Banking in the Gulf Cooperation Council in 2015

Embracing and Leveraging Change

Contents
About the Research Executive Summary Introduction Detailed Findings Initiatives for Success in an Altered Banking Landscape Conclusion About the Authors Collaborating with Accenture 03 04 05 09 15 21 22 23

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Accenture survey respondents by region. The survey respondents comprised 47 C-suite and senior bank executives. higher customer expectations and a tight labor market will mold the industry by 2015. Kuwait. Oman. This point of view discusses these trends and then presents a series of initiatives aimed at helping banks navigate the challenges and obstacles to emerge as high performers by 2015. The survey was conducted with the objective of gaining a deeper understanding of the challenges and gauging how banks are preparing to overcome these challenges and position for change. The survey. combined with Accenture’s banking industry insight and local market knowledge reveal several key trends most likely to shape the GCC banking industry by 2015.About the Research The Accenture study of the banking industry in the Gulf Cooperation Council (GCC) finds that regulatory changes. revenue and activity Regions Count UAE Qatar Bahrain Saudi Arabia Oman Kuwait 19 8 8 6 3 3 Percent 41 17 17 13 6 6 >US$10 bn US$5 bn– US$10 bn US$3 bn– US$5 bn US$1 bn– US$3 bn US$500 mn–US$1 bn <US$500 mn Group Revenues Count 3 0 2 12 4 26 Percent 6 0 4 26 9 55 Conventional Regional/ Domestic Retail Bank Islamic Retail Bank Global Retail Bank Regulators Regulators 3 100 Activity Count 25 Percent 53 18 4 38 9 3 . Qatar. Saudi Arabia and the United Arab Emirates. The survey was also extended to three major regulatory authorities in the region. The survey covered several key dimensions influencing the banking business and captured the opinions and viewpoints of the key decision makers in leading banks to gain insights into factors driving change in the industry. The Accenture 2011 study of the banking industry in the GCC is based on the results of a primary survey conducted across all the six GCC countries—Bahrain.

banks will compete to acquire and retain customers. it is even more important to ensure a strong competitive position. Accenture conducted a survey of 47 banks across the six GCC countries. Some of the key survey findings are: • Focus on retail and SME segments • Strengthening distribution • Analytics for customer insights • Regulatory compliance challenges • Widening skills shortage Banks in the GCC. As these industries grow. To gain deeper insights into how banks are preparing to address the demands of a transforming and fast-growing market. finance and tourism is creating new avenues for economic growth.Executive Summary Banks in the Gulf Cooperation Council (GCC) expect to face a whole new layer of business imperatives as fundamental economic and demographic changes unfold in their countries. as systemic risk from the global economy remains. Accenture’s deep understanding of the global banking industry and our analysis of the GCC banking sector shows that banks can achieve high performance by initiating five key steps to overcome challenges and seize new opportunities: • Align the operating model with strategic business goals. large oil-based enterprises to industries such as telecommunications. underscoring the need to stay differentiated. And. banks will be addressing a more diverse customer base including long-neglected segments such as small and medium enterprises (SME). are indeed considering a shift to a more customer centric and service-oriented operating model. • Architect talent strategies aimed at managing and retaining talent. complementing conventional ways to reach the customer. • Build customer analytics with predictive analytics capabilities. 4 . • Strengthen distribution channels and create new ones based on the Internet and mobile technologies. A gradual shift away from traditional government-driven. it is important that they reassess their business and operating models to build and sustain profitability. Target audiences for banks will increasingly include youth as well as women—as both are growing segments on account of higher education and employment levels within these demographics. in anticipation of the changing customer profile. • Seize the growth opportunities in the evolving regulatory scenario. The survey revealed that a majority of the banks. Mobile technologies and the growing number of Internet users are opening up new distribution formats. In a region with traditionally low customer penetration. However. and deliver operational excellence. are aware of the key areas that need to be addressed while chalking out their growth strategies for the next few years. in general.

