Ethar El-Katatney

All Things to All Customers

Posted in Business Today by Ethar El-Katatney on October 1, 2007

All things to all Customers
Business Today
News Focus
October 2007

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Photo by: Mohamad Allouba

Barclays Egypt’s ambitious short-term plan to make the switch from corporate outfit to world-class global bank starts to bear fruit, but could it be spreading itself a little too thin?

By: Ethar El-Katatney

One year ago, Barclays Bank Egypt embarked on an ambitious new plan to evolve and develop its outfit into a world-class “global universal bank.” Their strategy? Substantially increasing the number of employees, expanding branches, developing its retail portfolio and starting a Small and Medium Business Enterprises (SMEs) business line. And that’s just for starters.

From the beginning of the implementation of the strategic plan in January 2007, Barclays began undergoing national expansions. It went from having eight branches in June of last year to 31 branches as of press time, with seven new branches opening in Cairo and Alexandria — and one each in Assiut, Tanta, Mansoura, Port Said, 10th of Ramadan, and Obour City, among others. They have also increased the number of employees from 500, including outsourced staff, to a total of 1,800 in less than a year.

Has the diversification been too ambitious? Could it be a classic case of too much, too soon?

Certainly not, says Khalid El-Gibaly, managing director of Barclays Bank Egypt and North Africa. “It’s hard to do [] it’s challenging, [and] of course it’s tough [and] demanding. [But] the

is, ‘Do we want to be a leading player in this market or do we want to be a number 20 player?’ You know when you go to the amusement park, and they say don’t get on this ride [] if you have a heart condition or blood pressure? That’s the legal disclaimer. The journey that we’ve embarked on is not for the faint-hearted.”

A Change of Image

Barclays has always been known as a corporate bank, but has recently been aggressively expanding its retail-banking portfolio. They now offer an array of new products and services; credit cards and car loans were launched and personal loans will soon be introduced. Today, according to El-Gibaly, Barclays is one of the leading acquirers of credit card accounts in Egypt, with a 60% plus market share of all new cards issued in Egypt every month.

Less than six months after the launch of their car loans plans, Barclays has become one of the top two players in the car loan market, acquiring 35% of the market share of all new cars bought in the Egyptian market every month. “[We want to provide] end-to-end kinds of financial products and services that meet the needs of most of the customer segments,” notes El-Gibaly.

The customer segments he defines are “[the] premier, the mass affluent, the prestige segment, the mid tier, followed by [the mass] retail segment, [which is] basically everybody else, and that’s the bigger portion.” In the future, they will expand into even lower markets than the mass retail, hoping to provide at least 60% of the Egyptian population with products, services and infrastructure. “The other 40% that is rural-based we probably cannot reach,” El-Gibaly continues, “and cannot offer products for. But certainly if it’s urban-based, and if it’s A, B, C1 and C2 socio-economic segments, then [we can].”

Why the shift to retail, though, when they already had a very solid corporate customer base? “It’s not so much that we are changing strategy,” says El-Gibaly, “[but that we have a] revolving strategy. That means that at the end of the day our strategy globally is to become a global universal bank. [By that I mean to have] globally recognized, respected, and globally purchased product[s], [and] universal [] means we should have the ability to effectively address the financial products and services needs of our key and relevant target market segments that we have defined are relevant for our Barclays.”

This, he explains, is why Barclays cannot be a niche bank, either a corporate bank, a retail bank, or an investment bank; they have to serve all these segments if they want to become a universal bank. “So that is why we have embarked on completing our offerings as a leading financial sector player in the region [our] focus is on completing the picture and the puzzle.”

Corporate Growth

On the corporate level, Barclays continues to target multinationals and large local corporations, followed by the mid-peer segment, which is what they call business banking. Four months ago, they introduced the SMEs banking segment as their fourth tier in corporate banking space, with an independent SME credit head and team, in addition to increasing their retail portfolio.

Barclays now offers full-fledged banking products and services to SMEs, specifically tailored to that segment. These services, El-Gibaly highlights, “are handled by the retail bank because [SMEs] are very, very small businesses who have very simple product requirements.” An example would be a transactional account with a checkbook, he explains. Other than offering SMEs facilities and services, Barclays also advises them, trains them and provides them with workshops on topics such as business administration and project, cash and financial management.

