Suvo Sarkar, the new head of retail banking at National
Bank of Abu Dhabi, has high hopes for the bank. He aims to double
retail banking revenue and the bank’s cross-sell ratio within three
years. Capitalising on the bank’s ‘trust premium’ is also high on
Sarkar’s agenda. Farah Halime reports.
Just two months into the role, Suvo
Sarkar, head of retail banking at National Bank of Abu Dhabi
(NBAD), could be forgiven for falling into the jargon-trap common
to business people.
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He said he wants to boost the
bank’s “mind share”. This is defined as the level of loyalty and
trust customers have with NBAD and is more important to Sarkar than
the bank’s market share, which he says is an “obsession banks have
had in the past”.
As the largest bank in the United
Arab Emirates (UAE) by market capitalisation, it is difficult to
imagine NBAD will demote the importance of market share entirely.
But it is clear the lender is following the strategy of retail
banks across the globe in putting customers first post-crisis.
“It’s amazing the loyalty customers
have and especially after the crisis, the trust premium among
customers has been very high. It is quite a unique situation for
the bank and I want to capitalise and leverage on the trust,”
Sarkar told RBI.
Sarkar, excited about the
opportunities for the bank and with over 20 years’ experience in
the banking industry, brings a lot to the table.
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By GlobalDataArmed with three relatively
foolproof propositions, Sarkar aims to double retail banking
revenue. He would not reveal exact figures but said the bank
expects retail revenue contribution to group revenue to go up to
between 33% and 35% by the end of 2013, from 22% at the end of
2009.
He also wants to double NBAD’s
cross-sell ratio. It is currently under two products per person,
which is consistent with the market in the Gulf countries, but
Sarkar said he wants this to increase to four products per person
in the next 3 years.
He outlined three initiatives to
make this happen:
Sarkar added: “But this is easier
said than done and actually what is far more fundamental than the
people is how we run the business.”
It is a challenge for the bank but
also a personal test for Sarkar, who has a track record of
similarly daunting projects.
He spearheaded the merger of
Emirates Bank and National Bank of Dubai to create Emirates NBD at
the beginning of 2010. It is now the largest bank by assets in the
UAE.
The merger involved combining
different cultures and unifying technology of the banks, a
challenge Sarkar was able to overcome.
His vast experience in the banking
industry does not make Sarkar any less cautious and measured with
NBAD’s strategy.
“Clearly it is one of the biggest
opportunities and challenges I’ve had in my career; to transform a
retail business and leverage the brand value of NBAD to double
revenue,” he said. “We cannot rest on our laurels.”
Upping its
game
Sarkar said the bank had to up its game as the riches of the
boom-time years waned. A reliance on expats and the rising wealth
of the local population once helped banks yield massive profits.
But the global recession and the soaring debts of Dubai World have
put the UAE’s economy in jeopardy, and in turn the future of its
banks.
“Clearly the boomtimes are over –
there is no question about it. Now it is about boys versus men,”
Sarkar said as an indirect challenge to NBAD’s rivals.
He said banks must keep a much
closer eye on the quality of cost control. This has been neglected
in the past. A customer-centric focus is also paramount and this
means much-improved service levels and product value.
“This is our test for our future. I
have to clearly demonstrate to [the customers] that I am much
better than the others,” he said.
The bank cited Arrow, the country’s
first mobile phone money transfer and payment service, as a prime
example of what will define the bank as customer-centric in the
next few years.
Arrow struck an agreement with
MoneyGram, the global money transfer firm, in June that allows
customers to transfer funds directly from their NBAD or a prepaid
account to people outside the UAE via mobile phones.
It is big business for the bank,
particularly in terms of remittances.
The UAE has been recognised as a
major source of remittances worldwide. The World Bank recently
estimated remittances from the UAE to be between $15bn and $20bn in
2009. In the Gulf Corporation Council (including the states of
Saudi Arabia, the UAE, Bahrain, Kuwait, Oman and Qatar), the size
of the remit market is nearly $50bn.
It has been a “huge success” for
the bank, but Sarkar would not disclose how many people had signed
up to the service and instead said: “Thousands and thousands of
customers have signed up every month. It’s going really well, and
we want to expand it even more.”
The tactic has so far succeeded for
the bank, which has seen an influx of customers switching from
NBAD’s rivals in the UAE.
Sarkar did not want to reveal exact
numbers of account switchers, or the rival banks losing out to
NBAD, but he said the bank was winning business from many sources.
The switchers are typically opening a deposit or a current account
with NBAD, highlighting the bank’s brand value is at a premium.
“Every day we have customers switch
over. They don’t necessarily switch over their entire holding, but
customers will move only if we can match their expectations,”
Sarkar said.
He repeated his cautious note and
said one of his key objectives was that NBAD’s product range is
better than its rivals in the bid to boost customer retention and
grow loyalty among its consumers.
“[The bank’s proposition] has to be
seen as something the customers agree with to stay and grow with us
for the long term,” he said.
In the aftermath of the global
downturn, the strain on banks region-wide has made customers and
banks more vigilant. The mood in the UAE banking sector is wary and
growth is careful and measured.
Organic growth
This hasn’t stopped NBAD from growing organically. The bank is
continuously adding to its 106-branch network across the UAE, the
rest of the Middle East and Asia.
In the first six months of 2010 the
bank opened six new branches in the UAE, a branch in Jordan and
another new branch in Oman, bringing the total to eight branches in
Oman.
On 20 June, NBAD was also granted a
commercial banking license in Malaysia by Bank Negara, the
Malaysian central bank.
NBAD’s international network spans
12 countries and contributed around 11% of its retail banking
revenue (in the first half of 2010). For Sarkar organic growth is
crucial, both within the country and outside.
But he rejected rumours that the
bank was looking at acquiring the assets of Abu Dhabi Commercial
Bank, speculation that has been bandied about for the last few
years.
Instead he admitted that further
consolidation in the UAE banking industry is inevitable in the
long-run, but is not a target of his.
“There’s enough for me to do right
now without worrying about more acquisitions,” he said.
“I think there are enough mountains
to climb before we look at inorganic growth.”
The mountains include the
successful growth of the branch footprint, a number of products
that “still have some way to go” and the problem of a relatively
low cross-sell ratio.
For example, the availability of
personal loans has fallen because of slowing consumer demand and
tighter liquidity regulations. Card sales have also dropped by
half.
“There’s no denying. There is
definitely some catching up to be done with that,” Sarkar said.
Sarkar does not see the consumer
loan book growing much over the next few years and expects banks to
keep a tight strangle-hold on liquidity as the economy picks
up.
But he maintained an eager air for
the future of the bank.
“I represent the face of the retail bank. I’m excited about the
opportunities and what I can bring to the table in terms of my
experience. As well as being daunted, I know I must, to the best
possible extent, boost the brand value and retain trust,” he
said.
