Thursday, 6 October 2022

QIB’s Gamal: “We play crucial role in economic recovery”

5 min read

By Bassel Gamal

In this part of CEO Perspectives, Bassel Gamal, Group CEO of Qatar Islamic Bank (QIB) discusses the bank’s steps to address COVID-19, the role banks will play in the economy’s recovery and the changes the pandemic will bring for the banking sector.

  • People’s safety is paramount in this time of crisis
  • The pandemic has put pressure on banks’ profitability and changed consumers’ behaviour, two factors that will have long-term effects on the industry as a whole
  • Banks worldwide will play a vital role in the economy’s recovery

The COVID-19 pandemic is an unprecedented crisis and its extent is still evolving. Without any prior experience and with many unanswered questions about it, the epidemic is a major challenge for everyone. In a crisis of such magnitude, it is essential to put the safety of people – both employees and customers – as the absolute priority.

Putting people’s safety first

From the very early days of the pandemic, we have collaborated with the Ministry of Public Health and the Hamad Medical Corporation to raise awareness on how individuals can protect themselves and act responsibly for the benefit of their communities. We have made heavy use of our own channels to promote key awareness messages to our entire customer base across the country, including a campaign urging the use of our mobile and online platforms to fulfil daily banking needs remotely.

For our employees’ safety, we have maximised the number of staff working from home. By doing so, we have created the right social distancing environment for employees who, due to the nature of their responsibilities, are still required to work from office – a percentage less than 20% of our workforce. Frequent sanitising and deep cleaning of all bank premises, including operating branches and ATMs, have also been introduced.

Our bank has continuously invested in upgrading our digital channels and call centre capabilities to ensure customers can perform transactions without the need to visit a branch. This has allowed us to significantly decrease the number of our operating branches during this period and migrate almost all transactions and applications for services to our digital channels.

I believe our response so far has been rapid and effective. Within the framework of our business continuity plans, we have acted in a timely and disciplined manner to the unfolding events with our key priority being the safety of our employees and customers while ensuring business continuity.

Sustaining support for customers amid trying times

As a first response to the economic implications of the crisis – especially to many of our smaller business customers – we have immediately postponed financial instalments and due documentary credits. We are also accepting applications for the government’s COVID-19 National Response Guarantees Programme administrated by the Qatar Development Bank, which is meant to mitigate the pandemic’s short-term financial impact by relieving the most critical payments private sector employers will face during the next 3 months: salaries and rent.

We fully realise the importance of maintaining economic and financial activity as normal as possible. To that end, we have taken two further actions:

First, as we are experiencing a large number of customers using our digital channels for the first time, we have formed specialised support teams during this transition as well as made available educational material on how to perform key transactions on digital channels.

Second, for people and teams in mission-critical roles, we have split the teams to work from different bank locations – including working from home – to ensure business continuity. We also have explicit succession plans in case of emergencies.

Furthermore, our crisis management team has been conferencing daily. Our treasury group is also reassessing risks and preparing for a number of potential outcomes.

Banks’ operating models and the industry at large will change drastically

After having addressed the immediate challenges of the crisis, we are now preparing for the economic implications that will inevitably follow. At a broader perspective, banks worldwide will have to play a crucial part in the recovery of global and local economies.

The immediate ask is to support customers in this time of financial uncertainty. Some borrowers will face difficulties to make payments as business cash flows are impacted and individuals might find themselves temporarily unemployed, suspended or with reduced income. At QIB, we have already provided payments deferrals and we are actively participating in related government programmes.

Going forward, it will be crucial to ensure that companies will continue to have access to credit. Although banks in Qatar have very strong capital and liquidity positions, banks should prepare for a mostly temporary deterioration of asset quality and get ready to manage effectively the quality of their portfolios. The implications of the economic and financial impact of the pandemic are yet to be fully realised, depending on its duration and the length of recovery. Having said that, the recent governments’ stimulus programs and central banks’ actions around the globe are key enablers for a successful restart of the global economy. 

Two other key elements in play that will affect the banking operations in the future are the expected pressure on banks’ profitability and the rapidly changing consumers’ behaviour.

In the short-term, even the best positioned banks will have to deal with profit pressure. Business is slowing down, payments are deferred, and emergency rate cuts are compressing margins. In our case, we are identifying cost disciplinary measures to balance out the anticipated fall in revenue and the increased costs in areas such as safety, communication and cyber-security. As a start, we are re-prioritising current projects to determine what can be stopped, paused or redirected to the most pressing needs.

The crisis is also creating a shift in customers’ behaviour, as people are forced to bank online and on their phones. Many of them are new to these channels, so we have scaled up the number of our employees who can assist them over the phone with simple tasks such as how to register, log in, check balances or make a transfer. We do expect customers to get more comfortable over time and find out that managing their finances digitally is easier and safer.

These developments are definitely expected to have an impact not only on our bank’s future operating model, but on the industry as a whole.

Bassel Gamal is the Group CEO of Qatar Islamic Bank, the largest private sector Bank in Qatar.

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