Most of the GCC countries are relatively small—four have less than 4 million residents. particularly in KSA. Emerging relatively unscathed from the recent global financial crisis. May 2011 3. sustained by the government stimuli to diversify the industrial base and reduce the region’s heavy dependence on oil and gas revenues. the GDP of GCC countries will be twice the figure in 20011. and much faster than advanced economies (Figure 1). in most Western European countries. such as tourism and financial services. The GCC population is relatively very young. oil and gas extraction alone constituted 54 percent of the GDP in Kuwait. GCC banks are today considering operational changes in response to a banking landscape. for example. the GCC governments are stimulating infrastructure and housing investments. IHS Global Insight. However. while advanced economies will grow by just a fourth. If the oil-related industries and the public sector is taken into account. Additionally. The biggest is KSA with about 25 million4. this share can go up to an average of 70 percent2. it is even more important to ensure a strong competitive position. in part. 45 percent in the Kingdom of Saudi Arabia (KSA) and 39 percent in the United Arab Emirates (UAE). the economies of GCC countries have been growing fast: the growth was on par with other emerging markets. which is expected to be altered by the dynamics of economic diversification and by the new technologies that are already overturning conventional ways to reach the consumer. In KSA and Oman. Given the volatility in oil prices. 47 percent in Qatar. and development of more oil processing industries. The focus is now on fast development of alternative industries. Simultaneously. The high growth rates are expected to be. Business Monitor International. and therefore. January 2011 4. creation of a stronger push for full vertical integration of the oil industry. systemic risk from the global economy remains. Accenture’s experience and research has shown that customer centricity underpins competitive differentiation. more than half of the population is below 25 years. In the Gulf Cooperation Council (GCC). Arab Social Media Report. 1. IHS Global Insight.Introduction The flexibility to respond quickly to customer needs is as critical to banks as it is to other industries such as retail. Over the past 10 years. demographic changes are redefining the region’s economies. In 2010. banks too are turning their focus to even more customer-centric business models to position themselves in an increasingly competitive market. the proportion of youth is 30 percent or lower3. By 2014. the GCC countries see economic diversification as the way forward to creating sustainable growth. consumer goods and telecommunications. where a general change in customer needs and behavior can be recognized. May 2011 2. with average growth rates exceeding 5-6 percent. Official data of central banks and statistics authorities 5 .

there is an additional dimension of a labor pool restricted by the “ization” policies that mandate a quota of local talent to be hired in all national and international organizations. GCC countries compared with other Middle East countries and most important emerging. stricter regulations and a burgeoning skills shortage by 2015. the minimum 6 . what are the priorities of banking chief executives and how are they aligning their businesses to a growth agenda? To understand how banks are preparing for the requirements of a changing. Like their global counterparts banks in the GCC too are anticipating their central banks to enforce requirements focusing on maintaining stricter liquidity ratios and create capital adequacy norms in line with the Basel Capital Accord. women and SMEs—segments that have traditionally received little attention.Figure 1. since the GCC banks are fairly well capitalized. resulting in successful banks placing much greater emphasis on building deep customer relationships and penetrating new customer segments. In response. their concerns will be centered on liquidity management and meeting reporting requirements laid out by central banks. Additionally. Much of this sharpened customer orientation is based on the expectation that the customer base will widen and deepen to better cover youth. and through Facebook. So. The talent challenge too is developing along the same lines as in the other parts of the world where industries face a widening skill gap among the workforce. However. for instance. Additionally. more transparent corporate governance and risk management requirements are expected to influence the operating models. Future and past growth Real GDP growth percentage. there will be greater competition for the same pool of customers. However. in the GCC. banks are considering a shift to a more customer-and service-oriented operating model. the banking industry is also gearing up for change against this dynamic backdrop of a region accelerating toward high growth. Many also recognize that a welldefined customer-centric approach will require them to embed analytics in their operating models to gain customer insights. These segments are expected to be significant contributors to the economy. Successful banks will position themselves to manage two other major change factors—a stricter regulatory environment and an intensified struggle to get the right talent. Customer analytics is expected to inform almost all of their choices. Accenture conducted a survey of 47 banks across the six GCC countries. Many GCC banks are considering or are already investing in initiatives to get closer to the customer. comparison with selected countries1 1. The high Internet and social media penetration is helping banks reach out to tech-savvy customers with smartphone and iPad applications. May 2011 As expected. In KSA. natural resources-based markets Source: IHS Global Insight. as banks continue to strengthen their retail banking franchises within the region. fast growing economy. The survey reveals that banks in the GCC anticipate a more competitive market.

