Simon Clements

Q. How is the NBK developing its Internet banking system? And are you focusing on the retail or corporate customer?

A. NBK has been providing online services since 1997 when we launched 'Watani-Online' our flagship online banking service. Today it is probably the most advanced and functionally rich offering in the region, and compares well with the offerings from leading banks in the US and Europe.

We have concentrated on the consumer banking market, although we will soon be launching Internet services for our corporate clients to replace the aging PC based application that we have had for several years.

Q. What are your strategic objectives for Internet Banking?

A. I could make the simple and grandiose statement that we want to retain our position as the leading online services provider in the region. Well of course we do but there is a coherent strategy behind that.

Online servies will continue to be an integrated part of our multi-channel ( click and mortar ) delivery strategy . Today 34,000 customers currently bank online and we have challenging targets to increase this substantially over the next two years. We will continue to develop the offering and the internet will become a larger and larger part of the mix. Within 5 years the internet may well become the dominant delivery channel.

Internet banking users will increase as Internet penetration spreads, multi device access becomes reality as wireless and other technologies mature, the teenage " techie " population becomes bankable and the intenret becomes easier and easier to use.

We are close to completing phase one of our strategy which is to migrate the functionality available in the physical world to the Internet. Phase two will see NBK offering an increasing array of personalised offerings. This will be achieved through the integration of click stream data, life style date with the customer activity data already held in our data warehouse.
Products and services will be presented to clients based on their preferences and their web site activity when they are online. The Internet then becomes a focussed interactive marketing channel.


Q. How important is Internet Banking to NBK?

A. I think the fact that we have set up an e-business group within the bank indicates how we importantly we view this part of our business. Customers are becoming more and more demanding, they a want convenience, they want speed and they want to feel as though they are treated as individuals, the Internet enables this to happen in a way that hasn't been possible before.

As I have said we expect the Internet to become a dominant channel in the mix over five years. We recognise too that by that time online banking will become a commodity and that we will have to differentiate ourselves by the quality of our services, the array of services available and the level of personalization we will provide.

Q. Does NBK offer online share trading?

A. NBK was the first bank in the region to introduce an online brokerage in October 2000. Forming a strategic alliance with the US brokers Pershing we have provided our clients with the ability to trade online in US equities. We have had some good success with this service, and are expanding it in the near future.

Q. Do you think regional banks are at a disadvantage to the internationals in developing e-banking?

A. Two issues here I think, one is investing in the technology and what is a bank's objective in moving into the space, and secondly the issue of Internet penetration in the region. To answer the first one, investing in the technology should not be an issue for the larger players but they need to know what they are trying to achieve. What we are seeing is the 'me too' syndrome starting to emerge now which is not surprising, and what we are not seeing is clear strategic direction.

Internet penetration levels lag well behind Europe and the US and that is a challenge for all of us in the region.

Q. Are you involved in the development of e-commerce and B2B exchanges in Kuwait? If so, how do you anticipate that they will grow over the next few years?

A. NBK is very much involved in e-commerce both in Kuwait and regionally. On the business-to-consumer level we are the only bank providing payment gateway services, allowing merchants to sell on the Web and clients to pay by credit card. We were also the first bank in the world to introduce an Internet-only shopping card, a model that is now copied around the globe

In terms of business-to-business e-commerce we have very clear views on this subject. The region are mainly importers of goods and services, there is little if any manufacturing. Take oil and gas out the equation, because it seems likely that that industry specific exchanges will take care of its needs, and we are left with a relatively small total trade figure.

No country with the possible exception of Saudi Arabia can support a successful national e-market, because quite simply there is not enough liquidity. That is why we are leading a regional consortium that will provide B2B services to corporate clients. The regional approach will overcome the liquidity issue.

There have been no successful B2B market initiatives yet because they do not provide sufficient value to both buyers and sellers, and functionality has been limited. Tejari.com is probably the only one that is viable over time but a regional focus is a must, and to date they have shown the most initiative. We believe banks are key player in the B2B space and this importance, though recognized in the West, has not been recognised here. We will change that by providing a market that provides value added services along the complete supply chain this will include an integrated set of trade realted financial services.

Don't forget as well that there is also a major challenge in bringing corporates to the table and several important issues to be resolved such as the issue of agents and their role in this new environment. In answer to how quickly will exchanges grow, I would say firstly that there will be few successful ones and that growth will be slow.

Q. Which Internet banks do you most admire and why?

A. You have to admire those banks who have managed to move significant number of customers online and these would be banks like Citibank, First Union, Wells Fargo in the US, then Barclays in the UK, and MeritaNordsbanken in Scandinavia who have the highest ratio of online users in the world.

These guys have a clear strategy and provide real value to their customers creating compelling reason to bank online. A huge array of services, lots of interactivity on sites that are easy to understand and navigate, they have got the basics right and are now leading the industry in the next phase of online services.

Q. Do you think the dot-com bubble has damaged prospects for Internet banking in the region

A. Not for Internet banking where the banks are leveraging technology to deliver new value propositions. There was nothing wrong with the technology of most of the dot-coms either, but there were clearly many things wrong with their business models and how they were evaluated. The lack of sustainability that few analysts saw as an issue has now come home to roost.

Now that more traditional metrics are being applied to the dot-coms, the true value of these companies bears little relation to the inflated share prices of the past few years. This has definitely affected new dot-com initiatives, and one area of note is B2B where there have been many failures. But it has not been a matter of technology failure, it has been the failure of the business models that have been applied. They have failed to provide customer value, and in turn shareholder value, and the result is that many dot-coms have gone out of business.