Emirates NBD’s efforts towards digitisation have enabled customers to bank with more ease through its new account propositions. From Shake ‘n Save to Fitness and many other new mobile based applications, the bank is putting itself at the forefront of digital services
Emirates NBD occupies a large share in the UAE retail banking market. The bank reported its highest retail revenue in 2016 at AED6.1 billion ($1.65 billion). While the average growth of deposits is 1.6%, Emirates NBD’s deposits grew twice as fast at 3.4%, highlighting its ability to counter the slowing economy and liquidity crunch that has plagued the region. This it has done through leveraging the low costs of deposits to improve the margins on retail products such as credit cards and auto loans.
Personal banking is the bank’s largest segment, serving over one and a half million customers and providing services across the mass and affluent customer bases. The consistent growth in the bank’s retail revenue demonstrates its strength in the retail market (Figure 1). Through the past five years, the bank has achieved a net growth of 50% in its retail revenue. 2011 marked the year that Emirates NBD enhanced its investment in technology to improve the efficiency of products and operations.
Emirates NBD grew its revenue by over 50% between 2011 and 2016
Operating in a country that has one of the largest populations in the GCC (Gulf Cooperation Council) and one of the highest smartphone penetration rates globally is an advantage. The United Arab Emirates (UAE) presents many attractive market opportunities.
The UAE is home to a large market for smart mobile gadgets and apps and a smartphone penetration rate of 78.3% as of 2016. Banks in the region are increasingly seeking to innovate in the digital and mobile banking services space. Amidst the stiff competition, Emirates NBD has been actively working to become a market leader in terms of digital innovation through its mobile banking app.
Among Emirates NBD’s latest mobile banking innovations are: Shake n’ Save account that seeks to engage customers in banking through an enhanced mobile user experience; DirectRemit for mobile transfer of funds to international recipients; and mePay, which account holders can use to instantly transfer funds via mobile numbers instead of account numbers.
Shake n’ Save Account
The Shake n’ Save Account is a first of its kind attempt to encourage ‘impulse’ savings via a more developed digital banking portal. It combines popular gamification technology and trends in financial services to provide young, financially independent customers with an easily accessible, flexible and hassle-free method to save money on the go.
The mobile-only account can be accessed via the mobile banking app. Upon setting up the account, customers can pre-set the desired savings goals that range between AED 50 and AED 2,000 ($14 and $544). As the impulse to save strikes, the customer needs only shake the mobile device and a random amount within the pre-set limits will be saved in the account, earning interest of up to 2%. To reset the amount, the customer simply shake the mobile device again.
The bank gained more than 22,000 new customers through this product. It has helped Emirates NBD to extend the reach of mobile banking to the growing number of younger customers who are increasingly relying on digital channels of banking, with almost 20% of customers falling in the 18 to 30 age group (Figure 2). As more young people enter the labour market, their share in the bank’s client base will increase, prompting more digital investment to keep up with needs.
Young customers account for 18% of client base
Another product that Emirates NBD offers through the mobile banking app is the DirectRemit service that provides convenient options for international funds transfer. The transfer can be made free of charge via a smartphone, or online, at competitive exchange rates. The service was initially launched for customers making transfers to India and Philippines, but has now also been expanded to include Pakistan, Egypt and Sri Lanka. The processing time for transfer to most other banks in India and Pakistan is under an hour, and less than 24 hours in Sri Lanka, Egypt and the Philippines. A multi-fold increase has been observed in the number of transfers to the India and Philippines corridors since inception. Emirates NBD has sought to capture the expatriate segment, which accounts for a major share of UAE’s total population, of which 70% hail from India and the Philippines. Today, the Direct Remit service generates about 100,000 transactions per month.
The speed and efficiency of making international transfer of funds is DirectRemit’s biggest draw. Additionally, Emirates NBD has enhanced its competitiveness in foreign exchange in the past three years, in an effort to upgrade its money transfer services for the expatriate population.