If banks are to address new and emerging customer segments with the right products. 7 . but can offer opportunity by raising the profile of banks in the GCC. As GCC economies maintain steady growth. The survey was also extended to three major regulatory authorities in the region. These skills will be in short supply as banks scale up their retail and SME banking operations. Banks will remain challenged with a workforce that is a blend of educated but inexperienced young locals and highly experienced expatriates with a penchant for short-tenure assignments. Major challenges perceived in stricter regulations and a tight labor market: A tighter regulatory environment— with new capital and liquidity requirements proposed by the Basel Capital Accord—will be a challenge. The Accenture survey shows that the majority of the respondents are still to implement initiatives to prepare them to meet the changes expected in the regulatory environment. they will need skilled professionals who understand these markets and develop appropriate products. but also for enhancing their market share. the survey results describe how the banking landscape is likely to evolve in the GCC by 2015. Close to 80 percent of the banks have either planned or have ongoing investments in distribution channels. both traditional and emerging. the workforce and the customer base. which are set to shape banking in the GCC by 2015. will not only be pivotal for penetrating new market segments. Looking ahead. Strengthening distribution: Banks recognize that developing banking channels. Changing customer structure: A majority of the respondents (85 percent) say they will continue to invest in retail banking within the region. An overwhelming majority of the respondents (91 percent) say their banks are investing to strengthen SME banking operations. A majority of the respondents (89 percent) say that attracting and retaining talent will be critical to enhancing shareholder value. The survey covered several key dimensions influencing the banking business and captured the viewpoints of the key decision makers in leading banks to gain insights into factors driving change in the industry. The survey respondents comprised mostly C-suite bank executives and heads of strategy and retail operations. Banks will also build capabilities to respond to the needs of the burgeoning private and the small and medium businesses—a segment that banks currently struggle to serve.Sauditization level is 49 percent for banks with 500 employees or more. Banks also expect the current struggle for the right talent to intensify. the customer profile is expected to include a growing number of youth and women.

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This is in sharp 9 . for example. While 66 percent of the respondents feel that the customers’ expectation for innovative products will be a key challenge in the near future. A stronger customer focus also enhances cross-selling. tech-savvy youth and women customers are likely to define customer expectations for innovative products and services. A majority of the survey respondents (76 percent) say that a critical challenge will be to manage customer service expectations.Detailed Findings Figure 2. and better quality of customer service. mezzanine and leasing. Part of the customer focus is based on the understanding that just as with many consumer goods and services industries. More than 70 percent of the survey respondents say that customer loyalty is waning. Banks are. up-selling. primarily driven by customer penetration and customer acquisition (Figure 2). respectively. As a result. more than 80 percent acknowledge that the biggest challenge will center on managing the information expectations of techsavvy customers. the retail banking sector too will face an increasingly fickle and demanding customer. Most of the respondents indicated a preference to invest within their own countries in retail (85 percent) and SME banking (91 percent) (Figure 3). have more than 75 percent and 61 percent. dominated by very large enterprises. The GCC’s heavy reliance on an expatriate workforce is expected to reduce as the GCC governments have been encouraging population growth. the UAE and KSA. considering building capabilities to service this growing business segment. The battle to engage and acquire customers is expected to intensify around three main areas: need for continuously updated information. 75 percent consider the development of such products a priority area by 2015. This has also resulted in more standardized service offerings with lower focus on payments and complementary products such as insurance. given the government’s focus on economic diversification. with SMEs accounting for only 2 percent of the total loans at the regional level compared with 27 percent in the Organisation for Economic Co-operation and Development (OECD) countries. The customer-centricity imperative stems from the expectations of bank chief executive officers (CEOs) who see an organic route to growth by 2015 in retail banking. This insignificant share of SME lending reflects the historical structure of oil-based and government-driven economies. below the age of 30. How important are the following growth drivers for your bank to sustain organic growth in the next five years? Source: GCC 2015 Banking Survey SME. therefore. However. Banks are also likely to increase their attention around other potential growth segments—youth and women. access to financial services for SMEs is constrained in the GCC countries as compared with other emerging markets. and customer acquisition and retention. At present. This is not surprising. use of new technologies such as mobile devices.

