Mohamed El DIB, Chairman and Managing Director at QNB ALAHLI discusses the banking sector in Egypt and responds to our questions about QNB ALAHLI.
QNB ALAHLI has been in the Egyptian market close to 40 years. When you first began retail activities you operated 7 branches. You now have over 200 branches. What are the biggest challenges and opportunities you see facing the banking sector in Egypt? How is QNB ALAHLI contributing towards the growth and progress of the industry?
We have succeeded over previous years to maintain our robust financial strength in terms of growth, profitability and low non-performing loan ratio despite the continuous changing environment given Egypt’s challenging economic situation and the regional instability, this is a strong evidence of the resilience of our business model as we continue to offer new products and services to best suit the changing market and generate sustainable growth and profit as the bank provides dedicated products to the various market segments , with competitive offering. And in terms of customer satisfaction we managed to establish strong bonds with our various clientele whether large domestic corporations, subsidiaries of multinational companies, medium caps, as well as SMEs and retail.
As Egypt is passing quite well with its ambitious economic reforms program, we see lots of investment and business opportunities in all economic sectors which offer strong potential for the banking industry. The Bank is also focusing on financial inclusion initiatives and see good growth opportunities in retail banking as well as SMEs, very small and micro enterprises business.
Our ambitious strategy in the Egyptian market aims to further expand and reach all our customers in all governorates of the Republic, an area where we have already taken huge steps, as QNB ALAHLI has reached more than 200 branches in different governorates. We aim to cover more areas with new branches with the same level of service that our customers are used to and more, at the same time strengthening all branches with state-of-the-art banking technology while relying on our highly qualified and trained staff to deliver superior customer satisfaction.
The Bank also has been paying increasing attention to digitalization by investing in new technology and introducing digital solutions to its clients. The Bank has maintained its position in the Egyptian market, achieved remarkable growth in loan portfolios, increased market share, increased returns, and maintained asset quality. This is a direct result of its strategy as a business partner committed to its clients through balanced policies to work through the usual challenges, all of which aim at positioning QNB ALAHLI as first choice for customers through excellent customer service and the delivery of high quality products and services covering large segments such as corporate banking or retail through the bank’s subsidiaries all directly contributing to the welfare of the economy.
Finally, we are keen to stay in a close proximity and close relationship to our clients with access to up to minute information, which has helped in approaching clients as a universal bank offering a long list of products and services maximizing our return while still generated value to our customers, with strong operational efficiency, and prudent risk management where returns are maintained at good levels The bank knows quite well that its successes could not have been achieved without dedication of its 5400+ employees. Thus, the bank is keen on investing in its manpower and developing their skills to cope with the latest global banking systems through an organized training plan that covers all the bank employees as a key of success for any institution.
Has the demand for credit from corporates increased?
Yes, especially for capex financing given the slowdown in investments during the past few years. In addition, financing for short term working capital needs is growing given the increase of material and operating costs.
In what ways does your corporate banking division assist clients in managing their risk and enhance their revenue?
We pay high attention to advising corporate clients on solutions to their financial needs offering them advice on available alternatives, and guide them to reach optimization of their resources maintaining a good balance and minimizing financial risks. While we do that for all corporate clients, we have a dedicated team to advice clients on major projects and investments.
Can you tell us more about QNB ALAHLI’s unique business model used for SME clients?
QNB ALAHLI is a leading bank in approaching the SMEs. We developed products, packages, financing programs, and advisory services to fulfil the banking needs of this sector and help them develop and grow their businesses. As we strongly believe in the importance of this sector, and its positive contribution to the national economy we have availed teams of trained specialists and Relationship Mangers capable of serving this sector in our branches.
In line with the Central Bank of Egypt unified definition of Small and Medium Enterprises and subsequent initiatives aiming at developing this sector, the bank has introduced different types of financial and non-financial banking services catering for the special needs of this specific segment.
We have a dedicated business line that serves this promising segment, and we have been paying increasing attention to the very small and micro enterprises segment as well.
How is technology impacting the way you do business?
