Interview with Kamal G. Al Bakri General Manager, Cairo Amman Bank
The banking sector in Jordan has remained strong as a result of the Central Bank of Jordan’s (CBJ) conservative policies. But how has Cairo Amman Bank fared in terms of compliance in this new, more transparent and rigorous international environment?
The Jordanian banking sector has remained solid, even after the international crisis. The strict regulations of the CBJ have kept us from fiscal damage. And compliance has become, in the last couple of years, a very important issue. Banks perform thousands of operations a day, and to make sure that everything is legal you need a department that focusses specifically on anti-money laundering and legal compliance. Within our bank, the compliance department is completely independent from the executive management, which allows for greater transparency and trust.
The CBJ is playing a crucial role in this. There are fines and penalties being imposed on banks that aren’t compliant. This, of course, gives Jordanian banks a lot of credibility; it means we embrace best business practices.
What predictions would you make for the Jordanian banking sector in the next few years, considering the conflicts in the region?
We are part of the economy of Jordan, and the more problems the economy faces, the more we will be affected. Jordan has borders with both Syria and Iraq, although they are currently closed. This has affected Jordan’s exports and the profitability of our big businesses, SMEs and tourism industry. We were also affected by oil prices. The Jordanian external debt stands at 95% of GDP, while the current estimates for GDP growth are at around 2% or a bit higher.
As a bank, if you grant a loan to a company that can’t pay it back, you will suffer a negative impact. We issue governmental bonds, which at one point had an interest rate of 7%. Today, these interest rates are 3.5%. The drop in the interest rate is good for the government but not for the banks. The government, in fact, started borrowing from foreign sources, such as the IMF, and this had a positive side, because they bring foreign currency into the country. However, the interest rate on these bonds are higher than local banks’ rates. Most of our banks are experiencing a drop in profitability due to these factors and to competition among themselves.
Our priority is to manage the bank in a way that is stable and solid. This is much more important than profit, because we are thinking of sustainability.
“My advice to any CEO of a bank
is to go to more IT seminars than banking seminars. Any business strategy must be highly focussed on IT.”
How important is the early adoption of technological developments to Cairo Amman?
Today we are heavily reliant on the internet and mobile services. The development of technology is dynamic, and the financial sector must, therefore, also be innovative. We are currently talking about blockchain technologies, digital currencies, cloud computing, cyber security. My advice to any CEO of a bank is to go to more IT seminars than banking seminars. Any business strategy must be highly focussed on IT. If you aren’t following the current trends, you might end up becoming obsolete very quickly.
I believe technology is a part of life. For example, we use bank cards every day. If you forget your wallet, you cannot pay for anything. We aren’t as attached to our wallets as to our phones; when we forget our phones, we realise it immediately. Our phones are becoming extensions of our cards, and we, as Cairo Amman Bank, are also heading in that direction. We are establishing a consortium of leading telecommunications, banking and microfinance companies. Under the guidance of the CBJ, we are developing systems where your mobile and your bank account will be much more closely linked.
However, what really differentiates banks from each other is client services. I want our clients to engage with us; we encourage them to visit our branches and not only use mobile banking. In the first quarter of 2018, we will be launching new branches under a different brand. We want this new brand to be focussed on young customers, the under 40s.
There are differences in the population between who is offline, who is online and who is digital. Some people are completely offline. Some are online; they might use social media, but they prefer hard copies of certain things. And others are completely online — everything for them is digital. Everything they do is through electronic devices. Digital clients aren’t inclined to visit branches. They need a different banking environment, where the staff are on the same page as the clientele. We are looking at offering services that go beyond banking.
In Jordan, a very large part of society does not have a bank account. What do you think could attract more Jordanians to banking?
We will offer services beyond banking, which relates to your question. For example, we’ll have a dedicated human resources sector within the new branches that helps with job searches and CVs. These branches will show films offering recruitment advice. We will also have a helpdesk to offer financial advice to all Jordanians.
We have an agreement with Orange, which has an entrepreneurial hub in Amman; within the branch we will have a desk where you can share your entrepreneurial idea. After appraising it, we put you in contact with the people from Orange. We have also worked closely with Jordanian universities; we are now helping about 130,000 students to obtain bank cards. We want to offer the up-and-coming generation banking services and products that are adapted to the way they live. We want to support students who might be out of work. This is not only Corporate Social Responsibility, but also good business, business that speaks to the needs of the young clientele.
“Risk must, in both banking and
finance, always be calculated. If you calculate the risk properly, you will find it is worthwhile. Jordan is a very safe and stable country.”
We also have, as part of our CSR, established ties with schools to teach children how to handle their finances and their bank accounts. We want them to understand what banking is and how a bank can help them.
So, as far as inclusion, today roughly 60% of the population is not in the banking system. We want to expand banking services to that 60% and not, like our competitors, simply fight over the 40% who are already in the system. We have to be responsible for our entire society. If these branches do well, I will continue to open more in the future. We will continue to innovate and to keep up with technology.
Cyber security is a major focus for investors. How does Cairo Amman Bank ensure the safety of its clients’ accounts?
We have a highly developed IT system for security. The CBJ conducts audits of the banks in Jordan to make sure they maintain the highest levels of security. As far as information and data are concerned, we focus on protecting the privacy of our clients. Our core banking systems are designed by the most advanced developers in the world.
The Middle East and Africa are consistently regarded as a high-risk investment area. Do you feel this applies to Jordan?
One must neither overestimate or underestimate risks. Risk must, in both banking and finance, always be calculated. If you calculate the risk properly, you will find it is worthwhile. Jordan is a very safe and stable country. We are transparent as a nation and attractive to foreign investors. High risks also often lead to high returns. We are, as a bank, focussed on the best interests of our clients and therefore we would want them to always take calculated risks.