• "The challenge for the retail business is how do you stay relevant in a very competitive market"
• AL Ahli Bank is among the leading banks pushing the digital agenda in Kuwait
• AL Ahli Bank already created a strong foundation for future growth

Despite a small market, and an economy that contracted by an estimated one percent in 2017 as OPEC-related oil production cuts weighed on growth, AL Ahli Bank Kuwait was forging ahead in core banking replacement  which went live in October 2017 and digitising a range of services in one of the most regulated markets in the Middle East.

The challenge for the retail business is how do you stay relevant in a very competitive market. Rates amongst banks are very similar and as such the need to compete on service as a differentiator is more important than it has ever been. "Our aim is make sure our products and services remain attractive to our clients and of course encourage new relationships to the bank,” said Stewart Lockie, general manager, retail banking, AL Ahli Bank of Kuwait.

Growth in the retail financial services industry will see only a gradual recovery in 2018 and 2019.  In 2017, industry retail lending grew anaemic on average between 4-5 %, while retail deposit grew on average about 6-7% among the ten domestic commercial and Islamic banks.  Car sales, a key indicator of the health of the economy,  dropped significantly.

AL Ahli Bank ranks among the top two revenue growth plays in retail financial services between 2013 and 2017 measured by the compounded annual growth rate (CAGR).  With a deposit base of $5.9 million (KD 1.799 million) and 30 branches, the bank grew its retail liabilities by 15% year on year in 2017, according to its annual report.

“The replacement of our core banking system has just been completed in October 2017. Retail was of course going to be a large beneficiary of this project. We, as a bank needed to make sure the foundations were laid in order for us to build and expand our digital offering. We were successful with the implementation, in fact going live ahead of the proposed schedule.”

“Within 5 days of the launch of the new system we released biometric banking and facial recognition on the new platform. This is just one advantage of the core upgrade” Lockie added.

AL Ahli Bank is among the leading banks pushing the digital agenda in Kuwait. “2018 witnessed the launch of cardless ATM withdrawals. Customers can now visit the ATM, send a message to the call centre and they will receive an OTP (one time password) and be able to withdraw up to KWD 200 per day without using their card.”

The bank also was among the first banks in the instant issuance of card services, which is now available in more than six branches in Kuwait.  “With simplicity being one of our core values, we have enabled the account opening process to be more customer friendly now taking only 6 minutes to open an account with a card being ready for delivery on the same day. Additionally we have managed to bring the account opening application forms from 12 pages to three,” he added.

A large focus has been on the operational processes within the bank’s branch network. “We have managed to automate almost 40% of the day to day back office operations in 2017.”

A major sign of the bank’s success can be seen by the doubling of our lending portfolio since 2013 and a trend of 'double digit' operating profit growth in the retail business. According to its 2017 annual report, retail revenue grew by 6.6% to $175 million (KWD 52.8 million). The bank is among the best cost managed financial institutions in Kuwait.

According to World Bank, economic growth in Kuwait should gradually recover to about 3 percent in the medium term, supported by infrastructure spending. AL Ahli Bank already created a strong foundation for future growth. By continuing its drive towards simplicity and shift to a digital product and service delivery, it will support sustaining the bank’s bottom line profit in Kuwait.

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Keywords:Retail, Lending, Technology, Digitalisation, Operational Processes