Over the past few years, technology was one of the main issues on the bank management’s table, as it proved to be one of the best ways to help us reach out to new customers and provide the best service possible for long-term customers, as well as an efficient medium that facilitates availability of our premium products and helps our clients develop their businesses and manage their daily accounts, a feat which helped the bank to accomplish tremendous achievements. As technology is constantly evolving, adapting to these continuous technological developments is vital to the survival of any institution. At QNB ALAHLI, we are always keen on merging these new tools and applications in our day to day operations, as well as, in the products and services offered to our customers to help them achieve more with less effort accordingly;
- We re-launched our Retail Internet banking service that offers our clients full visibility of their accounts, cards, loans, and deposits, allowing them to perform transfers within their own accounts or to other beneficiaries inside QNB ALAHLI as well as external transfers to other banks, all performed instantly, and conveniently with the highest security standards in the industry.
- A new mobile phone banking application was also launched, this new application gives access to our customers to inquire their accounts, transfer between own accounts, and get the latest offers and discounts as well as other information such as QNB ALAHLI branches and ATM’s locations, we are putting the final touches to launch QNB ALAHLI E-Wallet which will offer our clients a variety of payment services to cope with the quick pace of life by redefining the way we perform our daily financial transactions. QNB ALAHLI E-Wallet will allow bill payments directly from mobile devices in a convenient, fast and secure way.
- This year proved as usual the pioneer role QNB AA assumes in the market as it launches for the first time in Egypt QNBAA m-Visa, a seamless and secure solution for instant mobile cash payments through smartphones in partnership with Visa, the global payment technology company. M-Visa is expected to contribute to the growth of easy and secure digital commerce for financial institutions, traders and consumers as well as accelerate Egypt’s direction towards a non-monetary economy.
At the start of this year you launched mVisa. Can you tell us more about this service and the benefits?
QNB ALAHLI has recently launched m-Visa service in cooperation with Visa International. m-Visa will play a great role in expanding the field of accepting digital payments as it’s considered a perfect solution for a number of problems and dangers that face merchants when dealing with cash.
Cardholder can capture QR code through their smart phone camera to perform the transaction and debit their cards. Worth mentioning that QNB ALAHLI is the first bank to launch this service in MENA region, which confirms the bank’s leadership in availing the latest innovative solutions in the Egyptian market and specifically in the field of digital payments building on the widespread of mobile phones with a subscriber base of around 96 million subscribers. The tool provides convenience and almost no interest cost on the client side while it is a secured medium of payment. Can you tell us more about your agreement with Mubasher Financial Group and what this means for investors?
The Agreement with Mubasher company offers clients of both firms who are interested in stock market trading opportunities to sign up for trading accounts on the Egyptian Stock Market through Mubasher while they can do that through opening a bank account with any of QNB ALAHLI branches all over Egypt, benefiting from our wide range of banking products and services
Seven lessons from 2020
Rebeca Ehrnrooth, Equilibrium Capital and CEMS Alumni Association President
Attending a New Year’s luncheon on 31 December 2019, we played a game that involved predicting the world in 2020. Some of the questions included: would Uber become profitable? Would the three-decade bond rally finally come to an end? Would the US hit a recession?
Unlike any of our predictions based on a traditional approach to business and predicting, we now know that 2020 became the year where business, professional and personal plans were turned upside down, reshaped and put-on hold. The proverbial black swan had arrived.
As revealed in a new CEMS Guide to Leadership in a Post-COVID-19 World, to which I contributed, the COVID-19 pandemic has exposed deficiencies in the 20th Century vision of leadership, giving a rare opportunity to question the status quo.
So, what are the main lessons from 2020?
- Humans are enormously adaptive. This is not an extinction scenario. The world is getting used to dealing with global human disaster which may become a recurring event. Life continues guided by new parameters.
- No sector or country is immune to rapid change. Just as the leveraged finance and equity markets ground to a halt during the Global Financial Crisis, we have seen a disruption in the financial markets (including M&A) in 2020, including a significant redistribution of wealth between sectors; think tech vs airlines and the hospitality industry. When a market is disrupted it has secondary and tertiary effects such as less work for accountants, lawyers, financiers etc.
