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Interview: “If you get the service right, everything will fall into place"

By Farrah Brake

Ambition and discipline are the key values driving Abu Dhabi Commercial Bank’s reversal from loss to profitability under Group CEO Ala'a Eraiqat.

Joining Abu Dhabi Commercial Bank (ADCB) in 2004, Ala'a Eraiqat saw a huge opportunity within ADCB after having left a career in an international bank.

“Local banks have an advantage but they are not capturing it. Depth was underutilised. So my team and I explored these advantages to their full potential,” began Eraiqat.

Excellence from the starting mark
Even before he became CEO, the initial tasks Eraiqat assigned to himself after joining the bank in 2004 aimed at maintaining the reputation of the bank during a turbulent time in the market. He embarked on selling off toxic assets, building provisions within the bank to cover losses, and de-risking. This was successfully achieved with the sale of ther bank assets at a profit, which provided ADCB additional revenue to reinvest while securing 100% loss coverage ratio.

After rising to head the bank in 2009, Eraiqat instilled discipline and ambition that were to become the story of ADCB. 2009 was the time of the global financial crisis, and the year the bank first declared a loss. The new CEO had a daunting challenge and relied on internal discipline to pursue the bank’s ambitious aspirations at the time. This required an extensive strategy building.

“These two principles of ambition and discipline were grounded on foundational ideas centered around the core geography of the United Arab Emirates and the bank’s core businesses,” Eraiqat explained. “Remaining humble and true to ourselves and focusing on core competency was a tough discipline to maintain and undertake every year. We decided to strive for excellence in the core business areas of retail, corporate, and treasury and to review these on a yearly basis,” he said.

The momentum behind the decision to focus all attention on the home market was due to the “great diversity” of the local marketplace and the stability of the economy. In addition, ADCB had the ability to capitalise on innovations that were lacking at this time, as government products and services were superior to banks at that time. It was only international banks that were able to provide superior service but that was easily replicable, according to Eraiqat. Hence, the bank went a step further to not just benchmark against the local market, but pursue excellence in service and product quality using international standards.

“ADCB’s largest success was the ability to sell the idea of service and very high credibility. Credibility through service was our biggest sales tactic. This required me to be an advocate within the organisation. The power of conviction in our managerial staff was a notable achievement,” he stressed.

Placing individuals at the heart of retail
Upon his designation as CEO, Eraiqat built ADCB’s core business around retail, which, he explained, is basically what comprises the UAE market. Moreover, there is lower risk associated with retail as the amounts are smaller and margins are higher.

“What I like about retail is that it brings discipline into the process. It is not bespoke but must be programmed. And if you get the program right, you can then manage the bespoke around it. But if you do everything as a bespoke, you cannot manage the discipline around it.”

Retail affects the hearts of more people, Eraiqat continued. “If you treat individual rights, they will also impact the bank they work for. If you satisfy the need of the individual, the likelihood of satisfying the need of a corporate is much higher,” he explained.

The customer remains first priority at ADCB and the bank has worked to build trust around each customer relationship. It is the first bank in the country to offer free banking, and promotes responsible lending by providing a 14-day return policy on loans with no penalty. Most importantly, with every investment a customer makes including funds, bancassurance, and other investment products, there is a 100% call-back on all customers to ensure full understanding of the product and risks, which results in zero disputes in new bookings.

By 2011, the bank had achieved the initial goals set out in 2009 with the acquisition of Royal Bank of Scotlands’ retail business in the UAE.

“Risk was managed and the bank was actively competing in the marketplace. Although RBS was not a large sale at the time, it was at the right value and gave the bank the possibility to acquire a customer base it would have taken years to acquire,” Eraiqat recounted. “Additional benefits were the incorporation of a high-quality staff from RBS and the option for cross-sell to clients who were serviced by an international bank.”

