In 2023, the Saudi Arabian Interbank Offered Rate (SAIBOR) – the key gauge of borrowing costs for banks in the Kingdom – climbed above an average 6% in July, higher than the rate during the global financial crisis in 2008. While SAIBOR fluctuations impacted the cost of funds (COF) of Al Rajhi’s microcredit arm Emkan Finance; the fintech subsidiary addressed the concern by introducing several higher yield products during the reporting period, while also implementing cost optimisation measures across its operations to further improve efficiencies.

A customer-centric offering

As a consumer finance fintech, Emkan focused on growing and diversifying its portfolio to meet rapidly evolving consumer demands during the year in review. This led to the subsidiary penetrating untapped market segments by launching a number of new and improved financing products addressing varying microfinancing needs, from direct personal financing products and auto-lease, to buyout and refinancing solutions. Having diversified into retail and merchant financing in 2022, Emkan counted a total of 106 booths set up at select Merchant Branches across the Kingdom by the end of the reporting period, to better service and assist merchant partners.

Given the risk-heavy nature of microfinancing, Emkan continued to prudently manage potential risks through strong internal controls, as well as by enhancing the process of identifying the borrowers’ credit worthiness. Such measures ensured that by the conclusion of the reporting period, Emkan achieved remarkable year-on-year portfolio growth of 39% exclusively for personal financing products, establishing a substantial 68% market share in the Kingdom.

Upgrading fintech infrastructure

Emkan invested in making a number of technology and system upgrades during 2023, leveraging automation, application virtualisation, data analytics and transformation, database upgrades and optimisation to support business growth and stay ahead in a competitive market. Upgrades were also carried out on security and anti-money laundering solutions beyond compliance requirements to ensure an enhanced customer experience with more functionally rich and secure digital solutions.

At the onset of the reporting period, Emkan launched its new, upgraded One Stop Shop mobile app, with the goal of cross-selling all Emkan products under one virtual roof, offering an unmatched, data-driven consumer fintech value proposition to customers. The app achieved a 4.3/5 rating by the end of the year in review, well above the competition average of 3.8. This improvement evidenced the success of incorporating customer feedback when enhancing the app, which saw the addition of features such as the breakdown of offering stages, one-click apply function as well as a financing calculator for customer convenience. The success of the app complemented by Emkan’s enhanced product and service offering resulted in nearly doubling Emkan’s overall net promoter score (NPS) from 38 to 71 by the end of the reporting period.

The subsidiary’s commitment to creating an unparalleled digital experience for customers through a meticulously executed, planned approach won Emkan the Best Digital First Strategy Award at the Digital Experience Show Middle East in 2023.

Strengthening the talent pool

Emkan leveraged Group synergies to train fresh graduates through the Al Rajhi Graduate Development Programme, developing capabilities through in-class training, job rotation and professional certifications, thereby building a strong talent pool of qualified individuals and providing them progressive job roles with clear career progression. The subsidiary’s employee value proposition was further enriched during the year, complemented by annual assessments and career plan development among other initiatives.