still see a scope for growth through branch expansion. In recent times. a renewed focus on stimulating employment among the youth presents banks with an opportunity to address this growing customer segment. their university enrollment is 16 percentage points higher than that of men. Arab Social Media report. Business Monitor International. Defining and targeting new customers also involves creating the right infrastructure. At 36 percent. despite the financial crisis. The GCC banking sector. September 2011 7. Banks to continue investing in the current distribution channels and increase focus on mobility. Banks. core platforms to be the key to increase shareholder value. Additionally. January 2011 6. The survey respondents also expect their Islamic banking practice to expand over the years in their countries. This line of business has been growing rapidly—global Islamic finance recorded a double digit growth rate over the last three years. Given this low branch density. World Bank. however. the density of bank branches is correspondingly lower (Figure 4). In that period. Accenture Research analysis based on different sources 10 .000 adults compared to about 75 branches per 100. KSA is the largest Islamic finance market within the GCC followed by Emirates and Kuwait7.Figure 3. it is not surprising that 76 percent of the respondents are planning or are already making investments to enhance their distribution channels including branch and ATM networks. the total share of GCC countries grew to over 40 percent of global total. GCC banks can afford to leapfrog the traditional branch model and offer new and innovative options in terms of banking channels.000 adults in the eurozone. is now looking at the deployment of new generation automated teller machines (ATMs). As women in the GCC countries aspire for greater independence and professional achievement. their purchasing power is expected to rise. as 81 percent of the respondents see rising synergies between distribution channels and 5. The female employment rate has grown considerably in the past 10 years—from 30. Initiatives by banks to increase shareholder value by 2015 will be mostly around distribution channels. which traditionally focused on corporate lending. contact centers and Internetbased banking to address emerging opportunities. World Development Indicators. As the GCC has a higher commercial banking assets to GDP ratio (116 percent) compared with other emerging markets in Europe. Given the emerging growth opportunities and the increasing technology adoption by potential customers. Women in the GCC countries are an important customer segment that is only expected to grow further. In which lines of business are you planning to invest by 2015 both locally and internationally? Source: GCC 2015 Banking Survey contrast to the global average of 52 percent5. There are only 17 branches per 100.1 percent in 2001 to 37 percent6. women are making a mark in higher education with their university enrollment rates surpassing that of men.

ASEAN: 4 countries. CEE: 9 countries. The survey shows that 61 percent of the respondents are either planning or are already investing in customer analytics with predictive analytics. Branch density Branches per 100.000 adults #2010 Banking Assets/GDP % 2010 2010 average total assets per country. Now. the consequent tightening of the global regulatory environment is likely to influence their business considerably. Accenture Research estimates based on Eurostat and local sources 11 . as of 2010 it seems more developed (~7 percent of the population) than in many other emerging markets. Business intelligence (BI) tops the list as the most critical and important technology with banks looking to leverage BI capabilities for customer analytics. Nearly 80 percent of the banks in the region perceive the evolving regulatory framework to become a major external challenge by 2015. With the deepening Internet penetration and the increasing number of tech-savvy youth that banks are planning to target. online banking in the Middle East is rapidly evolving. Eurozone: 18 countries Sources: Accenture research on BMI and World Bank data The Accenture survey also reveals that although a majority of the banks are considering expanding their distribution networks significantly over the next five years. USD 1. Indeed. However. Banks in the GCC fared better than their counterparts in the West during the recent global financial crisis. Online banking has an important role in the GCC countries as a complementary channel to small product-centric stores. only half of them believe that increasing traditional channels is a key growth driver. Internet technologies are the next in priority. A little more than half of the GCC banks surveyed are planning or continuing with their ongoing investments in social collaboration to get closer to customers. such as Russia (4 percent of total population) and comparable to other emerging techsavvy countries like Turkey8. North Africa: 3 countries. while 76 percent are creating and expanding specific services by leveraging mobile capabilities to meet evolving customer needs. 8. Central banks are expected to place greater emphasis on corporate governance and transparency to protect the banking industry and its clients. but most of the large players offer some services focused on account management and alerts. Mobile banking usage is at an early stage. followed by mobile technologies and cloud computing. Bankers perceive the evolving regulatory environment as a major external challenge to growth by 2015. the demand for online banking is set to grow considerably. there is a clear focus on new distribution channels that leverage Internet and mobile technologies—46 percent think that it was critical to expand new distribution channels to sustain organic growth. while 76 percent consider mobile payments as a critical factor. Latin America (LATAM): 6 countries.Figure 4. 79 percent of the respondents believe that mobile banking is the most critical and important technology enabler to sustain growth. Customer analytics with predictive analytics will be the major technology enabler for growth. risk analytics and marketing effectiveness. When examining if mobile technology is likely to sustain growth.

