ADIB goes digital at UAE branches as it courts 'savvy' customers

The tech overhaul is part of the bank's digital strategy, which helped it achieve a 48% rise in average monthly credit card sales

Philip King, global head of retail banking at Abu Dhabi Islamic Bank. In the first phase of its tech transformation, the bank has reconfigured 75 of its 87 branches. Mona Al Marzooqi / The National

Abu Dhabi Islamic Bank is digitally transforming its branch network in the UAE and investing in new products and services for digital-savvy clients as it looks to increase efficiencies and broaden its customer base, ADIB’s head of global retail banking said.

The development of a digital proposition for Generation Y – millennials born between 1982 to 2004 – and an overhaul of its branch network are running in parallel as part of the bank's digital strategy, Philip King told The National in an interview in Abu Dhabi. He declined to specify how much the bank is spending on its digital transformation initiative, which is now in its second year of implementation.

We are looking to transform the size of the branch network .... we may not need large branches going forward but branches themselves will still be very important in terms of access points for customers.

ADIB, in the first phase of tech transformation, has so far reconfigured 75 of its 87 branches and has trained 98 per cent of its staff to cope with emerging technology. The digital push has already resulted in a 48 per cent rise in average monthly credit card sales and a 25 per cent improvement in teller waiting time, he noted.

“We are looking to transform the size of the branch network .... we may not need large branches going forward but branches themselves will still be very important in terms of access points for customers,” Mr King said.

“We call them full-fledged branches but they will effectively be digital branches …. everything will be done, to the extent that it can be done in terms of transactions, digitally."

The bank is also reconsidering its footprint in the UAE by merging some of its branches, with four in Abu Dhabi already combined into one big branch that now serves its priority, business and mass banking clients.

“We merged some branches and we opened some where we saw opportunities …. our branch network will be the size it requires to be to service our community,” he said, without saying what would be the optimal number for the bank.

In phase two, ADIB will introduce interactive teller machines, which allows teller transactions through video conferencing, among other services. The first full-fledged branch under the new strategy will be launched in February this year, “with all of the branch technology that we are rolling out”, he noted.

Banks in the GCC are increasingly looking to digitally transform their operations to increase efficiencies and cut costs in the wake of a slowdown in the global economy. Dubai’s Mashreq plans to spend Dh500 million in next five years to digitise its operations. Emirates NBD and National Bank of Fujairah are also pursuing a digital pivot. Both Mashreq and Emirates NBD, which already have digital-only banks, last year rolled out online banks for small and medium-sized enterprises (SMEs) and start-ups.

Seventy-six per cent of UAE residents prefer online banking over bank branch visits, according to a September study by New Perspective Media. More than half of the 2,200 respondents only visit their bank up to two times a year and a quarter visit three-to-five times, the study said.

ADIB’s retail business, which accounted for 56 per cent of the bank’s Dh1.85 billion profit for the first nine months of 2019 and 62 per cent of the lender’s Dh4.39bn revenues for the same period, is expected to continue driving growth this year, Mr King said.

“The retail book is about Dh48bn in assets and we have about Dh63bn in liabilities [at the end of last year],” he said.

Retail assets have consistently grown in “very difficult market conditions”, achieving 1 per cent year-on-year growth. This compares to a 2 per cent decline in the UAE’s consumer finance market last year.

“This has been a consistent story over the last six or seven years …. we have always been at or above the market,” Mr King said. “We will try to maintain the same momentum in 2020 …. ADIB will continue to be driven forward by the strength of its retail proposition.”

The Abu Dhabi-listed lender has seen good growth last year across its retail business segments including SMEs, which account for about 12 to 15 per cent of total retail revenues. The bank’s mortgage book has also performed well “with negligible [credit] loss rate”, he said.

ADIB’s wealth management and priority banking business is one of the “star propositions”, and Mr King expects it to outperform the market this year.

The business, which primarily caters to UAE clientele, has seen a 25 per cent year-on-year growth in its assets under management in 2019. The wealth management business accounts for about 12 per cent of ADIB’s total retail book and the lender aims to grow the business by 20 per cent in 2020, doubling its size within the next five years, Mr King said.

“We have invested in products and we have invested in developing our client base,” he added.

The bank is looking to hire more personnel to add to its 174-member wealth management team and plans to increase the number of relationship managers this year by 25 per cent, from 70 currently.

“We have hired people and we will be hiring more. If we could hire staff more quickly, I’ll be very happy,” he noted.