The Business Year

Michel Accad

KUWAIT - Finance

Competitive Advantages

Group CEO, Al Ahli Bank of kuwait (ABK)


Michel Accad joined ABK as CEO in 2014. From 2009-2014, he served as CEO for Gulf Bank – Kuwait and oversaw its turnaround following the 2008 crisis. Between 2006 and 2009, he was the Assistant CEO for Arab Bank PLC, responsible for all banking businesses globally. He is a 27-year veteran of Citigroup, which he joined in 1979. His last post was as Managing Director and CEO for the Middle East and North Africa Division. Before that, he was the Country Head for Egypt and Regional Head for North & West Africa. From the mid-1980s to 2000, he held various CEO and country head positions, including for Nigeria. He holds an MBA from the University of Texas in Austin.

ABK is looking toward the future, focusing on digital banking solutions, extracting greater efficiencies within its processes, and enhancing solidarity within the company.

What new aspects have been added to your strategy to increase the levels of efficiency of your activity?

When we launched our 2015-2017 strategy, the vision was to become a simpler bank from the customers’ perspective so we could serve them better and deliver our products in the most seamless way possible. We have broadly achieved that, though simplicity is an on-going journey. Therefore, when we came up with the new 2018-2020 strategy update, we decided to focus on four core aspects. The first aspect is about keeping our simplification drive in order to significantly reduce our turnaround time, mainly on the retail side, by re-engineering our processes and implementing a new core banking system (Finacle), which is one of the most well-known worldwide. It allows us to extract efficiencies and also lets us move many of our activities from face to face to online with as little disruption as possible. However, it has been challenging for us to establish a centralized point that would drive and would encourage cross functional partnership. We therefore decided to create an EPMO to streamline and remap all our processes. The second aspect of the strategy was to change our corporate culture and enhance collaboration and solidarity within the company. It is a complex and long-term undertaking that requires external assistance to guide through this lengthy process. In addition, we also need to better empower our people by devolving authority closer to the customer. This will also contribute in accelerating many processes on our branches. The third aspect of our plan is to further develop our digital banking channels. We call our digital strategy “A-square, B-square, C-square”, and it covers AI and Robotic Process Automation (A-square), Blockchain and Big Data (B-square), and Cybersecurity and Cloud computing (C-square). We are progressing rapidly on all these fronts. The fourth aspect is looking at certain business initiatives that we need to promote further. For instance, we opened an offshore branch in DIFC that allows us to attend regional businesses in addition to positioning ABK as one of the top banking institutions for certain complex transactions such as structured finance, non-recourse project finance, or debt capital market syndications, which require a great deal of specialization.

What evolution have you witnessed since the implementation of your online banking system, and to what extent did that reduce ABK’s operative cost?

Our app has been highly successful. Since the early 2010’s, the total annual number of transactions flowing through the branch system is about half a million a year, increasing by 5-6% a year. On the other hand, until 2015, only 60,000 transactions were done online. A year ago, that number doubled to 120,000 transactions, and in 2018, it jumped to over 200,000 transactions. In 2015, only about 10% of our transactions were done online, while in 2018, that proportion had reached nearly 40%. In 2019, we expect to break through the 50% mark. The key to this success is the simplicity and the attractiveness of both our online system and mobile app. Moreover, ABK has a competitive advantage versus all the other banks in Kuwait due to the simple fact that we have the lowest branch presence of any conventional bank, and therefore the lowest fixed cost as well!

What results have you seen since launching your wealth management business activity?

Wealth Management and Private Banking have brought many benefits to ABK, although they are not necessarily all reflected in the bottom line. The benefit on the bottom line is perhaps KWD1 million (USD3.3 million), or just about 1% of our operating profit. In terms of volume though, it has translated into much more, because we have generated significant interest in the new investment products we offer, which has allowed us to retain many clients that would have perhaps gone elsewhere or abroad for their investment purposes. The banks in Kuwait are essentially geared for commercial and retail banking; they are not really geared toward high-end, private banking because they do not have attractive investment products to offer, although some of the larger banks have critical mass and can offer proprietary investment products. In terms of product offering, we are neither an open platform nor a proprietary platform; we fall somewhere in between, as we now outsource a dozen investment products from top class global and local providers, plus two existing products that we manufacture in-house: one is a Kuwaiti high-quality equity fund and the other is a high-quality regional equity fund. The beauty about that extra KWD1 million that we are earning from this business is that this profit is low-risk and low-volatility (unlike proprietary trading). Our core competency is not in managing assets or funds; it is in distributing products manufactured elsewhere to a large pool of people even if it is just for a small fee. This has really expanded our profile substantially, especially through our Al Ahli Capital Investment Company (ACIC) subsidiary, through which we now offer a relatively diversified and sophisticated product mix on the investment side, including local, regional and international products, in addition to certain Sharia-compliant products — and in all cases, we have outsourced the management of the assets or funds to the best-in-class provider.



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