- Location is not as important anymore. The belief that finance staff need to be based in one of the financial capitals to be effective has been forever altered. Pursuing a career in finance from anywhere is becoming possible. However, it’s likely that over time, financial controls and human interaction will move the work model back towards the traditional office approach, as work is a critical sanctuary for people. While working from home may allow more time for family, chores and sports, it is mainly effective for people who already have their internal and external networks. For junior employees it presents a notable challenge as they may be forced to spend their formative years without a chance to really build their networks.
- Change is likely to be lasting. The opportunity for alternative finance and tech focused providers is enormous and 2020 will accelerate this shift. For example, many retail banks are providing rather poor customer service, blaming the pandemic. Even the most loyal customers will be heading elsewhere. For recent graduates and current students this is a major shift; future winners and key employers may not be names we are used to seeing in the headlines.
- There will be a spotlight on leaders with visionary strategy and understanding of the operations. 2020 showed many politicians and business leaders behaving like they were playing a game of snakes and ladders, rather than executing a thought-out strategy. The next wave of thoughtful leadership is urgently required.
- Collaboration leads to success. The definition of a pandemic is an infectious disease prevalent worldwide. A global problem requires a collaborative solution rather than each country and industry on their own. Quoting Steven Riley, professor of infectious disease dynamics at Imperial College London: “Once you have the knowledge and you share the knowledge, then you are able to take measures to push transmission much lower”. This principle is transferable to management education. In a world more complex than ever, investing in a degree is hard currency. Combined with the full global alumni network, corporate partners and schools, CEMS is capital that doesn’t depreciate.
- Resilience has become a watch word. Saint-Exupéry’s quote resonates with me: “If you want to build a ship, don’t drum up people to collect wood and don’t assign them tasks and work, but rather teach them to long for the endless immensity of the sea.” We are in a new paradigm – so prepare for the next change. For COVID-19, while we hope that the vaccine will soon upon us, the broader long-term positive challenge remains.
Data after Brexit: How does the end of the transition affect GDPR?
By John Flynn, Principal Security Consultant at Conosco
The UK has officially left the European Union now that the transition period has ended on January 1st 2021. But this could raise issues with one of the biggest bugbears for many companies – the international transfer of personal data.
Businesses can relax, somewhat – GDPR, which took businesses months to get their heads around, is not being replaced. It will continue as the UK GDPR 2018, and will still be based on the criteria of the Data Protection Act of 2018. However, the UK will retain the right to change the UK GDPR as it sees fit in the future.
The main changes apply to those who receive data coming into the UK from Europe. Transfers from the UK to other countries can continue under existing arrangements.
We know it can be difficult to cut through the legal jargon, so we have simplified what you need to know to protect yourself and your data:
1 – Update your privacy notice
Most businesses do not have the correct clauses in place ahead of January 1st, potentially exposing their liability, should something happen to their data. All company privacy notices online will need to be updated to specifically state ‘UK GDPR’, as opposed to ‘EU GDPR’. You will also need standard contractual clauses in place, which cover both parties – those transferring and those receiving the data.
The Information Commissioner’s Office (ICO) has a list of what needs to be included in the standard contractual clause here. The ICO will remain the UK regulator for data protection, regularly liaising with each EU member state.
This also applies to Multi Corporate Groups who operate in multiple countries, who need to update their documentation and privacy notice to expressly cover the data transfers. The UK has applied for an adequacy assessment, which would negate the need for contractual clauses, however this has not yet been approved by the EU.
2 – Data privacy assessments
Any company which runs applications and software should always perform a Data Privacy Impact Assessment. This was also in the guidelines before, but these assessments are now more important for those who outsource their IT operations internationally.
For example, when using a service such as a cloud-based system, the company must be sure that its service provider adheres to UK GDPR and stores the data within the European Economic Area (EEA), or has a binding corporate agreement with the company, where data is stored outside of the EEA. You should also, as mentioned above, make sure that a contractual clause is in place.
3 – Review local legislation
Contracts should now have contractual clauses that specify the responsibilities of the data controller and the data processor. If you are receiving personal data from a country territory or sector covered by a European Commission adequacy decision, the sender of the data will need to consider how to comply with its local laws on international transfers. You should check local legislation and guidance in this case.
4 – Cyber Security health check
The ICO is increasing its capacity and efforts to crack down on data breaches, post-Brexit. Now is a great time for all companies to have a health check to understand their Information Security posture and GDPR compliance. Nobody wants to be caught handling data improperly and fined when it could have been prevented with education and training.
