Banking and FinanceIssue 04 -2022MAGAZINE
GBO_ Kuwait's banking paradigm

Reshaping Kuwait’s banking paradigm

Kuwait International Bank spared no effort to comprehend its customers' needs and aspirations, while designing programs that suit them

As products and services are redesigned to change how we live and conduct businesses, the digital age has forced many people into a paradigm shift. To create a world-class commercial hub for “New Kuwait,” Kuwait International Bank has actively reshaped this new environment.

How we earn, save, invest, and spend money today dramatically influences our lives. It can shift the entire market in hours, throwing the global population to where the demand is. The banking and financial industries are at the epicentre of these changing tectonic plates, simultaneously driving change and adapting to the recently emerged market needs.

Kuwait’s banking sector has always been embracing changing global trends, especially on the technology front, since its formation in the early 1940s, thus setting the way for other GCC nations to do the same. The COVID crisis and the global lockdowns transformed how services are delivered worldwide. Kuwait’s banking sector is unwavering in its commitment to staying updated on these changes.

As part of the national 2035 vision for “New Kuwait” to become a regional and international financial hub, the Gulf country hosted the “International Banking Conference: Shaping the Future” in 2019, where banking pioneers and market experts discussed the future of digitization of industry.

In February 2022, the Central Bank of Kuwait (CBK) stated that it would begin accepting applications for licenses for digital banks, which was greeted enthusiastically by consumers and industry insiders, apart from generating a lot of buzz in the market. In the end, it also inspired existing banks to speed up their modernization efforts.

Kuwait International Bank (KIB), a bank that is no stranger to adaptation and innovation, is one of the market leaders whose digitization continues to set the tone for competitiveness. To support its comprehensive digital transformation strategy, KIB reimagines its internal workings and surrounding ecosystem, going beyond the limited perspective of digitization that restricts it from creating digital alternatives to already-existing services and products. This is done by drawing on its 50 years of experience and market insight. However, let’s first take a moment to explore digital transformation before going further into KIB’s journey toward it.

It isn’t a collection of digital goods and services offered via a website/mobile app. The way the banking industry interacts with and serves its market, as well as the role it plays in society, has completely changed. The digitization of the banking sector requires institutions to reshape their building blocks in line with the philosophies, mindsets, and needs that underpin the digital sphere while also taking into account the entire ecosystem. Of course, this is true of any top-down reform. In light of this, let’s follow KIB’s lead as a market leader as it undergoes a digital transition.

A strong base for a vital service

No one would ever invest in a structure; regardless of how beautiful it is, unless it is constructed on sturdy foundations. The same holds true for financial services as well, as it involves managing clients’ hard-earned wealth. In recent years, Kuwait International Bank has focused on developing a sturdy digital infrastructure to support its large, all-encompassing digital banking arm.

By this, Kuwait International Bank has ensured the flawless operation of all of its digital-first services and products. It keeps on making significant investments in bolstering its cybersecurity and protecting its clients’ from threat actors. By partnering with one of the largest consulting firms in the world recently to modernize the bank’s IT infrastructure, KIB made a significant step forward in its road toward digital transformation.

Knowledge is power

It’s time to start developing a customer journey that seamlessly transitions from one touchpoint to the next once the digital infrastructure has been set up with strong security barriers. Understanding the financial behaviours and priorities of these majority age groups is crucial to the success of any bank’s digital solutions as those between the ages of 15 and 24 makeup almost one-fifth of the Kuwaiti population, followed by an astounding 52.32% of those between the ages of 25 and 54.

Kuwait International Bank spared no effort to comprehend its customers’ needs and aspirations, while designing programs that suit them. Whether these consumers need either assets management/diverse investment portfolios or these tech-savvy youth are looking for digital-only financial products, KIB right now has answers for all.

Integrating services that take clients on a very smooth journey from the first sales/marketing touchpoint through service fulfilment is the distinguishing feature of KIB’s digital experience. To realize this, it was crucial for KIB to meticulously plan out every step of the client experience and ensure that the in-app capabilities required to support each milestone were created.

By working with the Public Authority for Civil Information in Kuwait (PACI) to utilize its database and digital “Mobile ID” app to assist an online onboarding process for new clients, KIB pushed integration a step further. Through PACI’s Mobile ID, the bank will now be able to identify unique users swiftly, authenticate their identities, and extract the necessary data. As soon as Kuwait International Bank has its digital signature, it can quickly register them as new clients and finish the online account opening process.

