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General Manager Group Strategy at Emirates NBD, Dr. Jan Hendrik Kraus shared his views on UAE banking prospects with Suhail Shamieh, Consultant MEA at FitchLearning

UAE Banks:A convincing proposition

What are the latest trends in the UAE banking sector? “Competition in the local banking market is increasing

significantly and banks are trying to expand their shares, especially in attractive market segments like mid corporates/ SME, affluent banking and wealth management. A lot of banks are focusing on becoming the prime relationship of their customer and thus increasing their share of wallet and cross-sell ratios. However, you can also still observe acquisition, especially Abu Dhabi banks expanding their presence in Dubai and vice versa.

“Regulators have increased the focus on customer protection and several new laws have come into force over the last year(s). Transparency on tariffs and fees has increased and limits on fees have been imposed on a wide range of products. As a result, competition on price has increased and margins that used to be very high are coming under pressure.

“Convenience and ease of banking will become major winning factors. Convenience will go beyond the traditional availability of branches but include the accessibility and offering through all the new channels, including internet and mobile banking. Providing seamless integration across all channels and providing the customers the choice in how to interact with their bank will be crucial.”

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Jan Hendrik Kraus, General Manager Group Strategy at Emirates NBD

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What should be the strategy for sustainable growth in an unpredictable and fast changing environment?“In order to win in this challenging environment banks will have to develop very convincing value propositions for their target customer segments in order to prevent margin erosion and competition on price. A lot of focus and effort has been put on improving customer service; the differentiation will come from quality of execution and ability to sub-segment. Traditional client segmentation is based on the size of the relationship; however, this does not determine the specific needs of the client segment. A more holistic approach through sub-segmentation based on customer demographics, behaviours and values will allow banks to develop customer propositions that drive impactful improvements to the customer experience. Banks will have to invest in analytics in order to understand preferences and to deliver the right products, with the right level of service to their customers.”

Are the banks in UAE after operational effectiveness or finding a distinctive advantage to differentiate them from the crowd? And what about ENBD? “Operational effectiveness is in any case a hygiene factor that is required to optimise the cost position of the bank but also provide the speed and consistency of the delivery of services. Emirates NBD has set-up Tanfeeth, GCC’s first on-shore Shared Services Company, which provides financial operations, voice, F&A and HR services to the Group.

“Banks in the UAE will only be able to emerge as winners if they are able to develop a convincing proposition that differentiates them

from the competition. The challenge is not only to define and clearly communicate the proposition but also deliver against that promise. Emirates NBD wants to provide convenience and quality service to its customer base. Historically, with its largest branch network in the UAE, accessibility has always been there. The latest strategic efforts are to improve the transaction and

service opportunities through all other channels, ATMs, the call center, online and mobile banking.

“Customer interactions are carefully managed across all channels, recently more and more also through social media. Emirates NBD has a Facebook presence since August 201, but already there are around 136,000 likes and 12,000+ engaged users. Requests and complaints are being proactively monitored and a dedicated service team is following-up with customers immediately.”

What do you believe makes a great strategy consultant? “A great strategy person combines both an overall macro understanding of global and regional trends that affect the bank and an in depth-understanding of performance drivers and actual performance of the organisation. He/she should be visionary to anticipate opportunities and challenges of the future and steer internal discussions among

the senior management to ensure the organisation is properly set-up to capture the opportunities while preventing falling into traps or being outpaced by competition.

“While being an advisor to the CEO and Group ExCo, he/she should be a sparring partner to all business and support function heads, providing them honest feedback about opportunities to improve their respective areas. This

requires in-depth understanding and transparency of the businesses and their performance drivers vs. regional and international best-practices. The strategy person needs to build close relationship with senior management in order to ensure buy-in is created in order to incorporate the strategic insights and jointly developed recommendations into improvement programmes for the bank that are rigorously executed.

“Lastly, a great strategy person needs to be able to inspire people and help to attract talent to the organisation. Strategy work is only powerful if ideas and plans get executed which requires people- skills to convince and facilitate among several parties to ensure alignment in the execution.”

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A great strategy person combines both an overall macro understanding of global and regional trends that affect the bank and an in depth-understanding of performance drivers and actual performance of the organisation

Suhail T. Shamieh

Fitch Learning Consultant - Middle East and Africa