Here’s an interview with Adnan Ahmed Yousif, President & Chief Executive, Al Baraka Banking Group.
It’s been a year since the launch of Islamic challenger bank Insha. How is Insha doing? With low interest rates and volatile markets, where do you see growth coming from? How does your organisation embrace open banking?
The response on Insha is extremely encouraging. In fact, in early 2020, we have witnessed a double growth in terms of the number of customers and we registered an average growth rate of 32% on transactions per month.
Like several other challenger banks, our strategy is it is to focus initially on gaining a strong customer base and providing them with basic services and then grow accordingly. Going forward, we plan to expand into new European markets, introduce more products and services, and finally of course, serve new customer segments. We have committed a dedicated team on the Insha project in order to make this bank a success.
Concerning open banking, last year we launched, the Al Baraka Global API Portal that has more than 25 APIs under six main categories: accounts, money transfers, financings, credit cards, information services and investment products. The portal is open to global third parties like FinTechs, enabling them to use these APIs and test their innovative solutions. In Bahrain, open banking is driven by regulation, whereby as you would know, all the banks have opened their APIs last year. On the other side, in Turkey, we have taken a proactive approach in the market by opening the APIs and working closely with FinTechs to test various solutions. Meanwhile, as Insha is based in Europe it is also complying with PSD2 and therefore leveraging the potential of open banking -as an inherent part of our growth strategy.
How do you support innovation within your organisation?
We are going through a digital transformation period both on a group level as well as on individual level with our Units globally. Accordingly, we are extremely focused on improving our existing talent pool by providing them with workshops and training as required to upgrade their skills and knowledge on FinTech, Blockchain, and other innovations in the sector. In fact, we believe that talent is a crucial factor for success in digital transformation.
Another major component of our digital transformation is creating a digital culture that enables innovation and encourages creativity. Therefore, change management and creating an agile culture have been given due importance in all of our Units’ digital strategies. This can be seen in various initiatives taking place across the Group, including internal and external Hackathons as well as collaborations with various startups.
To give you an example, Al Baraka Tunisia conducts Digital Friday’s talk, which is a roundtable discussion with employees about latest digitalization trends in banking to ensure a smooth change management as part of their digital transformation journey. Al Baraka Turk on the other hand, embraced innovation internally through several other initiatives, which includes:
- Establishing Al Baraka Garaj, which is a startup acceleration and incubation center inside the bank. The center provides opportunities for entrepreneurs to prepare their technology based business ideas and projects and prepare it to market. The industries that are covered in the Garaj project include FinTech, Islamic FinTech, Artificial Intelligence, Chatbot, Blockchain, InsurTech, Internet of Things, Big Data etc. The existence of such a center inside the bank allows our employees to be in touch with entrepreneurs, and this helps create a vibrant innovative environment which leads to thinking outside the box.
- Rolling out Keşfet program in the bank, which is an intrapreneurship program that enables creative and innovative ideas to be developed within, with an entrepreneurial approach by employees. Throughout the program, the employees with a ‘big’ idea, are trained and mentored until they develop their products.
What are your views on the future roles of neo banks and traditional banks relationship in the future? Will it be a convergence or co-existence?
I believe both banks will coexist and the roles of each will be different. Today, most of the banks are going through digital transformation in order to stay competitive in the market and meet the demands of a new generation of consumers. As part of this transformation, some banks are launching their own neo banks and others are collaborating with different FinTechs to be innovative in their offerings. Now despite the strategy, traditional banks are excepted not to have the same role in future, as this will depend heavily on these neo banks and FinTechs in its front end and customer facing services. Meanwhile, these traditional banks will focus on the back end operations and services that can support these neo banks or any other FinTechs. It is not true that traditional banks will disappear but for sure, their role will change.
Banking these days is increasingly done digitally. What are the developments here? And what’s the effect on employees?
Digital Banking has always been part of the bank’s strategies and agendas in Bahrain. However, with the onset of Coivd-19, the speed of digital transformation in these banks has been faster than ever before. The digital changes that took place since early 2020 could have taken much longer in a non-Covid era. It is without doubt that this pandemic is being viewed in many cases as the main driver towards expediting the digital transformation plans of banks.
The circumstances that were imposed by the pandemic led to restricting physical interactions with customers and the decreasing use of physical cash. These have resulted in increasing the traffic towards existing digital banking channels, introducing new digital banking services, and increasing digital transactions by and large. The efforts taken by Team Bahrain led by HRH the Crown Prince, have been tremendously effective to progress the country to a more cashless society and reducing physical interactions for the safety and wellbeing of the citizens. As a result, the Central Bank of Bahrain (CBB) has increased the NFC (contactless) card payment limits, deferred installments, and prompted e-payments and digital banking solutions.
The common digital trends in banking that the Bahraini market have witnessed are the introduction of digital branches by banks, promotion of on-boarding features of the digital customers, providing Intellectual Teller Machines (iTMs), as well as offering open banking services. With Covid-19 most of the banks have directed their digitalization efforts to the back office operations as well, by empowering their employees to work from home using various digitalization tools and by starting to automate most of its back office processes to enable serving customers remotely and ensure sustainability of the financial services provided to the customers.
The global pandemic has helped us accelerate the digital transformation journey at Al Baraka and added further impetus on digitalisation initiatives that would better serve and meet the current and future demands from customers’ perspective. As for the employees, we offer a working environment that embraces digitalisation of our internal processes and back office operations simultaneously.
Finally, what would you like to learn from the E-Payments and Online Banking Summit’s participants this year?
Such events are important platforms to get updates on the latest trends in the financial sector and better understand the ecosystem through the different participants that we have, throughout these two days.Nevertheless, the e-payment related topics covered in this summit, specially in light of COVID-19 can add great value to the digital transformation journeys that most of the banks are going through and can open new avenues for innovation in our services and products.