ME Article Retail Banking New Horizons

Introduction

The countries in the Middle Eastare facing pressures from several forces including advanced technology anddemographic trends that are pushing them in the direction of economic growth drivenby domestic industry/consumption rather than oil exports. In addition,governments such as in the UAE are taking initiatives in this direction by investingheavily in educational institutions and infrastructure. With these trends inoperation, the retail banking segment in the Middle East is set to go through adecade of high growth with a rapidly increasing customer base and demand for variedproducts.

Additionally, Retail-banking innovationin the Middle East market has the advantage of being able to start on top of a strongbase with the availability of powerful technology, internet communications andadvanced telecommunications tools/devices. Such an outlook calls for‘blue-sky' thinking with regards to the design and delivery of services aroundRetail banking. In this article, consultants at Maveric systems propose somenovel ideas with high potential for uptake and relevance for Banks in the MiddleEast.

Employing RFID forcutting idle time

RFID is a revolutionarytechnology and offers an avenue to improve customer experience by reducing idletime. Yes Bank in India already offers an RFID-enabled experience in selectbranches where the density of HNWI customers is more. Given that customers inthe Middle East in general, place a premium on being treated with respect inany business transaction, they would be very open to any banking experiencethat would have a higher degree of personalization and values their time.

Debit cards can be issued withembedded RFID chips holding key personal information about the customer. When thecustomer enters the bank premises, the RFID card reader installed at the bankentrance intimates the bank official about arrival and can be used toauto-populate the customer information at the terminal at the greet desk. The keycustomer information is thus made pre-available to the bank employee at boththe greet desk and the counter to which the customer is subsequently redirected.The quality of the customer experience can thus be improved and the servicetime reduced.

Google Wallet with a recommended enhancement

The significant increase ininternet and smartphone penetration in the Middle East opens up the landscapefor products like Google Wallet which are currently available only in US. Giventhat the demographics in most of the countries in Middle East tilt towardsyouth, the business case for building and introducing smartphone-based appsbased on the Google Wallet platform only grows stronger.

Google Wallet represents a onestop location for storing the details of all the credit cards and accounts thatthe customer operates. The proposed app built on Google Wallet would come inhandy when a customer wants to shop at a particular location. The app will downloadthe best possible deals that the customer could avail by swiping each of hiscards at that particular POS and show them on the screen. Similar existing productsinclude iMint in USA and YPayCash in India. The app could also be used to informthe customer about the cards that he doesn't possess and the benefits that heis foregoing owing to that. This would serve as a pull- marketing strategy forthe bank card.

Conventionally, only mainstream banking services in the Middle East have allowed for facilities based on loan-based interest. Such facilities are normally disallowed by the principles of Islamic Banking. In order to enable such facilities within the framework of Islamic banking, a novel product model can be setup which will provide benefits for all the stakeholders involved. In this model, instead of sanctioning a loan, the bank would create a scholarship account for the student scholar based on pre-defined criteria. Once the student gets enrolled at university, the bank would start direct payment of fee-Installments to the university.

When repayment begins, unlike with a traditional education loan, the student would repay the fee installments to an NGO/Trust (as specified by the bank), towards repaying the principal amount. This would benefit all concerned entities since the bank can include such scholarship disbursements while reporting CSR-related activity, while operating within the legal framework imposed by Islamic banking principles.