2020 was a watershed for many banks’ digital businesses. For years, banks worldwide have been investing in digital platforms, processes, applications and technologies, while seeing the number of customers using their digital services increase. But when the pandemic led to offices and branches being closed, demand for digital banking services surged and banks saw their technological advances put to the test.
Today, banks are seeing more retail customers than ever use their digital services, and the increase in digitalisation across their operations — from the front-end to the back-end — means banks’ wholesale businesses are providing greater support, security and speed of service to their corporate clients.
For Commercial Bank of Qatar, its digital transformation strategy has really begun to deliver in recent years, and especially last year when its digital banking capabilities proved resilient and supported innovation to meet specific customer needs.
For instance, the bank’s swift development and launch of the CB Household Worker PayCard – a contactless, mobile solution enabling remittances to be paid by foreign workers who would otherwise rely on foreign exchange branches – shows how the bank’s investment in digital is helping it innovate and be more agile and responsive to customer needs.
It is this type of important innovation and service that Joseph Abraham, group CEO, believes digital banking should deliver for customers. Indeed, for him, digital banking is all about enhancing the customer experience – a new, fast-moving front in the battle between banks to win customers.
“Digitalisation is a means to an end, and the end is the customer or client experience,” he says. “We can do so much more today than we could in the past for our customers because of digitalisation. In the future, we will be able to do more to enhance the banking experience for them.”
Building from customer experience
Commercial Bank has made several advances in its retail digital offering in the past few years, such as its internet and mobile banking remittance service, which enables customers to send money abroad in 60 seconds or less, its e-wallet solution, and the CB Household Worker PayCard.
All of these innovations, and more, have been developed and launched to fulfil a need, and enhance the customer experience of banking. It is this that Abraham says is the focus for the bank’s digital retail banking strategy, which can simply mean providing a service that saves the customer time.
“We have focused a lot on analysing customer interactions with us to see where we can address a need and also help change behaviours to the benefit of the customer. So, for example, instead of having to come into the branch to deposit a check, customers can now do it remotely by scanning and sending it. We also provide cash deposit machines, which speeds up things for customers.”
Trying to change customer behaviour is never easy but creating the right digital banking service and products helps. Ensuring transactions happen swiftly and seamlessly is also important, which is why Commercial Bank has invested in accelerating its straight through processing capabilities.
We can do so much more today than we could in the past for our customers because of digitalisation
As a result of these developments, the “volume of customer transactions gone up three-fold in five years, and the number of branch collections has reduced significantly,” says Abraham.
He adds, however, that digital banking success comes with added risk. “As you get more and more digitalised in the retail space, it opens up a far larger playing field for fraudsters. We have seen a sharp rise in social engineering activity, so it is important for customers to be aware of this but also for us to closely monitor unusual activity and block anything suspicious where we can.”
Banks are becoming increasingly sophisticated in their ability to prevent fraud. To enhance their ability, Abraham believes a change in the law should happen. “The future is about biometric security in banking, which means the legal system will need to adapt to enable this to happen, so that biometrics are a legally recognized equivalent to signatures.”
In the longer term, Abraham predicts the use of cash and physical interactions in banking services will reduce even further, but how far depends on the type of customer and their needs. Some people, for instance, will still prefer to use cash, visit a branch and be advised by a person.
“There is no one customer. Customising our offering to customers, and segmenting them, will be important,” he says.
This also applies to wholesale banking, where there are as many similarities as there are differences in the needs of corporate clients.
Safer, secure, efficient banking
Commercial Bank provides a range of conventional commercial and investment banking services and products to large, medium and small enterprises, including corporate lending, trade finance, syndicated loans, deposits, letters of credit and guarantees.
In recent years the bank has launched several initiatives to support digitalisation in this side of the business, including integrating SWIFT GPI – a global standard in cross-border payments – as well as automated insurance service for trade finance customers, corporate mobile payment applications, digital trade finance and structured trade finance applications, and customised business-to-business solutions.
These developments are having an impact. Customer adoption of digital channels is healthy – 85% of payments, 98% of salaries and 50% of trade transactions are now conducted digitally.
So what has been the digital strategy in that business?
“Customer experience has again been a focus,” says Abraham. “Corporate clients want much the same experience as retail customers, in that they want to do their banking business simply, securely and efficiently. It’s also about ensuring a similar experience for their customers and suppliers.”
The new services include providing digital solutions for payments and receipts, making the process as seamless as possible, and helping them see and analyse all the interactions in their ecosystem. Being able to package-up information and insights on this is valuable, too, says Abraham. “This is where I see the future of wholesale or transaction banking – bringing all these different elements together to help our clients help their clients and suppliers with their financing needs in a safe and secure way.”
Digital technologies are already helping banks deepen and enrichen relationships with their clients. The use of some technologies, such as artificial intelligence, can provide several benefits.
“AI is definitely important to us, and in two main areas,” says Abraham. “First, it can be used to better understand customers’ needs and patterns of behaviour across the population. If we can better understand them in this way, then we can provide better service and better products. Second, through robotic process automation, we can monitor thousands of transactions at greater speed and with significantly higher levels of accuracy than if they were be manually monitored.”
Such capability is especially important in preventing money laundering, an issue which has grown and evolved partly as a result of digitalisation in banking and financial services.
Of other technologies of interest to Commercial Bank, Abraham says the application of blockchain or distributed ledger technology, offers potential for banking businesses.
In fact, the bank’s transaction banking team have been working closely with some international blockchain trade finance initiatives – Voltron and Marco Polo in particular – to develop and test the technology’s use. “Our involvement as part of these initiatives could lead to important developments in the use of this technology in the trade finance industry,” says Abraham.
Digitalisation challenges
While digitalisation presents banks with benefits and opportunities, it also brings challenges.
“It’s a huge cultural change, and one right across the organisation,” says Abraham. “This is why we needed to take a full-bank approach to our transformation, across all businesses and divisions. You cannot just focus on one business or area and make only a few people responsible for it. We wanted everyone to take on responsibility and accountability to help drive this initiative.”
Other challenges can include pursuing transformation strategy when some or all of a bank’s back-office operations are outsourced.
Previously, Commercial Bank outsourced some of its operations to India, but under its strategy, the bank brought these operations back to Qatar under its own management. “That was important for us because it meant the technology and business teams could work closely to solve issues and make the systems and platform improvements we wanted,” says Abraham.
“Working together instead of with a separate entity has expedited our transformation,” he adds. “We have been able to speed-up the roll out of new solutions, and adapt faster to customer needs. Importantly, the customer experience has improved, which is the focus of our approach to digitalisation.”