The end of the reporting period marked the conclusion of the highly successful execution of Al Rajhi’s Bank of the Future (BOTF) strategy, which remained on track during 2023, with strategy delivery in line, and at most times ahead of expectations.

During the reporting period, the BOTF strategy - also well aligned to the objectives of the Kingdom’s Vision 2030 - continued to grow the core banking franchise while exploring and leveraging diversification opportunities, driven by industry-defining customer centricity, as highlighted under each of the dedicated pillars.

Build on the core

During the three-year BOTF strategy cycle, Al Rajhi Bank continued to strengthen and grow its core franchise market share. In Retail Banking, Al Rajhi aligned with the Kingdom’s economic and social transformation program of Vision 2030, including the pivot to Private Sector growth. Redefining its risk appetite and propositions to meet the evolving demands of the Private Sector, Al Rajhi Bank recorded a 70% growth in retail financing during the strategy cycle from the base year 2020. Introducing an improved customer value proposition enriched with upgraded relationship management capabilities ensured Al Rajhi was well equipped to strategically address evolving and emerging customer needs. This in turn successfully increased the Bank’s market share of the Kingdom’s growing premium segment during the BOTF strategy cycle.

By the end of 2023, Al Rajhi laid claim to the broadest range of Real Estate Development Fund (REDF) and non-REDF mortgage products in the market with a dominant 41.3% market share, contributing to the Kingdom’s Vision 2030 objective of increasing Saudi homeownership to 70%. Having grown its Personal Financing as well as Auto Financing market share during the three-year BOTF strategy cycle, Al Rajhi continues holding the largest personal loan book in the Kingdom.

The objective to expand Al Rajhi’s Corporate Banking business was successfully executed under the BOTF strategy, with the Bank moving from 7th ranked Corporate Bank in 2020 to 3rd ranked in the Kingdom by the end of the reporting period. The growth has been broad-based with the Bank focusing across multiple facets; from attracting new clients to launching tailored products beyond balance sheet lending and cash management, to address evolving corporate financing needs. Having successfully grown its book across both liabilities and assets, Al Rajhi Bank is fast becoming a primary bank of choice for the Kingdom’s corporate segment for capital funding and deposits.

As the Kingdom continued to implement business and economic reforms to diversify the economy, Al Rajhi readied itself to assist in the transition of the economy into a more diverse and competitive Private Sector. As one of the world’s major emerging markets, Saudi Arabia’s Small and Medium-Sized Enterprises (SMEs) continued to be the economy’s growth engine, with Al Rajhi Bank delivering SME-specific financial solutions for the fast-growing sector.

Al Rajhi leveraged its leading 35.4% market share in merchant acquiring to improve the SME vertical during the BOTF strategy cycle, introducing a full set of lending products to merchants against the cash flow of each business, which were better suited to meet their individual requirements. The Bank also remained committed to the overall mandate of providing customers with increased, easy and instant access to financial solutions by digitising and automating SME solutions, simplifying and expediting the decision-making process by reducing the amount of external data elements required for merchant financing requests. Such focused efforts saw Al Rajhi Bank’s strengthening its reputation as the go-to partner for SME banking.

The Bank was also successful in growing total demand deposits by the end of the BOTF strategy cycle through a combination of factors including Al Rajhi’s unrivalled reach through the largest branch network in the Kingdom, growth of the Affluent, Corporate and SME market shares, and the application of more advanced digital analytics. The UrPay digital wallet introduced by the Bank’s fintech subsidiary Neoleap largely helped to both retain as well as grow balances, and remains one of the most widely used wallets in the Kingdom since its launch in 2022.

As a result of growth across all core banking verticals and securing greater market shares, fee income increased significantly during the BOTF strategy cycle, greatly improving the Bank’s revenue mix.

Outperform our competition

Increasing customer franchise value in the long term remained one of Al Rajhi’s overarching objectives during the past three years. The Bank recorded the leading Net Promoter Score (NPS) in the Kingdom’s banking and financial services sector for the reporting period—a strong measure of customer satisfaction across all segments, services, and products. The growing market shares, enhanced digital journeys, and enriched customer experiences were complemented by the bank’s new dedicated Group Contact Centre, making the journey across multiple customer touchpoints more seamless.

The Group Contact Centre is predominantly staffed by trained female employees, contributing to Saudi Vision 2030 female empowerment targets while also strengthening the bank’s reputation as a highly preferred employer in the Kingdom. The bank’s investment in high-potential Saudi talent is evidenced by the Graduate Development Programme (GDP), the preferred internship programme for top graduates across the Kingdom. As such, attracting, retaining, and developing the next level of talent was highly prioritised during the BOTF strategy cycle, equipping employees with specialist capabilities to address and build skill gaps in a rapidly evolving industry. Training and capacity building were conducted by the Al Rajhi Bank Academy, nurturing a stronger, more capable, and more adaptable workforce through providing over 600,000 hours of training. The success of such efforts was reflected by continuously improving employee engagement metrics, where the reporting period closed with an employee engagement score of 74%.

The Bank’s loyalty programme mokafaa continued to grow its membership to 14.7 million customers by the close of the BOTF strategy cycle, and maintained its position as the Kingdom’s preferred loyalty programme throughout. Supported by advanced data analytics and rapid responses to changing customer behaviour, mokafaa delivered an unrivalled customer value proposition in terms of merchant coverage and redemption offers. The programme has continued to successfully on-board the largest and most diverse merchant network in the Kingdom, totalling over 200 instant-redemption merchants.