A gap analysis performed by an expert is money well-spent. It’s also a fact that companies that have cybersecurity and Information Security controls are not only able to better defend against attacks but are also far better placed to recover from an attack.
It’s important that all businesses – large and small – are properly preparing their data storage and transferring for the 1st January. ICO has been busy setting examples by fining large, high-profile companies for failing to keep millions of customers’ personal data safe.
It will continue to come down hard on the data breaches of personal identifiable information and special categories of data. The saying ‘prevention is better than a cure’ rings truer than ever this year, and you will thank yourself if you make the efforts to properly store your data now, and not when it’s too late.
2020 reflections and 2021 outlook
By John Hunter, Head of Banking and Fiduciaries, Finance Isle of Man
Reflections on the most surreal year
The Covid-19 pandemic has completely changed the world as we knew it, resulting in catastrophic loss of life and fears of a downturn hang over global economies like a sword of Damocles. In the UK, the new strain has further exacerbated the situation. As I am sure many have already said we are living in what could be called the most surreal times. People have been trying to cope with this “new normal”, by changing their lifestyles and evolving behaviours.
The Isle of Man responded swiftly to the pandemic by closing its borders and enforcing social restrictions which everyone respected and adhered to. Socially and culturally the Island demonstrated all the good things that come from living on a relatively small Island where community still means so much.
The Isle of Man’s financial services sector adapted quickly, seamlessly transitioning to working from home. The banks too adopted flexible remote working practices and continued to support clients around the world helping them navigate the challenging situation and making the most of any opportunities that arose.
Although there is no substitute for face-to-face interactions, we all embraced web-conferencing platforms like Microsoft Teams and Zoom to stay connected with contacts around the world and build and nurture business relationships, whether it was with financial services firms or high net worth individuals looking to relocate to the Island.
Furthermore, a priority for the Isle of Man has been to reinvigorate the business and cultural ties with South Africa. In a normal world, we would have travelled to the country, held in-person meetings with businesses and industry representatives and talked about building on our wonderful historic ties. However, because of the scale and breadth of disruption we had to change all our plans! We hosted a virtual roadshow which comprised a series of webinars exploring why it has never been more important for South African businesses and individuals to choose the right jurisdiction for long term financial planning.
Looking ahead to the future
We are all hoping that the global rollout of vaccines will provide the pathway to some form of return to normality and all the things people are missing will be back. Like amidst all periods of immense turmoil, interesting, new possibilities have emerged such as the revolution in work culture and a renewed importance of being close to nature and green spaces is. And these possibilities can help reshape society for the better.
The global economic recovery and rebuild might seem further away in the current environment especially amidst the new lockdowns. But we are confident in the resilience of economies and are hopeful that different industrial sectors and governments working together would result in green shoots.
The financial services industry has an important role to play in getting the world economy back on its feet. It is a core component of the solution to continue facilitating the financing of corporates, as well as to develop sustainable finance and nurture digital technologies which have proven to be vital during the pandemic. The sector should continue its cooperation and collaboration with governments and regulators to ensure efficient capital flows and financial stability for businesses and individuals.
Banks too have a crucial role to play as they are instrumental to the effective transmission of monetary policies and stimulus packages. As mentioned in a report by EY: “Financial insecurity in the wake of COVID-19 will require banks to boost consumer confidence and help build a more resilient working world.”
We expect the Isle of Man’s financial services sector and banks to continue navigating the situation with resilience as they have been doing thus far and contributing to the global recovery process. Also, we truly hope this will be our busiest year ever (subject to our ability to travel), with an extensive global schedule of planned activity to promote the Island as an international financial centre of excellence and innovation. Personally, I had planned to be in South Africa for the British & Irish Lions tour, but regrettably, it might not take place and as such we will look forward to catching up with friends there as and when we can.
No doubt, there are significant challenges for the world ahead but as Albert Einstein said: “in the midst of every crisis lies great opportunity”. And it is this opportunity that we all need to work together to identify and make the most of. We are confident that in 2021 the Isle of Man will continue to support financial services businesses help their clients, employees, and the wider society through these surreal times. We are all in this together.
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