Instilling discipline in corporates and treasury
Within the corporate sector, ADCB focuses significantly in the cash management business, which relies on infrastructure that the bank has built over time, including the ESCROW accounts service. Eraiqat explains the reason for this cash management focus is the bank is able to focus on one angle of the relationship—the UAE, its geographical coverage. For trade finance where an extensive regional network is required, the bank is making use of technology. ADCB’s cash management business is a successful, revenue-generating business as the bank has the ability to leverage the business to sell credit and manage liabilities. Over 50% of customer deposits are current accounts that provide a cheap cost of funding.

Alongside cash management and retail, treasury remains a core competency of the bank. Treasury brings the highest level of discipline on pricing and mix-match of assets, said Eraiqat, who said fund transfer pricing controlled by treasury is the driver of the business. Treasury manages and executes customer requests while simultaneously maintaining the bank’s asset and liability mismatch, as there are certain margins to be made in the space that the bank is capturing.

Treasury serves as a significant income generator but more importantly, serves to manage the liquidity portfolio as ADCB does not engage in trading. The bank retained a stable loan-to-deposit ratio of 107% in 2015 and a cost-to-income ratio of 34% at the bank-wide level, which is on par with the best around the globe.

Attitude is everything
Ambition and discipline are not just the values that define ADCB the organisation, but also the individuals who work within the organisation.

“All top management who have been with the organisation for over 3 years share the same attitude towards life, work, and customers. We are ambitious on one end but extremely disciplined on the other. This is how we distinguish ourselves and define our work at ADCB—we keep it simple,” stated Eraiqat.

The 2015 annual report of the bank tells the story of this discipline and quality, with the cost of risk declining from 2.61% in 2010 to 0.29% in 2015.

Since the beginning of 2016, Eraiqat has done away with senior job titles and hierarchy as individuals report to one another and everyone has to report to the bank. Now job titles are based on a description of what the employee actually does, and job families have been created. The inspiration for this change came after Eraiqat noticed the bank was employing more vice president titles across the bank than tellers. The tenure managerial staff was motivated to implement the change as they felt they were above titles. Initially, there was some resistance from mid-level managerial staff, but after the reasons were explained, the staff agreed to this bold move. ADCB is one of the first banks around the globe bold enough to implement this change.

Along with hierarchy being eroded, ADCB implemented a measure for service.

“If you get service right, everything will fall into place. We set measurements including net promoter score, internal NPS. We conduct monthly meetings on customer experience, and have daily engagement and involvement with customers. We had to raise the level of customer service to provide the highest standard within the bank.” Eraiqat stated.

The chief added, “reward is also based on service. Everyone in the bank, including myself, has a minimum of 30% of their KPIs based on the service levels they provide on customer experience both internal and external. We have built this culture and we have to reward based on these measurements day in and day out. If there is a problem then we must take steps instantly to correct them.”

ADCB has implemented a systematic feedback circle called Fast Loop, which is both proactive and reactive. Fast Loop logged over 50,000 calls last year to ask one single question, “How was your experience?”

“We do not compare ourselves to the market as we just do the best in what we do,” Eraiqat said. “We are an ambitious group and we are never satisfied. Today you are telling me the benchmark and excellence of where we are; today I believe we are at 50% of what we need to achieve. A labour of passion, actually obsession with achieving the best, is what drives me. There is a lot of emphasis on attitude. Attitude defines an individual—your attitude towards life, work, and family all impact your performance in every aspect of your life. Everyone at the bank has the same attitude towards all,” he stressed.

Today, Eraiqat looks outside of the industry for benchmarks in customer service, including brands like Apple, and hotel and airline chains, which pride themselves in service quality.

“We do not compare ourselves with the market as this makes us lose focus and restrain ourselves from capitalising on our full capabilities. Like an athlete, you do not compete with others, you compete with yourself. For that is where you become sustainable.”



Categories: Leadership, Retail Banking, Risk and Regulation
Keywords: ADCB, Core Business, Retail, Treasury, Loan-to-deposit Ratio, Risk, Fast Loop
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