RAK Bank has been one of the UAE's leading players in banking, with a reputation for strength in retail operations especially. Murray Sims speaks to Gulf News about the UAE retail banking sector and RAK Bank's strategies to become a market leader.
Gulf News: Do you believe that the UAE's market is over-banked?
Sims: Having a number of financial institutions opens the choice up to the consumer and creates a more competitive environment. That said, with the advance of the WTO, there is a possibility or a likelihood that we will see some consolidation in the banking sector in the years to come.
This has also been driven by international forces such as the implementation of Basel II, which is likely to lead to revised capital requirements. As banks compete, they need capital, and that force may lead some institutions to consider acquisitions and mergers.
Gulf News: Why are only few banks actively involved in the retail banking sector?
Sims: Retail banking is quite different in terms of the requirements needed. These involve heavy investments in systems, people, products, distribution, sales, etc. That results in few institutions being able to effectively compete.
Obviously, RAK bank is one such bank, and we are now regarded as both a major competitor and a leading force in the retail banking space in the UAE. For smaller institutions, it is more difficult to compete without the scale and heavy investment described.
Gulf News: What is the RAKBank's strategy in managing a successful the retail-banking sector?
Sims: I believe in giving the consumer excellent service at a reasonable price. One example of this is our credit card which is half the cost of our competitors' in addition to the fact that it is free for life.
Essentially, what I feel is that we need to be perceived as the consumer's champion, fighting in the customer's corner, and that is the mantra we believe in.
Gulf News: What are the challenges specific to retail banking?
Sims: One of the challenges is how to adapt and cope with rising interest rates. We have seen, of course, in the last two and half years the Federal Reserve of the United States increase interest rates seventeen times, up to 5.25 per cent. There is still a market view that those interest rates may increase again as America battles with inflationary forces. So, [we have] to manage a retail business in a rising interest rates environment while still maintaining fair value for the consumer.
Gulf News: Do you believe the selection of retail banking products in the UAE market is sufficiently sophisticated in comparison to other markets in the region?
Sims: Of course, the consumer is the one to answer this question. From my perspective as Head of Personal Banking at RAK Bank, I think that leading retail players offer a complete suite of products, which can be benchmarked internationally. They offer a good spread of products and services and give the consumer a reasonable choice.
The range of mortgage products in the UAE is another example. A number of institutions such as ourselves have moved fairly aggressively to provide consumers more products, and we will only see that process accelerate given the competitiveness of the overall market.