Emirates NBD’s mePay is designed to cater to the local money transfer needs of its customers. This products allows customers to carry out instant money transfers by using the recipient’s mobile number registered with Emirates NBD, instead of account number. Along with the Shake n’ Save Account, this service also caters to the growing demand for digital services among the younger clientele of the bank. The service was developed to streamline the process of money transfers between accounts at the bank. However, in a recent upgrade, the bank has extended the service to non-account holders. Customers can now transfer cash to anyone in the country through the recipient’s mobile number. Recipients will receive a text message with a one-time PIN to withdraw the transferred funds from an Emirates NBD ATM.
Emirates NBD has invested heavily in technology to enhance its retail product offerings. The bank gained more than 22,000 new customers through the Shake n’ Save product since its introduction in 2014.
Additionally, DirectRemit has been recognised as a significant initiative due to its reach and competitive exchange rates, with a significant increase in transactions in the India and Philippines corridors.
The mePay product has also been successful in easing the process of local transfer of funds, to the extent that an upgrade was undertaken to extend the service to non-account holders.
Aside from the Shake n’ Save product, the bank also offers mobile banking to provide ‘on the go and self-service’ banking solutions to its customers. The mobile banking app alone offers over 100 transaction types. Emirates NBD was the first to introduce mobile remote cheque deposits capture service in the Middle East and Africa regions and as of 2015 is the most popular product among current account and savings account (CASA) customers. It also introduced to the market the ability to issue a mobile token to book appointments at its branches, with intelligent segment prioritisation. The bank has been at the forefront of introducing technology-focused products, reducing costs and enhancing profitability. Figure 3 shows how the cost-to-income ratio at the bank has been declining through the years. This can be attributed to the cost optimisation strategy adopted by the bank in 2011.
Cost-to-income ratio has declined consistently since 2012
Emirates NBD’s retail revenue and assets have risen through the years and large investments in technology have been made. It is one of the largest banks in the Middle East with over $100 billion in total assets and is one of the largest retail groups in the region with over AED 50 billion ($14 billion) in retail assets, serving as the infrastructural development bank for the UAE. The figure highlights how the retail assets of the bank have grown through the years in correlation with digital enhancements. Particularly noteworthy is 2014, when assets grew against the backdrop of differentiated products and improved credit quality.
Increasingly, banks across the globe look to plan and build services with the smartphone as the focal point. Using a combination of smart phone features, mobile applications and location information, banks have the ability to know what the customer is doing in real-time and pitch the appropriate products and services at the right time. Armed with advanced analytics, banks can promote more effectively with real-time offers. Industry disrupters like Moven and selected global banks provide real-time insights to customers.
New contactless mobile payments through near field communication (NFC) are emerging globally. Apple Pay is one such example that combines digitised cards with mobile. Leading banks in Asia Pacific, for example United Overseas Bank (UOB) and ANZ, have recently implemented NFC for contactless mobile payments while selected banks and increasingly non-bank payment service provider in China, such as Alipay and Tencent, are focusing on GPS, voice recognition and QR code payments. Banks are enhancing security in transactions, biometric capability using finger print detection features in new smartphones to prevent cyber fraud and any breach in security. Social media banking applications have been on the rise for leading banks. SBI, ICICI Bank and Axis Bank recently introduced services through Facebook and Twitter while Bank of China, Hong Kong, implemented ‘Wechat’ services for account enquiry, promotions and alerts.
We continue to see advances made in the area of digitising and putting deposit and remittance and payment products on the smartphone. While Asia Pacific markets exhibit strong leadership in the field of digitisation of savings and payments, the African market has also grown considerably. It is banks such as DBS and the Commonwealth Bank that have maintained their lead in the market through advanced mobile money services including social media and P2P payments and augmented reality technology; however, services like m-Pesa in Kenya have also taken the goal of global financial inclusion forward through its integrated platform for savings, payments and remittance in Africa. The Asia Pacific region is also the leader in the implementation of NFC technology for contactless payment, while banks and non-banks in China are implementing QR code payments. The recent demonetisation scheme introduced in India has also given a fillip to the digital/mobile payments industry, with payments company like Paytm (which has Alibaba as a strategic shareholder) chalking up significant number of new customers and users. We believe that more innovations will come from banks and non-banks in these two most populous countries in the world, and increasingly they will lead in the mobile financial services space as they reach out and attempt to serve the large unbanked and underserved segments.