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Adapt and Survive

Starting by highlighting the Mashreq Chairman’s view that banking will be shaped by banks that survive the next 10 years by transforming into fintechs with a banking license, Thomas Cherian, Executive Vice President, Head of Retail Banking Technology and Retail Technology details what to expect in the development of the successful banks of the future

Thomas Cherian, Executive Vice President, Head of Retail Banking Technology, Retail Technology

What key actions should the regions retail banks take to ensure they thrive in the near to medium term?  

Notably, Mashreq’s chairman H.E. Abdul Aziz Al Ghurair highlighted that the future of banking will be shaped by banks that survive the next 10 years by transforming into fintechs with a banking license.

Digital transformation has left a strong mark on Middle East’s banking industry. Yet, the maturity scale of transformation is moderate with fewer banks reimagining their current strategy. However, the banking sector is beginning to reinstitute themselves while catching up with swift digitalization. To create winning strategies and synergies within the ecosystem, banks must focus on the following three trends.

  1. Digital-first platform– banks must adopt a digital-first outlook to provide greater flexibility, transparency and quicker access to solutions. Platforms like OTT have paved way for instant gratification and influenced consumers to expect on demand services. Similarly, the expectations from bank providers have evolved – consumers are on the look-out for digital bank platforms that can enable a wide array of services such as payments, fund transfers, and even deposits through online, zero-touch mediums.
  2. Lifestyle banking through open ecosystems – Increasingly, customers want their tools, information and services to be able to engage with different companies on an open network for a hassle-free experience. To enable this, banks must focus on building APIs for deep connectivity and partnership with platform businesses such as ecommerce service providers, social platforms, messaging platforms and home devices.
  3. Switch to microservices – Switching from one major core banking provider to microservices and multiple third-party tech vendors will help banks avoid technical debt in the long-term, substantially reducing the time-to-market for new financial products to become market leaders. It provides a competitive-edge and help in better competing with dynamic market demand. Also, a microservice architecture allows banks to build ecosystems and partnerships for future scaling.

Over the last two years, Mashreq has focused on becoming a superior customer experience bank. By leveraging the tech stack, we have been able to improve operational processes and increase efficiencies. Today, 85% of customers are onboarded through digital banking platforms and 92% financial transactions are performed through digital channels. We have created zero-touch processes for customers, enabled work from anywhere for employees, and implemented AI-driven processes for operations. Mashreq is also digitalizing on the outside to build a super-app to provide platform banking systems by integrating our services and products with those offered by our partners in the ecosystem. Going forward, this year, we will transform into Banking as a Service (BaaS) to provide our solutions to our partners’ customers.

How will the co-existence of legacy retail banks and neo banks evolve in the coming years? 

Agility, innovation and data are three key components that enable banks to diversify and succeed. Traditional financial institutions are evolving with current times by responding to the modern requirements of consumers by focusing on those three components. As a result, legacy banks are launching digital banks of their own to remain competitive among fintechs and neobanks. One of the most effective operational models is represented by established players that leverage existing assets and tech-stack to offer omni-channel and interoperable experiences to consumers.

Are new developments in retail customer onboarding nearing their limits or is there room for further innovation? 

Innovation is a continuous process and requires constant agility to respond to current market requirements. Hence, there is always room to enhance, ideate and create further with the help of technology. Onboarding is a crucial step in the customer lifecycle as it often among the first experience customers have with banks. To smoothly onboard customers, open networks and integration with third parties play a crucial role in cross-sharing of existing KYC data. If banks optimally enhance this process, it can result in minimal identity verification and lesser KYC data-entries, further improving the onboarding time. By implementing simplified & intuitive user interfaces, banks can also reduce onboarding steps to enable instant account opening.

At Mashreq, we believe it is important to collaborate with companies in the ecosystem to offer superior experiences to customers. We have partnered with EFR to validate the customer identity in real time, while providing KYC related information which requires minimal intervention from the customer. This simplifies the journey – enabling customers to open accounts with Mashreq in under two minutes.

In a time of more options and easier onboarding, how are you encouraging customer loyalty? 

Mashreq has been at the forefront of introducing innovative services and digitalizing processes, including onboarding to provide customers with choice and flexibility. On average, customers have a lifecycle of 7 years with Mashreq as per our internal research. While this loyalty is built on rewarding customers at various stages of the lifecycle such as first transactions, birthdays, anniversaries etc. it is also formed at the back of innovative, value-add services we offer customers. Our core competency is delivered through digital intelligence that enables us to analyse consumer trends and provide tailor-made products and services geared towards their requirements.

During this period of ongoing digitization how are you managing the generational differences between your customers? 

Banking preferences and customer behaviour are continuing to evolve. Due to restrictions on in-person interactions, MashreqNeo, our neobanking platform witnessed positive customer engagement and satisfaction from various age segments, especially those 45 and above.  On the other hand, Gen Z and millennial customers are more drawn to mobile banking apps than other generations for instant banking satisfaction and functionality.

To build a sustainable engagement strategy across different generations, Mashreq is focused on delivering omnichannel experiences that offer integrated, hybrid banking experience across all touch points such as branches, online banking, mobile apps, chatbots and call centers. This can help cater to the younger, digital native segment as well as the older generation.

We’ve also seen that mobile apps are a core and central platform for customers. As a hub of interconnected and interoperable experiences, these apps witness higher digital engagement, irrespective of a customer’s generation. While accelerated demand for digital services continue to rise across customer generations, preferential differences between physical and digital touchpoints will remain. Hence, a hybrid banking experience will be crucial in the success of banks.