. What are the key priorities for your bank to address upcoming challenges sucessfully and the top performers in your industry by 2015? Source: GCC 2015 Banking Survey Figure 6. attract. What are the key challenges that your bank will face in the next five years to sustain organic growth (i.e. retain and develop customers)? Source: GCC 2015 Banking Survey 12 .Figure 5.

To better understand how banks are positioning themselves and their risk departments to address regulatory challenges. More than 70 percent of the respondents say that risk management will not be an isolated department’s priority but the bank leadership will focus on developing an organization-wide culture of risk awareness. we asked banks what their main priorities were with regard to their risk management capability. Talent management strategies are. 13 Banks see the skills shortage deepening and affecting capability development and innovation. new products and to effectively manage their operations. The need for specialized skills will be especially great when catering to segments such as SME and corporate banking that require professionals with a thorough understanding of their segments along with other specialized financial skills. for example. But. banks need the right skills to innovate and design .The Saudi Arabian Monetary Authority (SAMA). therefore. several banks that we interviewed responded positively to the prospect of increased regulation and welcomed any regulation aimed at enhancing the profile of the financial services industry. Banks will be compelled to improve risk reporting. The talent issue is even more relevant if we consider that the competition for highly skilled talent affects all industries in the GCC. implement risk-based pricing. About 72 percent of the survey respondents believe that capital requirements will impact the banking industry and 70 percent feel that liquidity requirements will have an equally big impact. Banks are of the view that capital and liquidity requirements will influence the banking industry the most by 2015. By fostering a close working relationship with the local banking industry. In 2008–09. The banking industry in the GCC is facing a situation familiar in other industries— shortage of skills. Moreover. In the GCC. policy requirements on mandatory local hiring and a floating expatriate population present unique challenges for banks. With heightening competition and demanding customers. has played a particularly proactive role in regulating and protecting the Saudi market from the current global economic turmoil and is expected to take the lead in regulatory reform across the GCC. the GCC governments injected liquidity and capital into the banking industry. likely to gain a lot of importance for banks keen on increasing their shareholder value by 2015. SAMA has been able to create an open dialog within the industry. The survey reveals that banks plan to align the risk strategy with their overall business strategy as they expect an increased focus on liquidity risk management on account of the Basel Capital Accord requirements. but are likely to implement regulation that will reduce the risk of similar needs in the future. an active alignment with the government policy on increasing local talent contribution is an important external factor in the workforce plans of both international and national companies. and develop effective risk measurement and modeling.

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risk management. Their transformation efforts center on processes around HR transformation. • Architect talent strategies aimed at managing and retaining talent. Group functions • What governance model is used to steer the bank? What is the level of autonomy of marketing. • Build customer analytics with predictive analytics capabilities. • Seize the growth opportunities in the evolving regulatory scenario. combined with our banking industry insight and deep local market understanding.Initiatives for Success in an Altered Banking Landscape Given these findings. • Strengthen distribution channels and create new ones based on the Internet and mobile technologies. Client management and marketing • Is there a single customer view based on a unified group-wide marketing strategy or are customer segments managed independently? • Are there different brands and service positioning per customer segment? 2. what should banks in the GCC do to develop a more customer-centric approach and position themselves for a greater market share? The survey results. attract new Figure 7: Bank operating model schematic Client management and marketing Distribution channels and front office Back-office factories Group functions 15 . distribution channels and product factories? Who takes precedence? • Which functions are organized across regions. banks can design an optimal operating model and execute a business strategy that will enable them to achieve a competitive structure. Accenture's High Performance Business research demonstrates that organizations that align their operating models with their business strategies outperform those that do not. Distribution channels and front office • Can customers access products through several channels and expect consistent service or are there different sets of channels for different client segments? • Are channels segmented by product line. brand or region? 4. business innovation and extended value chain development (such as mobility services). customers and revenue. Operating model schematic (Figure 7): 1. operating companies and factories. Back-office factories • Are all products produced by the bank’s own factories or does the bank produce third-party products? • Are factories split per client segment. By asking the right questions. and which ones are devolved? Our experience with clients has shown that leading global banks are focusing on transforming their operating models. An operating model defines how a company executes its business strategy across the value chain and consists of both governance and structural decisions. brand. strategic cost reduction. Fundamentally. along with a clear understanding of the best business model to follow. allow banks to stake out a clear vision of how to shape their future organization. client segment or geographical region? 3. Getting the operating model right The right operating model can make the difference between just surviving and outperforming competitors in the current climate. an operating model strategy is about optimizing the volume and distribution of people across a company’s portfolio of initiatives. and reach their financial objectives. suggest that banks in the GCC could undertake five recommended initiatives to create the customer centricity needed to meet growth and profitability objectives: • Align the operating model with strategic business goals. Answers to these critical questions.

