Group Chairman Interview for AlBayan Magazine Annual Issue 2021

What are the emerging challenges that did not exist in the past years?

Covid-19 is a unique crisis in a number of ways.  It is exogenous and not the result of any one country’s economic access or imbalance or policy mistake, as has been the case in past crises; it is highly uncertain and unpredictable; and it is truly global in terms of its reach and impact. The response to the crisis has had to be equally unique as traditional policy levers to boost demand and supply were rendered ineffective by lockdowns and confinement measures.  The focus has instead been on buffering firms and households through necessary bridge financing and resources, as well as through unprecedented coordination between monetary, fiscal and prudential policies.  
Not surprisingly, there are a number of challenges that are emerging against this backdrop.  Indeed, while some of the issues that are emerging are not new, such as embracing digitization and sustainability, the pandemic has certainly induced an unexpectedly heightened level of criticality towards them. 
Undoubtedly, the most critical challenge is the global mass public health operation that will get underway as part of the vaccine roll out, which is without precedent.  There are concerns about the efficacy of the vaccine, but the progress has shifted the focus towards assessing the economic recovery.  Yet, the shape of recovery to come is unclear and difficult of predict given the global expanse of lost output, increased debt burdens, corporate failures and devastating social impact.  There is a wide range of possible outcomes across geographies and industries, which in turn will have implications in terms of accelerating secular shifts.

With the growing reliance on digital technology, do you have any intention of closing some branches and replacing them with digital branches?

Our retail banking arm, meem, was launched in January 2014 as a digital proposition with limited physical locations.  As the first Shariah compliant bank to offer digital banking, our customers can open an account and on-board through multi-optional online channels.  We do not face the challenges of other retail banks with vast physical networks, and our aim is to continue building on our digital proposition. 

The spread of the Coronavirus this year has affected retail banking. What is the bank’s plan in this regard, and what new products and technological banking services do you aim to launch?

GIB’s decision to launch meem has proven, particularly during the current Covid-19 pandemic, that digital transformation was the right decision. It provided our clients with a range of creative products and flexible services they could use quickly and easily. We understand that our customers’ time is precious and that the availability of banking solutions at their fingertips helps them save time and effort. Not only is this in line with the Saudi Vision 2030 of creating a society that does not rely on banknotes, but it also aligns with the region’s aspirations to boost the digital lifestyles of their citizens. Keeping in mind the importance of technology in future financial services, we aim to continue in this direction to provide our retail customers with innovative digital services and products.

We have started to see an increasing number of acquisitions and mergers in Arab banks. What do you think?

Bank operating models were already under the spotlight pre-Covid-19 amid poor profitability prospects, low interest rates and the onset of competition from non-bank financial players.  Since the onset of the pandemic, this has spurred consolidation and digitization in the Arab banking industry. 
Consequently, while a consolidation phase was already underway among Arab banks prior to Covid-19, this trend is likely to accelerate now.  Indeed, the new wave of M&As expected post-Covid 19 are likely to be opportunistic and driven by economic rationale, and not be based on the reorganization of assets of common shareholders, as had largely been the case among Arab banks historically.

Is there a particular strategy you will follow for the next years coming?

Recognising the uncertainties in the global and domestic markets stemming from the COVID-19 crisis, the Strategy of the Bank was reprioritised in April 2020 with a strong focus on Revenue/Cost Optimisation and Digitalisation in order to cater to the changed environment, market needs and corporate demands. Initiatives relating to enhancement of GTB products and services, expansion of Retail products, building a compelling environmental, social and governance (ESG) proposition and improving the Digital banking experience were accelerated.