending, we don’t believe in that. We spend smartly – assessing timing against costs and benefits. And we listen to our customers – we won’t build out concepts that don’t have customer appeal. If anything, this experience has helped us fast-track the rollout of our existing digital strategy, but there is still more to be done. We are continuously reviewing our product offering to best respond to the changing needs of our customers during this unprecedented time. Soon, no service we offer will require physical interaction. Our new banking app is a big step forward for us. We already offered digital onboarding through our previous app but this update will feature much greater new-to-market functionality. We have already seen more account openings via our previous app than any of our physical branches – no doubt catalysed by Covid-19. Moreover, with this new app we expect only a very small number of our customers to require a physical banking space – and even then, only to carry out a very small range of activities. However, staying relevant in these unprecedented times will require more than just offering our services though digital channels. We have a renewed focus on data, for example, and more ambitious plans for the use of cloud technology to improve our product offering, increase efficiency and most importantly enhancing the availability and uptime of our services. Ultimately, our digital and strategic ambitions are for our services to go beyond the customer. We want our services to reach the whole household, catering to the family, the community and beyond. As the world adapts to the new reality we find ourselves in, banking needs to be more inclusive and innovative to deliver results for all stakeholders. What are the lessons learnt from the pandemic? The pandemic has given us fresh eyes through which to view our approach. We can and should question absolutely everything – from our current physical footprint to our business model – everything can be optimised and enhanced much more than we traditionally thought possible. The pandemic will be tough on everyone, but it is also a gamechanger. We’re proud of the robust, client-centric and technology-focused approach we have taken to the crisis, but there are always areas for improvement. We would have liked to have allocated more resources to re-engineering processes, for example, to further lessen dependence on physical locations. Although few could have foreseen the scale of this pandemic, we have had to re-evaluate our internal policies and procedures to better accommodate social-distancing requirements. Now, as the crisis enters its next phase, we are working to offer clients a more flexible service – allowing them to tailor their own offerings based on their bespoke requirements. For many sectors, this will be a difficult storm to navigate, and the impact will be long-lasting. But those businesses that can adapt to and even embrace disruption will thrive in the “new normal”. It took Instagram two years to reach 100 million users; it took Zoom less than three months. Agility and adaptability will be key, as will a comprehensive risk management framework.