“[What] stimulated interest in SMEs is the same thing that stimulated interest in retail,” says El-Gibaly. “Specifically [that] the economy is doing tremendously well. It’s growing at a sustainable rate of 7.2% and higher, all the macro[economic indicators] are quite positive, and a significant portion of any economy, 50% or more, is normally represented by the SMEs. So if the economy is growing and if part of that economic drive is coming from SMEs, then clearly that’s a segment we want to be in to help growth.” He adds that driving the growth of SMEs is the best way to get economic benefits felt by the “man of the street,” who most probably works for an SME.

SME growth is also in line with the government’s strategy, which is to focus on and expand the SME segment, which they see as the future. Running with the ball, Barclays have partnered with the Social Fund for Development (SFD), a governmental organization which focuses on sustainable development projects and are currently finalizing a memorandum of operation between them.

“[The SFD has] a large database of SME-type businesses who are interested in dealing with a bank that can extend them the right level of service, the right level of credit facilities, [and] the right level of advisory information to better run, better manage and better grow a business,” explains El-Gibaly. “They know who the companies are, and we have the products, services and infrastructure to help companies grow, expand and succeed [][so] it’s clearly a win, win, win [situation].”

Banking on Success

So are all the new developments a result of brave new management? “Partly,” answers El-Gibaly. “[But it] isn’t just new management on the ground [it’s also a] renewed clarity in terms of where we want to go, not only locally and regionally but also globally. Remember that this international global growth expansion strategy has really been verbalized and clearly laid out only over the last couple of years.”

The new management, he believes, has the vision and strategy, but capability has been built in increasing the numbers of employees and branches, in addition to the fact that Barclays truly believes that now is the right time to invest in this market.

But while the Barclays plan for the future appears rosy on paper, when push comes to shove, there are a number of obstacles bound to crop up.

“Talent,” says El-Gibaly, identifying the first deficiency. “The growth that is happening now in Egypt is far, far outpacing the infrastructure capabilities of talent. [New] buildings and [technologies] are useless if you don’t have the people to run them. There’s a clear gap between vocational or skill-based training, and if we want to have a sustainable growth pattern in this country, we need to revolutionize the way we prepare people for the real world.”

He believes the biggest challenge facing all industries and not just banking is equipping the human resource talent with competencies in an accelerated and smart fashion to be able to enable economic growth. “I don’t think doing more of the same will help anymore, because [] re-engineering the educational system, [and creating] a vocational training skill system needs a generation and I don’t think we have [one],” he is quick to add. “[Because] if we [want] to make [the economic growth] sustainable, there must be some key measures taken to accelerate [skills] over the next 12-18 months.”

To this aim Barclays, is investing in intensive training for all their old and current staff. “Absolutely. The amount of money, the amount of time and the man-hours [we are spending] this year are like nothing we have ever done in Egypt before. It’s in the many, many, many millions, not two or three.”

Barclays is currently establishing a regional training center in Egypt, and have created an onboard training system with Dell Carnegie and a very comprehensive, business-skill-specific, three to four week long training course. They are also interfacing with the Egyptian Banking Institute (EBI) — Barclays is providing them with specific expertise in areas like treasury in exchange for EBI training.

With its strategic plan successfully set in motion, Barclays management believes it is simply a matter of time before they reach their end-goal: becoming a lead player. “We want to be a lead player, defined any which way you want,” says El-Gibaly. “We will benchmark ourselves against our relevant competitors. Our global CEO John Varley defined leading in a very relevant fashion; he said we should be seen as a leading player in the customer’s mind. [Because] if we are seen as a leading player in the customer’s mind, as a leading bank, then by definition it’s only a matter of time that [we] become a leading player or even number one [player].” btBarclays PLC is a major global financial service provider engaged in retail and commercial banking, credit cards, investment banking, wealth management and investment management services. Barclays is one of the largest financial services companies in the world by market capitalization.

Operating in over 50 countries and employing over 123,000 people, they move, lend, invest and protect money for over 27 million customers and clients worldwide.

Barclays entered the Egyptian market in 1864 but left after the nationalization of 1956, returning almost 30 years ago in a joint venture with Banque du Caire. Barclays Bank PLC became the majority shareholder increasing its share to 60% in 1999 and 100% in 2003. bt


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