Banking is changing.
As the world continues to embrace more and more technologies and innovation, this creates an ever growing and ever demanding customer base. With the rise of smart payments, shifting towards a completely digital experience, the financial sector has to change and evolve with this shifting world.
For Dr Arafat El Mourad, Author and Acting Head of Procurement and Contracts, Xbank, this evolution should be a process that avoids the somewhat cliché term of “digital transformation” that is bandied around the industry so frequently.
“It’s not just technology. You can have the best technology in the world but if you don’t have the right mindset, the right people driving that innovation, it simply will not work,” he says.
As per his published book (Innovation in Procurement and its added value to United Arab Emirates Banking Sector, Islamic & Conventional) El Mourad says that in procurement you need the right people and you need communication, transparency, reliability, skilled and competent staff, quality innovation and, most importantly from a stakeholder viewpoint, cost optimisation and added value.”
Over the course of more than 20 years working in IT and procurement, studying in Zurich and working in the UAE at Xbank, he has seen first-hand how the industry has changed and must continue to change in order to provide the best possible services and solutions for its customers.
“Throughout my career I have become much more strategically driven, as opposed to focusing solely on the process,” he says. “I’ve spent the best part of it looking at how technology can be deployed to add value, not only in terms of cost optimisation but also how it we can add value to the customer that does not compromise on quality.”
El Mourad is a firm believer that for any push for technology and innovation to be successful, it must be built on three main pillars.
People, technology and process.
The people element is key to all of this, as without the right people with the right mindsets and possessing an open mind to embracing technology and striving for innovation then nothing else will work.
As El Mourad says himself, people represent the first pillar of change.
“You have to be innovative in the way you approach technology and approach process,” he says. “You need those three pillars to make it work and you need to be innovative in the process, and the communication.”
Of course, working with people and attempting to change mindsets and approaches to the industry, mindsets that have been built up over years of working in a consistent and reliable way. The financial industry, despite its upswings and downturns over the years, remains a hugely profitable and ultimately successful sector so why try to fix what isn’t broken?
“It takes time [for people to get on board with technology transformation]” says El Mourad. “But the key is how you communicate what will happen, the benefits we can reap and translating the added value that it will bring to the organisation.”
El Mourad points to a time where he planned to introduce a new technology system into Xbank, a process that took three years to fully implement. The first two years of this journey were spent trying to convince people and stakeholders to embrace this change.
“It’s all in the language,” he says. “I cannot present this technology to the CEO in the same way that I could present it to my peers on procurement. I have to translate it into a business case.”
“I approach the communication in a way that can be understood by every stakeholder because I communicate it in a different way to every stakeholder, or CEO, or CIO. There is no one size fits all to this.”
With technology and transformation there is an unavoidable element of risk involved. Risk of failure, risk of losing customers and perhaps most importantly, particularly from an operational standpoint, risk of significant costs associated with that failure.
This is a fact of life when it comes to implementing technology and it has developed a mindset that is somewhat consistent across the banking industry the world over and not simply within the UAE.
“There is a risk and a concern. I’d argue that risk is actually up there as an important discussion with the working out the added value,” says El Mourad.
“The question becomes more about what are we actually doing to measure the risk and most importantly mitigate the risk.”
This calls back to El Mourad’s strive for clear and open communication. With regular meetings with top tier management and stakeholders, El Mourad ensures that from top to bottom all levels of the company understand the technology implications but also the risk implications in any new venture.
He attributes this to a cost ownership mentality. After all, cost is often king.
“It’s about cost ownership,” he says. “How much you’re spending on technology? How much on security? It’s important to show that while technology costs, it saves you money – technology is all about reducing those costs and saving money, not incurring more costs.”
The banking industry in the UAE is changing at a rapid rate and this is driven by the customer. The banking customer of 2018 wants a digital experience. El Mourad himself points to a conversation he had with board members; upon asking them when was the last time they visited a branch in person over the course of the last 12 months between a group of six, there was only three visits.
This is a perfect encapsulation of where banking stands right now in the USE and Xbank, along with all banks, must continue to innovate to continue to serve this growing demand.
This turn towards digital not only affects the bank’s external operations. Over the last few years Xbank has continued to invest more into machine learning, automation and AI wherever possible as it looks to streamline its internal operations to enable its external operations to grow.
“I was involved in discussions about how the bank was moving towards digital.” Says El Mourad. “They want to become more AI focused. It’s a trend in the UAE. More banks are moving to AI, instead of just automation. This helped me build my case and the added value that procurement can bring on this front.”
A key example that El Mourad notes is the implementation of an automated procurement system that will see what he describes as the end of emails. Through this one centralised system, the procurement team can access all documentation from approvals to supplier lists at the click of a button.
Over time, this function will begin to utilise AI and for El Mourad this is crucial in growing as a business.
“This makes it easier to learn,” he says. “AI will help us mitigate risk, learn from where we could potentially improve, and continue to understand the customer requirements and ultimately meet them. Therefore, procurement should transform and shift their focus from internal customers to internal and external customers.”
As the banking sector continues to grow, banks and financial organisations must continue to push the innovation boundaries in order to grow with it and ultimately survive.
For El Mourad, the key has always been the people.
“The banking sector right now is rigid,” he says. “It needs to embrace innovation. People fear change and it needs a leader to inspire.”
“For me, it is all about inspiration, not transformation. Through inspiration, we can unlick the innovative mindset that will allow the sector to reach new heights.”