As the UAE’s banking industry becomes ever more competitive, Abu Dhabi Islamic Bank (ADIB) says it will continue with its current strategy based on prudence in risk management, coupled with innovation in customer experience and products.

It is an approach that appears to be working: over the past two years, ADIB has attracted more than 100,000 new retail customers, taking its total to more than 950,000.

This growth is reflected in the bank’s most recent results. In the first half of 2017, net profits rose more than 14.1 per cent year-on-year to $307m. Total revenues reached $757m, up 4.1 per cent.

Solid performance

“We have shown we can attract customers and take market share, even in a tough operating environment,” says Khamis Buharoon, ADIB vice-chairman and acting CEO. “We now have a very balanced customer base, across Abu Dhabi, Dubai and the northern emirates, [comprising] UAE nationals, as well as Arab, Asian and Western expatriates.

“Our sound financial performance is underpinned by a clear commitment to excellence, which was recognised by ADIB winning more than 30 industry awards in 2016.”

Customer experience

A number of new additions to ADIB’s range of retail and wholesale banking services are planned over the coming years, with the emphasis firmly on digitisation.

ADIB will continue to invest significantly in customer experience, and over the next 12 months will introduce new ways to enhance its offering to existing clients, as well as targeting new customers in both the expatriate and UAE national segments.

“Digitisation, and automation in branches, will be key to growing our individual and corporate customer base,” says Buharoon. “We want to continue to take advantage of opportunities that may arise as the UAE’s pace of economic diversification accelerates.”

Digital platforms

Already, more than 90 per cent of ADIB’s cash transactions are conducted over digital channels, indicating that customers are looking for digital banking services that offer a more intuitive user experience.

To this end, ADIB’s biggest transformation to date has been partnering with Germany’s Fidor Bank to launch the region’s first ‘community-based digital bank’. “The new online platform is designed to fit the lifestyle of millennial consumers, also known as Generation Y, as well as those looking for a digital offering that matches their banking needs,” says Buharoon. It provides full digital services, as well as a community for the exchange of views and information, particularly around personal finance matters.

Importantly, the platform is flexible enough to allow app-like add-ons to be attached as banking technology evolves, which is crucial if ADIB is to stay at the forefront in customer experience.

Digital incubator

The link-up with Fidor Bank follows ADIB’s partnership in 2015 with the US’ IBM to create the IBM digital studio. The studio acts as an incubator for innovative digital services that serve the bank’s internal needs as well as help create products for customers. Buharoon says the studio has “done everything from helping departments within the bank digitise and communicate better with other departments, to creating the latest version of our digital banking app.”

Personal interaction

He points out, however, that while digital banking is a central pillar of ADIB’s growth strategy, it is important not to lose sight of the value of direct and personal interaction with customers. “Our research shows that many customers in the UAE still value a personal touch, and would prefer to visit our branches,” says Buharoon. “To cater to this, and in addition to our current traditional branch network, we are launching a new class of efficient branches called ‘ADIB Express’, with higher levels of automation, and relationship managers to give an attentive presence.”

Transaction banking is another growth area for ADIB, and the bank employs a team of professionals who advise customers and offer cash management and working capital management solutions in order to unlock liquidity from their balance sheet.

Challenges faced

The main challenge for ADIB, as an Islamic bank, is still to change peoples’ perceptions about the industry and become truly mainstream, says Buharoon. “We are confident we are on track to achieve this, as we did following our acquisition of Barclays Bank’s UAE retail operation. This was proof that customers of conventional banks can easily be integrated into an Islamic bank if we offer attractive products and an excellent customer experience.”

A 2013 study commissioned by ADIB found that in the UK, the proportion of people likely to bank with an Islamic financial institution jumped to 28 per cent after respondents heard the Islamic banking proposition, from just 7 per cent before the information was provided.

“This shows that Islamic banks strike a chord with people, not because of religion, but because of ethics. People are even more willing to use Islamic financial services when banks demonstrate their ideals of partnership, respect for the interests of the customer, and simple, transparent and honest business practices,” says Buharoon.