ME Article Retail Banking New Horizons

Introduction

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

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

Employing RFID for cutting idle time

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

Debit cards can be issued with embedded RFID chips holding key personal information about the customer. When the customer enters the bank premises, the RFID card reader installed at the bank entrance intimates the bank official about arrival and can be used to auto-populate the customer information at the terminal at the greet desk. The key customer information is thus made pre-available to the bank employee at both the greet desk and the counter to which the customer is subsequently redirected. The quality of the customer experience can thus be improved and the service time reduced.

Google Wallet with a recommended enhancement

The significant increase in internet and smartphone penetration in the Middle East opens up the landscape for products like Google Wallet which are currently available only in US. Given that the demographics in most of the countries in Middle East tilt towards youth, the business case for building and introducing smartphone-based apps based on the Google Wallet platform only grows stronger.

Google Wallet represents a one stop location for storing the details of all the credit cards and accounts that the customer operates. The proposed app built on Google Wallet would come in handy when a customer wants to shop at a particular location. The app will download the best possible deals that the customer could avail by swiping each of his cards at that particular POS and show them on the screen. Similar existing products include iMint in USA and YPayCash in India. The app could also be used to inform the customer about the cards that he doesn't possess and the benefits that he is foregoing owing to that. This would serve as a pull- marketing strategy for the 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.