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banks will need to consider improving the quality of their databases. priorities and behaviors reshape the banking landscape in the GCC. Best Buy had implemented a customer segmentation initiative for appropriate marketing and offers. top retailers across the globe have focused on marketing. Customers. such as time spent online or brand loyalty. can be used to shape unique products for nontraditional segments such as the youth and women. banks should improve business intelligence capabilities that translate into improving business performance with appropriate. enabled by analytics capability. but banks need to supplement this data with often-neglected behavioral and needs-based attributes. As shifts in customer segments. Figure 8. Deployed effectively. Giorgio Armani developed in-store and online branding programs targeting Generation Y customers with popular icons. Many banks continue to divide their customer base into groups based on simple demographics. For example. and conducted by Efma. By leveraging these successful models for their own business. To make the most of analytics. For example. Initiatives into re-examining customer segmentation techniques are also a priority. for example. This is true in practically every serviceoriented industry—retail. which present packages frequently “bought together” based on storewide buying patterns and other correlations. banks can differentiate their products and services for consumers. which recommends new content based on individual users’ purchasing histories and entertainment libraries. places and spaces: Customer-centric principles for acquiring customers in today's multi-polar world". have become more demanding. as well as the small and medium businesses. A recent study based on a survey commissioned by Accenture and UniCredit. customer segmentation and continuous monitoring of the customer. Insights gained from customer analytics. banks will need to use customer analytics to mine customer data for actionable insights that can be used to achieve positive business outcomes. Hence. banks in the GCC will have to establish a strong information management foundation by improving business processes and insights to achieve a “single source of truth” for all their information. reveals that major European banks are implementing or planning to implement proven retail strategies of companies such as Best Buy. as a first step in this direction. a strong relationship with telecommunication service providers could help the bank create an innovative mobile delivery channel. advanced customer analytics can help companies create customer loyalty and improve the overall customer experience while improving the return on marketing investment and generate new revenue streams. or those such as Apple’s iTunes “Genius” tool. actionable and timely data and information. Moving forward. Multidimensional customer segmentation Source: "New faces. at the primary level. These are important. gaining a firm grasp of what customers want and then knowing how to address demand profitably will be a critical competitive differentiator. Giorgio Armani and Prenatal.Importance of customer analytics—learning from the experience of the retail industry. or into categories based on how profitable they are. Accenture 2009 17 . banking and telecommunications. better informed and less loyal to certain brands. such as age or income. in general. social networking and entertainment. The study also shows that international banks are considering retail strategies followed by Amazon. To keep pace with customer expectations. And. Successful banks will move beyond breaking down the data silos within the bank and consider erasing the silos between the bank and other product and service providers to come closer to the customers' needs and expectations.com for its point- of-sale product recommendations. to create a truly multidimensional customer segmentation (Figure 8).

