Marcopolis presents the Kuwait Report focused on the investments, doing business, economy and other topics featuring interviews with Kuwaiti leaders. The sectors under review in this issue are industry, oil and gas sector, investments, banking sector, telecom sector and many more.
Elham Mahfouz, CEO of Commercial Bank of Kuwait (CBK)
Interview with Elham Mahfouz, CEO of Commercial Bank of Kuwait (CBK)
Banks are now announcing their performance figures for 2016. Commercial Bank of Kuwait recorded a profit of 50.4 million Kuwaiti Dinars for last year. How did the banking sector fare in 2016 and what do you predict for 2017?
At the beginning of 2016, the management predicted that it would be a tough year. We knew it would be very difficult for us to achieve our targets. Our budget would have to be conservative. We have been watching the figures every month and every quarter, as well as the developments in the sector. 2016 was a very good year for us. Across the board, the sector has flourished. Fees and commissions have improved 9.3 percent. Foreign exchange, which is income coming from foreign currencies, was about 37 percent. Dividends were also above 20 percent. Interest income used to be on the negative side because of the cost of funding and the need to go to Basel III in order to borrow longer term. Even this aspect has done relatively well, showing a 1.2 percent increase, in spite of all the factors externally as well as within the region. It was also a good year because we participated in media projects. These media projects are very important for the bank's income, whether it is interest income or fees and commissions, which accounts for the majority. First and foremost, it is within the country, so it is the Kuwait that we know. These media projects are related to the country itself in terms of services, utilities, the oil sector, clean fuel, and also related to projects like hospitals and education. 2016 also saw private-public partnerships. This is a new idea to Kuwait and new to the GCC. There are two projects that we have participated in, but the bidding is not yet open. There have been some changes to some of the terms and conditions. Any meaningful project that is presented to us in Kuwait, even for the long-term tenure of 15 to 20 years or longer, is not a problem for us. We will participate. All this collaboration and business was very good. This was true even for international business. Although we do not have branches or subsidiaries outside of Kuwait, we were able to conduct international business from here. We participated through correspondent banking relationships on many of our projects, such as trade financing, participating in syndications, and working with Chinese companies that are top notch in leasing and telecommunication. We have branched out, but in a very cautious and selective manner. We have already started talking about our figures for 2017. Again, it will be a tough year. But, we did very well in 2016, even though it was very tough, and this year we will do the same, if not better. The motivational level is already there across the board in the bank. We have done it before and we can do even better.
Our strategy for 2017 and 2018 centers on the retail customer, the corporate customer, banks, our business with international institutions, our stakeholders and shareholders. They are all my customers. This is the number one priority for me, my staff, and the management.
What new services and products have you introduced inside CBK? What has changed in the past two years?
We have introduced automation and our self-service platform. In our major branch, there are twelve screens where the customer comes in, dips their civil ID, and then can do everything they need to right on the screen. Things are so easy, now. In the beginning, it was not easy because many of our customers were messengers coming from the owner of a company or the owner of a small shop. This messenger had to do all his banking activities on the screen. We had many members of the staff available to help the customers with this process. Now, that customer is knowledgeable and he teaches others who are new. This kind of shift made people worried about whether they might be fired or let go. That did not happen, though. Yes, there were some people let go cause of low performance, and we gave them more than one chance which is typical of any institution. But at the same time, we have taken some of those people into the back office and we are strengthening our backbone in certain operational areas. For instance, our call center is now a contact center and it is now our main form of communication. The call center must have very knowledgeable staff to help customers with tasks such as filling in information for applications to open accounts or helping with loan requirements. Rather than taking two or three days for the approval for the loan process, with the staff’s help it will now be much easier. We also have online services for issuing LCs and LGs. You can fill in the information on the internet and everything can be done for you. We send a messenger to come and get the paper, and all the customer does is sign. Everything is much easier. The year has been focused on retail banking and we are proud of that. We have not done much publicity, but this year our self-service and automation was self-developed by our bank staff. We did not get somebody from outside to help us. The team here worked very hard. Staff from the retail business side and our IT people worked together hand in hand.
You stated two years ago that it would take time before you could say that your bank has the best customer service in Kuwait. What are the next steps for you in terms of ensuring that you will achieve this goal?
