subsidiaries

Emkan Finance – the microcredit arm of alrajhi bank recorded double-digit growth during 2024, diversifying and expanding its product and customer portfolios in a rapidly growing microfinancing market.

Continued volatility of the Saudi Arabian Interbank Offered Rate (SAIBOR) – the key gauge of borrowing costs for banks in the Kingdom – posed a significant challenge to Emkan’s business in 2024, impacting the subsidiary’s cost of funds (COF). Having reached an all-time high of 6.32% in December 2023, the average 3-month SAIBOR rate remained unsteadily above 6% until August this reporting year, dipping below 6% from September and continuing to fluctuate.

However, through its adaptability and swift response to changing market conditions, Emkan successfully navigated these challenges while meeting the demands of an equally volatile market. The subsidiary’s farsighted readiness resulted in the successful issuance of 3 Private Sukuk programmes totalling SAR 3.3 Bn., and 4 Securitisation transactions valued at SAR 5.1 Bn., contributing to lowering COF by approximately 21%.

With the launch of alrajhi bank’s new ‘harmonize the group’ strategy in 2024, Emkan has taken on a significant role within alrajhi’s growing financial services ecosystem. Among Emkan’s key objectives is to target specific segments within alrajhi bank’s existing customer base to drive growth and increase market share, while also identifying and penetrating untapped markets. During the year in review, Emkan focused on growing across both Retail and SME lending segments by introducing new products such as SME Point-of-Sale (POS) Financing, Buyout, Buy Now Pay Later (BNPL).

Having diversified into retail and merchant financing in 2022, Emkan counted a total of 97 kiosks/sales promoters set up at select Retail locations, and 99 booths at Merchant Branches across the Kingdom by the end of the reporting period, to better service and assist merchant partners.

All these initiatives, coupled with increased customer penetration in both B2C and B2B markets, led to a growth of 40% YoY, with Emkan exceeding SAR 1 Bn. in monthly new sales in 2024.

Upgrading digital infrastructure

In 2024, Emkan initiated the migration to a digital core banking system, modernising its technology infrastructure and greatly enhancing operational efficiencies. Beyond the digital transformation of the core system, Emkan also continued to leverage process automation, data analytics and machine learning technologies, to enhance customer service, further streamline the underwriting process, optimise data management, drive business growth, and refine marketing strategies. Following the successful launch of the new BNPL product during the year in review, the subsidiary initiated the development of a cutting-edge technology platform, to power its innovative BNPL solutions and increase its share in a promising market.

A number of significant updates and improvements were implemented on Emkan’s mobile app throughout the reporting year, with the aim to further streamline the digital financing process. Customer feedback was also incorporated into the changes that were carried out, with Emkan addressing user pain points alongside functional upgrades. The app now offers an end-to-end, enhanced digital experience with an extensive microfinancing product portfolio, allowing users to choose from a range of products, receive instant approvals, and sign contracts directly through the app.

The upgrades have resulted in an improved Apple App Store rating of 4.5/5 at the close of the year, well above competitor average. Customer satisfaction with Emkan’s commitment to provide functionally rich and secure digital user experiences is reflected in the improved Net Promoter Score (NPS) of 74 at the close of the year.

The subsidiary’s passion for innovation and commitment to creating an unparalleled, seamless digital experience for customers won Emkan the ‘Most Innovative Digital Microfinance Company’ and ‘Most Innovative New SME Digital Financial Platform’ at the International Finance Awards held this year organised by the International Finance Magazine, an esteemed British publication. The subsidiary was also awarded a MENA Effie Award for effective and responsible marketing in November 2024 for its ‘Don’t Finance what you don’t need’ campaign, which promoted the concept of responsible financing among its customers.

Building capacities

Emkan strengthened its employee value proposition during the reporting period in an increasingly competitive job market by implementing comprehensive training programmes with the launch of the Emkan Digital Academy. With a range of online courses made available for employees, the Digital Academy facilitates an online learning environment that can be accessed anytime anywhere, with clear transparency of each employee’s learning progress. The ability to track and measure this progress also enables Emkan to provide employees with opportunities for promotions, mapping required skillsets and training programmes for their career progression. This robust training programme is complemented by regular performance reviews and annual assessments. With a competitive salary package aligned with market standards, Emkan achieved a high employee satisfaction rate, and went on to be nominated for the Best Workplace Award 2024.

The subsidiary also partnered with Prince Mohammed Bin Salman College of Business and Entrepreneurship – a leading higher education institution in the Kingdom – to facilitate Executive Leadership Programmes to enhance and expand the subsidiary’s leadership capabilities.