To become high performers. movies. However. In a multichannel environment. take the case of La Caixa. Globally. Targeted primarily at the youth. even in the GCC. which has devised iPad applications allowing customers to search for special discounts on nonfinancial products. personalized customer experience across all channels. For this. and locate ATMs and branches. smartphones and tablets such as iPads are already driving innovative ways to maximize the customers' accessibility to the bank. Similarly. Closer ties between banks and telecommunication service providers could deliver new channels quicker. and engaging in largely nonfinancial activities. Using a geo-location technology. The offers are specifically conceived for the target and propose discounts on a variety of areas such as music. By delivering a seamless. through enabling transactions. mobile banking and payments are hot technologies currently. bank products and education. it is important for banks to create a common experience across channels. along a progression from relaying information to customers. the application. banks need to define strategic guidelines and evaluate different branch model options as well as strategic branch positioning. the bank can send users tailored commercial offers via SMS. banks in the GCC will need to prepare for the next phase in mobile technologies. allows users to consult relevant commercial offers depending on where they are. concerts. Figure 9. which has designed a smartphone application to provide location-based discounts.Strengthening and enhancing distribution channels A robust branch network and distribution channels are a critical part of creating the right customer experience. banks will have to move up the maturity curve (Figure 9). sports. An effective distribution strategy can only be created on the right kind of customer profiling based on the insights drawn from customer analytics combined with market analysis. make transfers. Or. Mobile banking will be particularly useful in improving customer penetration and customer engagement. Take the case of Citibank. The free application also allows people to access their bank account. being part of life style management. banks can achieve competitive differentiation. in Spain. while also providing a map to get to the store. Indeed. buy tickets online. which is also available for the iPhone. interacting with customers around their financial needs. Mobile banking sophistication Source: TowerGroup. As urbanization rates are more than 80 percent. Accenture 18 . Our experience shows that reshaping branch networks to reflect a good mix of multichannel services and offerings is effective in building the right level of customer experience. mobile banking could encompass innovative services delivered over mobile devices. however. Commonwealth Bank’s iPhone applications allow customers to access sales data on real estate. The right branch model will need to consider the geographic area and customer profile.

the impact of Basel Capital Accord will be felt more in terms of liquidity risk management than on capital requirements. both nationally and internationally. as our experience with clients has shown. they can drive real value and support in taking advantage of regulatory change. Banks in KSA and Qatar. products and processes—will be a key component in building customer loyalty. However. The risk department will need to move away from its traditional support/ service provider role toward being a true business partner (Figure 10). banks will take a leaf out of the experience of retailers in designing and marketing their products and services. as IT departments of banks in GCC countries tend to be small and characterized by heterogeneous architectures. banks should focus on allowing space for the finance and risk department at the strategy table. Being a true business partner means. Banks will need to take a proactive stance in understanding these new requirements and their implications for their current product and service offerings and management of liquidity. To position themselves to prepare for regulatory changes.— will improve both customer experience and efficiency of bank distribution networks. have been steadily increasing their IT spends over the last years and are expected to demonstrate double-digit growth in the mid-term. business outcomes can be achieved better in organizations where the IT department’s role is that of a strategic business partner. differentiate themselves will be able to identify and act on the opportunity to align risk management with the business strategy and look for growth drivers. GCC banks recognize the criticality of IT in business operations. as in the case of retailers. More importantly. the ability of banks to apply technology innovations in business—in channels. increase transparency to the customer base. Transitioning to a business partner Source: Accenture 19 . Increased auditing and compliance requirements. and provide riskbased analytics-driven insights. Banks that Figure 10. for example. In this capacity. require banks to spend on IT systems. Mastering regulatory compliance With banks in the region already being adequately capitalized. And. Indeed. Such an approach could enable efficiency and performance improvements. they may well need to integrate the architectures and silos for greater business efficiency. Communicating with customers across multiple channels— via handheld devices and the selfservice kiosks already available in some bank branches.Technology will play a pivotal role in creating the desired customer experience. using innovative technologies as a differentiating factor to create competitive advantage. for instance.

