In a market and economic climate that is often described as volatile, global economies are struggling to find a rhythmic flow as they manoeuvre shifting challenges and an unending state of turmoil. No sooner had the Covid-19 pandemic started to recede then war broke out between Russia and Ukraine, sending markets worldwide back into chaos. Whereas geopolitical uncertainties are underscored by crippling disruption in global supply chains and a shift away from globalisation toward economic decoupling, macroeconomic tensions manifest in inflation spikes across numerous economies, accompanied by skyrocketing policy rates announced by central banks across the world.

Despite the intensifying pressure as economic volatility continues to spread faster than wildfire, a window of opportunity slides ajar for banks and financial institutions to robustly respond to the market’s dire need for a trusted guide to see them through this economic murk. In these less-than-ideal circumstances, banks find themselves racing against time to come up with innovative solutions to novel challenges as well as long-forgotten ones.

The success checklist
Standing centre stage with all eyes turned to them, banks’ survival depends on their ability to take quick yet calculated moves that prove their worthiness as reliable financial partners to retail as well as corporate customers. But what does that entail in 2023–24?

Digital transformation: The Covid-19 pandemic wreaked havoc across global economies and markets, but this challenging time also triggered some positive changes that the global markets continue to build on.

One such example is the resounding shift that the pandemic triggered in the public’s perception of digital financial services. With more and more people committing to social distancing and precautionary measures, digital payments trumped in-person cash payments, sparking a massive wave of digital banking adoption across all markets and age groups. While some ‘new normal’ features dwindled with the withering of the pandemic, digital transformation was here to stay, with adoption rates rising in 2022 to as high as 89 percent of banking customers in the US, who reported relying on their mobile devices for carrying out banking operations on a regular basis, according to Insider Intelligence’s Mobile Banking Competitive Edge Study. This figure spikes to an astounding 97 percent when zoning in on millennials’ survey responses only, as per the same report. In light of the growing need for the efficiency that comes with digital financial and banking services, institutions that fail to keep up with the market’s fast-paced digital transformation risk being left out of the race, and possibly even the conversation.

Successful digital transformation requires building a sound digital infrastructure

It serves to note that digital transformation is, as the term stipulates, a complete transformation of mindset, and not merely the creation of digital replicas of existing products and services. Successful digital transformation requires building a sound digital infrastructure that provides both efficiency and security without room for compromising either. Building upon these digital infrastructures, banks need to consider the market’s evolving needs and aspirations as they innovate new digital solutions and products.

Sustainability: In 2023, banks that aspire to lead the market should be able to perform as far more than successful financial institutions. In fact, successful banks are expected to act as promoters and supporters of positive change and sustainable growth within their communities and domestic economies. This global direction is amplified in the context of environmental, social and governance (ESG) considerations, which governments now mandate to be weaved into corporate entities’ business strategies and future innovations.

Whether legally mandatory or not, ESG is a win-win investment for corporate citizens and governments alike. From a polished market reputation to a wider pool of ESG-focused investments and fewer regulatory pressures, banks that strive to achieve business success through mindful ESG practices reap multiple fruits and are thus able to navigate with greater ease toward their business goals.

Capitalising on data: In today’s market, any institution, whether financial or other, that aspires to achieve business success needs data galore. With data-based insights, banks are able to build products and services that address the market’s rising and changing needs. On the other end of the data spectrum, supervisory bodies and the mass public require banks to be transparent about their practices – a form of data that is often pivotal to winning and maintaining the trust of customers and investors. Thanks to digital transformation, banks are now able to collect and analyse data with greater efficiency, enabling them to be closer to their customers and to take active steps towards supporting them.

Human capital investment: In the banking industry, capital and resource management is at the heart of every operation and business decision. However, one resource remains uniquely important for the determining role that it plays in any bank’s rise or fall. Every bank strives to offer its customers an exceptional banking experience, but what often goes unnoticed is that a rewarding customer experience begins and ends with a rewarding employee experience. This realisation, paired with banks’ commitment to enabling their communities, makes human capital development a top priority for any bank that aims to maintain a leading role within its market. Not only does this strategy attract and retain the best talents, but it also encourages them to respond to clients’ needs with uncompromised empathy and proficiency.

Catering to customers’ holistic wellbeing: For the longest time, banks were keen on designing a streamlined banking experience that catered to customers’ needs without disruptions or complications. Today, banks look beyond the limited interactions that they share with their customers within the banking context and look to offer the community tools and services that allow them to lead holistically rewarding and satisfying lives. This is addressed through a number of strategically planned partnerships with leading service providers as well as initiatives, programmes, and events that empower customers and the community to lead more fulfilling lives.

A market that thrives
In the midst of the rising uncertainty that permeates the global banking industry and the market’s growing expectations for banks’ involvement in curbing economic challenges, the Kuwaiti banking sector stands out in 2023 as a success story. In June 2023, the international global credit rating agency Moody’s announced that the Kuwaiti banking sector stands on steady ground that is upheld by sound capital and strong liquidity, with an estimated projection of GDP growth of 3.4 percent in 2024, as reported by Arab Times. This stability can be attributed to the Central Bank of Kuwait’s (CBK) prudent regulations and comprehensive efforts of safeguarding the market against uncalculated or unnecessary risks.

A rewarding customer experience begins and ends with a rewarding employee experience

Nonetheless, the Kuwaiti banking sector is not entirely risk-free, according to Moody’s, especially when considering the minor pockets of risk that the financing of the small business sector poses – albeit, a risk zone that comes backed with a wealth of provisions, hedging, and sound capital. In fact, the CBK’s regulations have led the sector to weave a safety net against financing losses that amounted to 270 percent of non-performing financing by December 2022.

