al rajhi bank – Kuwait
In a challenging year defined by tough market conditions, inflationary pressures, interest rate hikes and an aggressively competitive job market, Al Rajhi Bank – Kuwait (ARBK) made considerable progress in digitalisation, high-level recruitment, customer inclusivity and operational efficiencies, ending 2022 on a positive note as the country’s banking sector continued to recover.
Coming out strong
With the Central Bank of Kuwait (CBK) partially withdrawing the stimulus package and raising its discount rate (CBDR) from 1.5% to 3.5%, ARBK experienced a YoY increase in its cost of deposits. Early settlement profits were also impacted by an increase in the KIBOR rate, which pushed the market to charge higher profits on new financing, negatively affecting consumer sentiment towards early settlements and buy-outs.
Despite the challenging conditions and tough local peer competition, total deposits at ARBK showed a YoY growth of 5% in 2022, with customers investing their idle funds into term deposits. Prudent budgeting and increased operational efficiencies also ensured a negligible increase in operating expenses for the overseas branch YoY. Most notably, ARBK recorded a significant 46% YoY increase in forex income following a series of high-value transactions.
Building on its successful debut in Kuwait’s Sukuk market in 2021, ARBK started building its Sukuk portfolio in-line with its budget for the reporting year, generating revenue well into the second half of the year under review.
Additionally, strategic leadership appointments made during the previous year helped ARBK greatly increase its agility and efficiencies by enhancing its reporting and decision-making structures, with a new digital team strengthening the synergy between the overseas branch and Al Rajhi Bank KSA headquarters, to enable a smoother flow in approval processes.
Growth through smarter banking
The year under review saw ARBK invest significantly in technology, in line with Al Rajhi Bank’s broader “Bank of the Future” strategy.
New features introduced on the ARBK mobile app in 2022
SMS banking was enhanced in 2022 with new text messaging templates introduced for transaction updates as well as an efficient communication channel for communication and awareness generation. SMS alerts were also introduced for VISA Electron debit card transactions initiated outside Kuwait. The Interactive Voice Response (IVR) system was upgraded in the reporting period with a view to improving and streamlining customer interactions with the branch. A few pending automation issues were also resolved during the year.
During the reporting period, ARBK introduced the cross-border payment solution Transfast for international money transfer services, enabling customers to leverage its digital and e-channels to carry out their instant financial transactions with ease. A call-back option was also introduced to verify the authenticity of payment requests.
With customers demanding more control and autonomy over their finances, ARBK introduced additional features through its ATM network such as mobile number updating for core banking and e-channels, and changing/resetting credit card PINs, further enhancing customer satisfaction.
Increasing operational efficiencies
During the reporting period, ARBK reviewed all applied tariffs and fees, circulating reports and expected income targets among supervisors to drive their respective teams to conduct follow-ups and collect all services-related manual fees.
The overseas branch also enhanced its counter terrorism financing (CTF) measures in compliance with regulatory instructions issued by the Central Bank of Kuwait during the year under review, in efforts to further mitigate risk and protect its customers, while promoting integrity within financial system.
Achieving excellence through customer centricity
The overseas branch continued to promote financial inclusion, providing specialised translations for blind customers, special screens at ATMs, as well as wheelchair access for customers with special needs and mobility issues. ARBK staff too, received tailored training to better assist and serve customers with disabilities.
ARBK also implemented several initiatives targeting its female customer base, including the introduction of a debit card exclusively designed for women, and working together with Kuwait’s Ministry of Education (MOE) to provide sponsorships to its female customer segment. Medical insurance was provided to female employees and family members testing for breast cancer during breast cancer awareness month in October of 2022.
The Sales Team at ARBK initiated a sales drive by targeting segments based on geographic distribution to offer customers greater convenience.
In keeping with Al Rajhi Bank’s rebranding in 2021, the overseas branch also reprinted its debit and credit cards during the reporting period, incorporating the new logo design to strengthen brand loyalty among its customers.
Developing human capital
In the face of aggressive recruitment drives carried out by the competition, ARBK was successful in hiring for positions that were hard to fill in 2022. The overseas branch adhered to its steadfast commitment to the government’s Kuwaitisation drive, with all departments and units identifying appointments of Kuwaiti citizens for middle and senior management positions, in line with the requirements of the CBK.
Successful mid-year reviews followed by morale-boosting increments were accompanied by a renewed focus on training, with ARBK employees provided the opportunity to visit the Al Rajhi Bank headquarters in Saudi Arabia and the Jordan branch for hands-on experience, and to better acquaint themselves with the Bank’s corporate spirit. The ARBK team also came together in a show of responsible corporate citizenship, launching a campaign to distribute meals for Iftar Saem during Holy Ramadan.
A mobile app for an HR employee system developed during the reporting period to monitor bank employee performance and activities which will be launched upon securing the necessary approvals.
Faced with growing competition in the digital banking sphere, ARBK will adopt a sharper focus on its digitalisation drive and digital channels going into 2023, and system dependencies uncovered during the reporting period that resulted in several initiatives being put on hold. ARBK envisions a larger social media presence in the year 2023 as part of its digital strategy.
The overseas branch is also in the process of enabling international remittances via its internet banking (Mubasher) service and mobile app. ARBK will also issue Point-of-Sale (POS) to clients.
Plans to improve customer experience and satisfaction in the coming year include the in-house development and implementation of a customer relationship management (CRM) system, as well as enhancing customer touchpoints like the mobile app, call centre, and the branch and ATM network.
On our people front, the Bank plans to strengthen its recruitment process while continuing to comply with the CBK vis-à-vis its Kuwaitisation targets as part of the branch’s middle and upper management strategy. Training courses will also be provided along with on-the-job training for those in line for succession.