Dubai headquartered Mashreq could become a branchless bank thanks to new automation and self-service technology, said its CEO Abdul Aziz Al Ghurair in a speech this week to mark the bank's 50th anniversary.
An announcement about a new digital only spin-off bank unit is also expected in late June after the religious festival of Ramadan. This will run alongside the longer-term aim to make the entire bank more technologically advanced and less reliant on people and manual processes in the future.
The United Arab Emirates (UAE) based Mashreq bank will soon be launching "a bank without branches", reported 'Gulf News' in its coverage of the 50th anniversary event.
Al Ghurair reportedly said at the function: "There will be absolutely no need for you to visit a branch in future. You will be able to access all of our services".
The new unit would be "a bank without boundaries" and it is likely to be aimed at tech-savvy millennial customers that live on their mobile phones.
Alongside the plans for a digital only bank, Al Ghurair also spelt out plans to make the bank as a whole more efficient, suggesting that there would be a significant uptake in new technologies such as artificial intelligence (AI)-inspired chatbots, which can be deployed in customer service roles, and automation techniques that will replace roles currently occupied by humans.
"Machines will start replacing a lot of processes and jobs," he reportedly told 'Gulf News', adding: "The future for employees is not in repetitive work."
Al Ghurair stated a bank is generally structured with 20 per cent of staff in customer-facing roles, while 80 per cent sit in the back office. "It is this 80 per cent that will be eliminated by use of technology," he said.
No detail has yet been given about the bank's enterprise-wide automation plans or digital only standalone unit, so full confirmation will have to await the expected announcement after Ramadan.
However, the financial technology (fintech) plans are in-line with a general trend in the global retail banking sector towards AI-inspired robotic process automation (RPA) and machine learning techniques which can cater for the 24x7 customer service demands of modern customers. Millennials expect their bank to be as convenient, accessible and easy-to-use as the rest of their digital lives and banks either have to develop their own IT to cater for this need or partner with outside fintech firms that are willing to collaborate with them.
Historically, the UAE and particularly the more modern banks in the wider oil-rich Gulf Cooperation Council (GCC) region, which incorporates Kuwait, Qatar and Saudi Arabia among others, have less legacy IT systems and inefficiencies than Western banks, but they too can benefit from customers' desire to bank online or on their mobile. Latin American and Asian banks can benefit too from the move away from branches as so-called digital banks – a clear trend in the sector – require less staff and expensive in-situ employees.
Western banks are hindered by the fact that they probably have more braches to close as part of this paradigm shift, in addition to more legacy IT. They have also likely been in existence for much longer and are hiding siloed systems from past acquisitions on their technology stack that have not been integrated into group-wide systems. This is another cause of operational inefficiencies.
It is something Middle-eastern and particularly GCC banks hope to avoid in future by adopting more open and accessible IT systems as they develop and as they face their own wave of consolidation in the banking sector.
For instance, in the UAE Abu Dhabi's biggest lenders National Bank of Abu Dhabi (NBAD) and First Gulf Bank (FGB) recently completed their formal merger earlier this year to create the renamed First Abu Dhabi Bank (FAB). There will inevitably be job losses in the giant new $175 billion bank as any branches that exist side-by-side are closed. But it is to be hoped the more modern technology used at the previous iterations of the bank will be more susceptible to integration efforts.
The Qatari banks Masraf Al Rayan, Barwa Bank and International Bank of Qatar are also mulling a merger at the moment, which would create Qatar's largest Islamic bank and second largest lender.
In Saudi Arabia, talks are continuing about a merger between Alawwal Bank and Saudi British Bank.
Bigger banks, with a bigger digital footprint and less real estate, would appear to be the future. Integration will be the technological challenge.