GCC banks may need to consider empowering their HR department to be able to drive an impact on overall company business performance and align company governance with country government strategy and indicators (i.. 20 . Additionally. Accenture’s experience has shown that it is possible to design talent strategies aimed at achieving customer satisfaction goals as well as employee engagement and retention objectives (Figure 11). Banks will need to invest in creating a performance culture as common values that bind the organization from the branches through the back office and headquarters and internally establish value-based inclusion and diversity capability. creating an innovative and attractive work environment. are on the way to winning the war. HR and talent management framework Source: Accenture Design the right talent strategies to attract and retain talent. today’s pressure for skills can be won by proper planning and with creative talent management strategies. Companies with clearly defined threeto five-year workforce plans that quantifies volumes per critical roles.e. among many other such parameters. identifies the market supply potential in the region and globally. developing. This alignment with corporate strategy will be most effective if HR directors are equipped with rigorous. Organizations everywhere are grappling with the challenge of attracting. competitive advantage—and excels at attracting. GDP or Sauditization/Emiratization/ Kuwaitization). fact-based reporting metrics and predictive and prescriptive analytic intelligence. engaging and retaining talent. A talent-powered organization is one that sees workforce talent as the engine for sustained. engaging and retaining its best people. and clear succession planning among others can enhance a bank’s competitiveness.Figure 11. Talent management strategies that extend beyond rewards and remuneration and are based on other factors such as learning and development opportunities. In our experience. and measures the time to proficiency per critical role.

what will a winning bank in the GCC look like in 2015? Most likely such a bank will have a diversified customer base. This guiding principle of customer centricity is in line with our global research. integrated risk management. product innovations and channels mix. efficiency and improved risk management. 21 So. Banks everywhere are positioning themselves for change—putting in place flexible operating models that respond to customer needs.Conclusion Banks in the GCC are looking at adopting a customer-centric approach rather than a product-centric model to meet the challenges of an evolving banking landscape. . revenue streams and products. Accenture’s experience suggests immense potential for serving the customer better through transparency. It will have a customer-centric operating model. market changes. strategic cost management and innovative products enabled by new technologies will be the new priorities for banks on the road to high performance. which shows that banks across the globe have or are moving away from leverage-based models and aggressive cost cutting. Customer management based on analytics-driven insights. an organizational culture of analytics and a multichannel experience for its customers. Although most banks in the GCC perceive a major challenge in stricter regulatory requirements expected by 2015.

com.com. 22 . Oliver Reppel.david.elsaadani@accenture. Accenture in the Middle East. has worked for and consulted with banks for more than six years. Amr can be reached at amr. strategy and governance design as well as risk management. operating model design and value-based management. senior manager-Financial Services.com.reppel@accenture. His experience includes core business transformation. has worked for and consulted with large and diverse financial institutions for more than 24 years. consultant-Financial Services. Michael can be reached at michael. Michael Gibson.About the Authors Amr El Saadani. has worked for and consulted with banks and insurance companies for more than 10 years. His experience includes operating model design. merger integration and back-office consolidation. Accenture in the Middle East. Oliver can be reached at oliver. managing directorFinancial Services. His experience includes corporate strategy definition.gibson@accenture. Accenture in the Middle East.

comply with new regulatory initiatives. We help our clients in developing and executing strategies to target. manage risk.com/banking. Accenture's deep banking knowledge. Since transformation programs affect the way people work. please visit www. wide-ranging transformation experience. Accenture has assisted many banks in defining their new business strategy and operational journey to achieve high performance in a continuously changing world. expand product and service offerings. Our solutions have been used by: * 88 percent of the top 50 banks worldwide * 93 percent of financial services institutions ranked in the Fortune Global 100 *80 percent of the top 20 money managers worldwide For more information. acquire and retain customers more effectively. and 18 of them have worked with us for 15 or more consecutive years. support integration related to mergers and acquisitions. banks need a renewed focus on imperatives such as the customer. 23 . Accenture also provides change and cultural integration management. geographies and software solutions. Every one of our top 25 clients have worked with Accenture for 10 years or more.Collaborating with Accenture To succeed today. Accenture has implemented more than 200 core banking transformation programs across multiple types of operating models. skills of more than 15. new operating models and effective divestitures/mergers and acquisitions. and leverage new technologies and distribution channels.accenture.000 professionals and a global delivery network have supported our clients on their journey to high performance.

2011. Accenture.accenture. 31. Its home page is www. comprehensive capabilities across all industries and business functions. Combining unparalleled experience. Accenture collaborates with clients to help them become high-performance businesses and governments. its logo.About Accenture Accenture is a global management consulting. and extensive research on the world’s most successful companies. and High Performance Delivered are trademarks of Accenture.accenture.5 billion for the fiscal year ended Aug. The company generated net revenues of US$25. You can access this content on: http://www. technology services and outsourcing company.com/gccbanking Copyright © 2011 Accenture All rights reserved.com.000 people serving clients in more than 120 countries. with approximately 236. .