The digital factory, an innovation-focused concept staffed with the appropriate resources and entrusted with improving the bank’s services, was recently established by KIB with success. As a result, the bank has begun to create a variety of digital goods and solutions that cater to all of its key consumer segments. The team adheres to a dynamism and agility ethos, using design-thinking approaches, agile working norms, and the most recent technological advancements to respond to client needs and market developments quickly.

Sandboxes in the desert

Fintech has seen a flurry of activity during the past ten years in all of the financial hubs of the GCC. The Regulatory Sandbox at Abu Dhabi Global Market and the FinTech Bay incubator in Bahrain both debuted in 2018. The Dubai International Financial Center (DIFC) established its FinTech Hive accelerator program in 2017.

In Kuwait, the Central Bank of Kuwait announced its own regulatory sandbox structure in collaboration with local banks that same year, allowing players to test innovative services with light regulatory and licensing requirements. Currently, the CBK’s website lists four companies as having “graduated” from the sandbox: open-banking firm Spare, buy-now-pay-later supplier Taly, aggregator of money exchange services Xent, provider of electronic know-your-customer solutions FRM Tech Labs. The DIFC’s FinTech Hive graduated 44 startups in 2021, although this level of activity is insignificant in comparison to Kuwait’s regional counterparts.

Kuwait was ranked 238th overall out of 264 cities in findexable’s Global Fintech Index for 2021 and last in the MENA region. The issues faced by Kuwait in the fintech space are related to how it is viewed as a financial hub. The country was placed 108th in Long Finance’s Global Financial Centres Index for 2021, which is again lower than any other GCC hub.

But outside of its official programs, Kuwait has seen the emergence of a number of prosperous fintech start-ups. These include digital financial services aggregator FinFirst, payments companies Tap, MyFatoorah, and UPayments, which ironically graduated from the Qatar FinTech Hub accelerator program in 2020.

The three telcos in the nation, Zain, Ooredoo, and STC, have perhaps been the most interesting players outside of the banks in the fintech field.

The Kuwait-based Zain, which operates as a telco in seven Middle Eastern and African nations, has introduced financial services of all kinds across its service area, including microloans in Saudi Arabia and digital wallets in Iraq and Jordan, with plans to introduce services in Kuwait, Bahrain, and Sudan this year.

According to the operator, the number of customers using its digital financial services increased from 372,000 at the end of 2019 to 1.54 million in December 2021.

According to the vice-chairman and group CEO of the operator, Bader Al-Kharafi, “Zain views the opportunities presented by the Middle Eastern digital economy as brimming with potential, as digital capabilities offer greater levels of innovation and direct positive impact on economic and social development.”

“We are particularly interested in supporting innovation in the fintech sector and establishing a challenger bank headed by telcos,” he remarked in 2021, while attending the financial institution’s “Ordinary General Assembly.”

Change originates internally

But many institutions need to pay more attention to the equal necessity of reorganizing the workforce to accommodate the modified digital workflow. For example, to provide its customers with an unrivalled online banking experience, KIB made sure its personnel adopted digital’s flexible, 24/7, adaptive, and inventive qualities.

The bank continues to emphasize the necessity of developing its human resources in parallel with developing its services and products to deliver an impeccable, well-rounded, premium digital service to its customers through a variety of training programs that KIB periodically offers to its staff.

Since change is not typically a constant in the traditional banking environment, improving the institutions’ internal operations and removing any underlying bureaucratic and systemic barriers to change are prerequisites for success as a digital banking service provider. Instead, a flexible mentality that promotes more agility should be embraced, enabling the institution to react quickly to changes in the market as they occur.

Massive data is where big wins begin

The simplicity of data collecting is one of the benefits of becoming digital that people value the most. Every transaction, interaction, marketing campaign, and even customer complaint allows banks to learn more about their clients and the industry. And unless you’ve been living under a rock for the past few decades, you’re probably aware that data is the sole resource that can advance any firm, including banks. Data enables improved consumer comprehension, which results in a more individualized experience and higher retention. Additionally, it entails more precise campaign targeting, which can increase the ROI of any effort.

In addition to putting the aforementioned into practice, Kuwait International Bank also uses the vast amounts of consumer data it has amassed over the years to collaborate with industry titans whose goods and services are sure to benefit KIB’s clients. In recent years, KIB has partnered with industry heavyweights in the automotive industry like Al Ghanim and Behbehani, as well as the world’s most famous furniture brand, IKEA, to provide simple and flexible financing of their products, along with a variety of valuable benefits, conveniently delivered at their showrooms. Like everything else in the digital domain, digital banking is still developing and changing, opening up new options. Only the patient and watchful will succeed in this ultramarathon.

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