Considering the mature and flourishing state of the Kuwaiti banking sector, it comes as no surprise that the CBK continues to support a sandbox environment where existing banks and new competitors can constantly innovate and test novel technologies, which ultimately aim at achieving compound success for individual institutions, the local community, and the domestic economy at large.

A model of excellence in Kuwait
Among the banks that have exhibited great finesse in their banking innovation and growth is Kuwait International Bank (KIB). Judging KIB’s business success is easy to grasp in numbers, seeing how the bank concluded the first half (H1) of 2023 with an 88 percent growth compared to H1 2022 in net profit attributable to shareholders, which amounted to almost KD6m ($19.3m). Meanwhile, in June, KIB announced the completion of its subscription of capital by rights issue, which aimed to increase its capital by offering 428,571,429 shares at a value of KD60m ($193.8m), in a move that aligns with the bank’s strategy to achieve further development and growth. It serves to note that the rights issue was oversubscribed by 687 percent. However, as a leading banking institution in Kuwait, and under the umbrella of its comprehensive social responsibility programme, KIB defines its success not only by the business metrics of growth but also by the bank’s investment in its community and the extent to which it can propel Kuwait’s national talents forward.

On the banking front, KIB has contributed generously to the innovative advancement of banking in Kuwait, which greatly serves the market and enables different strata of the consumer base to reach their aspirations. This is particularly evident in the bank’s dedication to digital transformation, which prompted KIB in late 2022 to launch KIB Digital Factory – an innovation hub where the customers’ unique needs are at the heart of numerous banking innovations and forward-looking products and services.

Some of the insight-driven innovations that were introduced by KIB’s Digital Factory in 2023 include: the revamped corporate online banking platform, which is designed to enable the bank’s corporate customers to manage all of their employees’ banking operations as well as control the finest financial details with ease and accuracy; the first-of-its-kind KIB Aqari, a one-stop shop for real estate-related needs where customers can enjoy a wide range of real estate services and innovative solutions; and a completely upgraded KIB mobile application, which comes geared with state-of-the-art payment features such as KIBPay. Each of these groundbreaking contributions addresses a different cluster of customers and answers their specific needs.

Many of these innovations are made possible thanks to the bank’s favourable work environment, which attracts some of the best talents in the market. However, other leaps of innovation are the result of KIB’s selective choice of partners who share the same passion for growth and development. In 2023, Visa was one of many partners who joined hands with KIB to bring the local market previously unheard-of banking innovations. This includes introducing the first biometric Visa card, which uses the customer’s fingerprint to authorise POS transactions instead of a PIN code, in a bid to add an extra layer of security to customers’ transactions. In addition, KIB was the first bank in Kuwait to join the Visa Ready for Fintech Enablement programme, entwining its digitisation vision with Visa’s resources for a holistically transformed banking landscape in Kuwait.

In the same spirit, KIB has launched KIB Mubader, an incubator and hub for bolstering entrepreneurship in Kuwait – an endeavour that goes hand-in-hand with its comprehensive support of its community and budding talents. Besides KIB’s dedication to digital transformation, the bank has also matured a wider range of products and services that continue to respond to the market’s varied needs and aspirations. This is especially true of KIB’s growing spectrum of financing offerings, all of which adhere to the Islamic Sharia law, which is sometimes delivered through big retail partners or directly through the bank.

In addition, KIB remains focused on developing its existing products and services. Following the same mentality of advancing the existing products and services in parallel to completely new offerings, we continue to introduce new tailored cards and banking accounts, each bringing a new level of ease and convenience to a specific target market whose needs are met with precision and care.

Onward to a bright future
In 2023, the Kuwaiti banking sector remains a beacon of hope and an inspiration for other markets, reminding observers everywhere that far-sightedness and the ability to plan can help weather the harshest of storms. Today, Kuwait’s banking sector is on a trajectory of growth and unprecedented achievement, with optimistic anticipations for the next frontier to conquer. The prospects are high, and the possibilities are endless; however, the Kuwaiti banking industry remains one step away from unlocking a new definition for banking success in the region.

In order for the Kuwaiti banking industry to maintain this momentum of advancement, it is critical for market leaders and decision-makers to adjust the environment so that customers, whether retail or corporate, view and accept ambitious strides with open minds rather than scepticism. After all, in a market as delicate as the financial and banking one, there is scarcely any room for uncalculated risks, and customers’ willingness to adopt banking technologies will always be tied to the amount of security and return these technologies promise.

On this front, campaigns such as ‘Let’s Be Aware’ (Diraya), which has been running for over three years under the patronage of the CBK and the Kuwait Banking Association (KBA), in partnership with Kuwaiti banks, remain pivotal for the steadfast development of the field. While Diraya continues to serve as a platform for disseminating essential information about the modern banking industry and its massive suite of services, it also holds the key to preparing the market for novel ideas in a smooth manner.

Considering how the banking sector is at a turning point, several factors will be in play to help shape the prospective environment, which will certainly look very different than what we are seeing today. The face of future banking rests in the readiness and adaptability of the environment as a whole – starting with regulators adapting their approaches and developing new regulatory frameworks and regulations that are more in tune with contemporary needs, then moving on to the capacity of governments to regulate themselves in order to adapt to the evolving landscape, thereby influencing the big players in the market, and ending with the overall market environment and its ability to accept and cope with the new change.