Automation is a great service, but is it enough for the customer? All banks are offering the same service with varying degrees of automation. We must provide customer service from the beginning until the end. From the moment the customer comes in to the branch or into the process, they must be directed properly, have their questions answered promptly, given proper and reliable information, and you must be very clear and transparent with them. It is all that packaging, plus the automation that then allows us to provide the proper customer service. If I have only automation and the people behind it are not caring or are not well-trained and cannot give proper information, we are lacking. It must go hand in hand. Maybe I am considered old- fashioned, but it is the people working in the front line or the back office that are the main asset of my bank. Adding the automation to the resource of proper training makes them better able to serve the customer. It is not easy. In 2016, we established an academy focusing on the new idea of training people in customer service, processing, and how to provide assistance to customers using the automation platform. They do not have to be extremely sophisticated. They can be high school graduates or two-year college graduates that do not want to go to university. There are opportunities for them if you train them properly. They will be able to help the customer by standing by the screen teaching him, directing him to the proper department in the bank, and making his experience in the branch easier. The academy also offers continued training for customer service personnel already working with us. It benefits everyone, from the branches, the corporate side, the treasury people, even myself. The way you handle issues is very important and the message is very clear to everyone. These are my customers and I must take care of them.
Ensuring effective training is a challenge. What other challenges are you facing at the moment?
There are both internal issues and external issues which are very important. One internal issue is getting everyone to work and speak the same language on the same platform. It is very important that our strategy also be very clear. Currently, we are working on a three-year strategy for the bank. This involves concentrating on the issues of growing the business in a selective way. After establishing all those provisions, you still have to be selective and make profits at the end of the day. No bank will survive without trying to make profits. If you are selective it has to be meaningful. You need dividends for the distribution for the shareholders who did not originally take dividends until the provisions and the offloading of the bad loans have taken place. We must give a return to the shareholders and to the people who are reading our figures and buying our shares. We also need to clean internally in terms of control self-assessments, internal control reviews, and performing certain processes internally. We have not completed all our goals and the process is still ongoing. As long as you are working, you are operating. Still, you have to do more and more. Over the next three years, we will continue on the same path, but with more concentration and focus on the local market to be involved as much as we can with as many important projects that we have to participate in. We have to be visible, but we also have to reciprocate the relationship that we have with these institutions. Sometimes we can let go slightly on the return because there is an overall picture. It is for the benefit of Kuwait and the economy, and part of your being there as a bank.
What services do you offer that make CBK stand out compared to other banks in Kuwait?
I cannot compare myself to the other banks in terms of competitive edge. We are doing very well with our self-service. 2016 has been a year of great efforts being made by banks. We have just launched our first co-branded card through MasterCard and British Airways. We also have introduced prepaid cards in associated with retailers that give our customers special discounts. This is especially popular with the younger generation, whether it is restaurants, entertainment places, cafes, shops for clothing or perfumes. We have about 120 retailer relationships. We have also introduced premier banking, which is similar to private banking, which was a service we have offered for a few years and we are now expanding. There is a salary requirement to maintain or a deposit. There are many benefits to the customer, including concierge and free access to lounges at the airport. We also want to be competitive with the other banks in terms of replying quickly to the customer. It is very important, because the customer needs this card, but he has many more banking options that can provide him with the same packages and service.
You recently received an award for private sector cooperation. What campaigns are you running in relation to corporate social responsibility?
We began a campaign going to the street to help people. Our public relations advertising department are the ones who really worked behind the curtains and in the front and to arrange it. They gathered general bank staff and went to the streets to see the road cleaners. They provided people working in construction sites with water and with necessary equipment like masks when the weather is not great or when it is cold, giving them sanitizers and other things that are important for them. It was a humanitarian part of the social responsibility. The program has been going on for several years. During Ramadan, they have also organized many events centering on social responsibility with hospitals, people of special needs, and patients. In our annual report, we are so proud to see all the events that have taken place because it was not only for the local market. When the GCC organized this prize, they saw that we have been making an effort for several years to be available and extend our service to the public in terms of giving back to the social environment that we are living in. We are really very proud of this award.
How would you project yourself in the next two years? If everything goes according to plan, what do you want CBK to have achieved in the mid-term?
Our strategy for 2017 and 2018 centers on the retail customer, the corporate customer, banks, our business with international institutions, our stakeholders and shareholders. They are all my customers. This is the number one priority for me, my staff, and the management. This message is important across the board, from the Board Chairman down. I will never decline anyone who wants to see me, even if they come in with no appointment or if the solution has been given to them already. Even if I have an emergency, the staff will call me just for one minute to see a customer. And it is not only me, even the chairman will do this. It is an open-door policy. If there is a problem, we will always see the customer. Even if he is upset, you can cool him down and understand the situation and the problem and then it can be filtered to other people who are able to handle it best. It does not mean that is the end of the complaints. As long as we are working daily and dealing with the customers, there will be some customers dissatisfied. They may have not received the proper treatment from one of the staff, they were irritated, they stood for too long of a time or their processes have been taking more time than expected. But we try to sort it out daily, as much as we can. It is not only me; all my people are trying their level best. It is very important for us. When you take care of the customer, the profits will come and we will definitely see the benefits. We have seen proof of this for the last few years and we will continue on.
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