Al Rajhi Bank continued to focus on regulatory performance and compliance; this also included understanding, planning and implementing policies according to regulatory guidelines and technical standards of the Open banking framework announced by the Saudi Central Bank (SAMA) during the BOTF strategy cycle. Al Rajhi also committed to the pursuit of ambitious ESG goals, improving its third-party ESG ratings and strengthening its reputation for leadership in financial conduct in its position as the World’s largest Islamic Bank.

Transform technology

One of the biggest success stories resulting from the execution of the BOTF strategy during the past three-years is the unprecedented pace and scale of automation, digitization, and technology infrastructure upgrades across Al Rajhi Group. The Bank successfully completed the replacement of all its core systems; Corporate Banking System, Treasury System, Loan Origination System, Loan Management System, Core Card System, and Microfinance System modernising projects were successfully completed during the BOTF strategy cycle, thereby setting the benchmark for the Kingdom’s financial and banking sector in technology transformation. Al Rajhi’s mobile banking Apps too, are ranked no. 1 in the Kingdom in terms of both features as well as active users.

The Bank leveraged data-driven insights to enhance responsiveness across its customer segments, expanding its omni-channel reach to provide personalised solutions and offers to customers in real-time, further increasing customer engagement and enhancing customer satisfaction. Significant operational efficiencies and performances were achieved by upgrades in technology, broad scale implementation of robotics, and the re-engineering of processes.

Al Rajhi Bank was able to leverage both its agile culture and agile delivery approach during the reporting period as demonstrated by the pace and scale of its implementation of the BOTF strategy. With the adoption of “Lean and Agile” methodologies across Group operations, the Bank and its subsidiaries were able to rapidly adapt and evolve to changing market conditions and explore emerging opportunities.

Such far-sighted investment sets Al Rajhi Bank up as a future-ready competitor in a digital-first operating environment; the Bank will be able to build and respond to customer needs as well as external competitor threats, especially from the growing ecosystem of fintechs moving forward.

Focus on new client needs

Some of the BOTF strategy’s greatest deliverables come from diversification into a number of areas that the Bank was yet to explore in the market. Al Rajhi invested in building new capabilities that allowed the Bank to take advantage of several promising opportunities, while also protecting the Group against emerging threats. One such focus area for diversification was consumer finance; with a fast-growing microfinance market in the Kingdom, Al Rajhi Bank established Emkan Finance – a fully digital microcredit arm – to serve credit needs of consumer segments that were beyond the Bank’s risk appetite. The company recorded a remarkable 250% growth during the BOTF strategy cycle, becoming the Kingdom’s leading microfinancing company during the reporting period. Positioned for further growth, Emkan continues to open up to new market segments, with a pipeline of products currently in development to meet their needs.

With payment solutions becoming the point of entry for many new players in the financial services sector, Al Rajhi Bank defended its leading position in merchant acquisition, and explored new fintech opportunities through its payment fintech subsidiary Neoleap. The first fintech in the Kingdom to offer a fully digital merchant onboarding process, the subsidiary lists a full set of Business-to-Business (B2B) solutions across e-Commerce and Marketplace including Point-of-Sale (POS), Electronic Cash Register (ECR), and third-party payment and processing solutions, servicing the entire value chain of merchant activities. Neoleap’s Business-to-Consumer (B2C) payment solutions include the fastest growing digital wallet in the Kingdom – UrPay, with over 4.8 million users registered at the end of the BOTF strategy execution. The wallet promises to continue in its evolution, growing beyond its core business verticals and transitioning into a comprehensive lifestyle app.

Al Rajhi Bank focused on strengthening its Private Banking offering to better meet evolving high net worth customer needs during the BOTF strategy cycle. The Bank introduced innovative investment products among other solutions, complemented by exclusive benefits including Credit Card offerings comprising a concierge service, membership to the leading loyalty program in the Kingdom, highly proficient Relationship Managers for enhanced customer servicing, all supported with the establishment of 18 dedicated Private Banking Centres by the end of the BOTF strategy cycle.

The Bank also explored avenues where it could harness economies of scale anchored to the size and scope of the Al Rajhi business; Operations, staffing solutions, automation services and contact centre operations for the Group were consolidated under a new company Tanfeeth, which is responsible for managing, streamlining and improving processes across the Al Rajhi Group to deliver greater operational efficiencies. The Group Contact Centre in Qassim established in 2022 has contributed to enhanced customer experience while also providing dedicated back-end support to the business.

The Bank’s real estate and property management arm Tuder was revived under a new brand identity to oversee Al Rajhi’s large real estate footprint by virtue of a growing branch network and offices. Tuder consolidated all real estate services from engineering and consulting services to facility management, real-estate documentation and registration, and evaluation of real estate and property, maximising synergies across the Group for cost efficiencies. Al Rajhi also established Tawtheeq during this time, a financial leasing contracts registration company, to better organise contracts data and streamline litigation processes, a scalable operation that has successfully been automated.

The acquisition of Ejada Systems took place at the onset of 2022. The company is an industry-defining IT services and solutions provider with a prominent tech footprint across the Kingdom as well as the wider Middle east and North Africa (MENA) region. Ejada assists Al Rajhi Bank in rapidly building and deploying digital capabilities, while also servicing external clients and bringing in additional income.

Al Rajhi Bank also focused on deepening customer relationships through a “needs-based” cross-selling approach, increasing the number of products per customer based on data-driven suggestions generated by the Bank’s leading real time analytical and AI capabilities. Application and servicing also evolved with improvements to customer journeys, enabling customers to explore a range of financial solutions from Al Rajhi Group’s subsidiaries.