Knowledge Update

Reason for Consolidations in the UAE Banking Sector

Fintech is radically changing the finance industry. Innovations such as artificial intelligence, machine learning, blockchain technology, biometric identification, cloud computing, and the use of big data are revolutionizing the industry. During the past five years, more than US$100 billion has been invested in the Fintech sector, and 73% of this investment was focused on retail banking. Thus, the impact of the current and increasing FinTech disruption is on the banking sector, and this is forcing banks to invest heavily in latest technologies for their existence or they will perish in the near future.

The retail banking experience:

Even individuals who have access to a bank account and who are able to go into a nearby branch, often don’t want to because the experience is so unpleasant. Investors and Fintech entrepreneurs have recognized that traditional retail banks have failed the consumer in this respect, and are developing new technologies that allow for a more enjoyable financial experience.

Challenger banks:

These are banks, such as the United Kingdom’s Monzo and Starling Bank, that are purely digital. These banks conduct most of their operations via mobile phone, providing fast, painless and pleasant user experience. From the investor’s perspective, it costs up to 50% less to set up the digital infrastructure for a challenger bank than for a traditional bank, and challenger banks require up to 90% less staff to run them. Moreover, their use of automation and sophisticated data technology means they are highly efficient financial service platforms, forcing established retail banks to reinvent their business models in an effort to keep up.

Recent events:

Some banks in the GCC have already merged, few are in the process of merging, some have announced their intentions for the merger, and many are in the preliminary discussions on merging. In my opinion, this increasing trend among the GCC banks forming alliances or merging is basically to survive the Fintech disruption and the challenges from new entrants from the non-banking sector and I doubt what kind of synergies they are going to achieve – it is a survival strategy.


Disclaimer: The above is personal opinion expressed as part of academic exercise.

Dr. Manuel Fernandez, mfernandez@skylineuniversity.ac.ae, Skyline University College, Sharjah, UAE

Most of the organizations in the world have implemented project management successfully and achieved better and sustainable outcomes. But, in today’s dynamic, global, highly competitive and complex business environment, the project management approach is turning out to be a little difficult one to implement due to its rigidity and highly process-oriented methodology. Out of the several techniques to resolve this rigidity, agile project management is found to be one of the most successful approaches. It is considered to be the most flexible and capable approach, which can execute several varieties of tasks simultaneously.

The traditional project management approach adopts a linear sequence of completion of events one after the other known as "waterfall" methodology. All the events and tasks of the project are planned well in advance, and are completed one after the other passing through different phases of a project known as "Project Life Cycle." In general, these phases are known as define, plan, execute, and close. All these four phases are commonly followed in each and every project. The project scope statement is prepared well in advance and the possibility of making changes to the scope is very rare. Due to this, the projects that are generally of longer duration face severe deviations in planned versus actual budgets and timelines.

Contrary to this traditional approach, the agile approach adopts an iterative approach (projects are implemented in small packets of works) which enables it to incorporate an element of flexibility in the scope and dynamic modification of project based on client’s requirements. It focuses on working along with the needs of the customer throughout the project, instead of freezing them at the beginning itself. The agile approach uses flexibility-enabled software for completing the tasks of the project through adaptive planning. According to the Project Management Institute (www.pmi.org), adoption of the agile approach is rapidly increasing in many industries and it is not limited only to Software and IT projects. Whereas the traditional project management is useful for tangible deliverables, the agile is found to be more useful for intangible and knowledge-oriented deliverables.

In traditional projects, the deliverables are not visible to the client until the completion of a very long duration of the project, whereas, in agile, the client can visualize the deliverables in small chunks within a very short duration. At the same time, the changing needs of the client can be incorporated at every chunk of the agile project. This increases the client’s satisfaction and at the same time enables flexibility and adaptability in the project.

Most commonly used agile processes are Scrum, Scrum/XP hybrid, Custom Hybrid, Scrumban, Kanban, and Iterative development. Out of all these, Scrum is the most popular agile methodology designed to guide the members of project teams in the step by step iterative methodology and the delivery of the product to the customer in a phased and incremental manner. Popularly, the Scrum is also called as "A Framework of Agile Project Management." It enables the project teams to quickly respond to changes in an efficient and effective manner and dynamically modifies the time and cost of the project to suit the client’s requirements. This is achieved through the usage of tiny slabs of time, known as "time boxes," and a collaborative approach with the client. In agile projects, the traditional project manager functions as a "ScrumMaster." Some of the examples of usage of scrum include social justice, venture capital projects, sales, marketing, finance projects, and portfolio management. Scrum works in a "lean way" and executes the projects through the continuous involvement of customer and project team to develop the right outcome as per the requirement of customer.

Today, the popularity of agile project management approaches has already spread to almost all industries. Some of the industries where agile approaches are widely used are, software, information technology, construction, pharmaceuticals, medical devices manufacturing, mobile and telecommunications, and electronic products manufacturing, etc.

It is expected that very soon project management will be totally replaced by the agile approach in many sectors.

Education has always been one of the main focus of governments and people in all countries in the past and in the present. Through education, all closed doors open and all obstacles in life can be overcome. Education lets people develop emotionally, intellectually and socially. Education is the scale that measures nations in all fields such as lifestyle, development, richness, poorness, and even happiness. That is why countries have been doing research to find better ways to enhance students in schools and to support teachers. When technology has become an integral part of various fields and industries, governments made an effort to integrate technology in education.

The idea of integrating technology in education has been a growing demand for both teachers and authorities in higher education. In the past, the major focus in classrooms was a teacher-centered approach in which teachers taught in a traditional way: using chalks, hardcopy books and notes, and lectures. Classes were dull for many students as the actual involvement and interactions of students out of classroom was lacking. The communication between teachers and students was limited.

Presently, integrating technology in education has become a need for every academic institution. It has become a vital part of the teaching-learning process. Having a computer and internet in the classrooms make it easier for teachers to give exercises and show students extra material such as pictures or videos in an easy, effective way. Moreover, teachers have access to unlimited teaching resources from the internet they can use in their work. Also, now it is much easier and faster for both teachers and students to communicate, discuss, release or submit assignments or even enter marks online. Teachers and students can also keep themselves updated about the latest trends. Assigning assignments, doing homework, performing exams are easier now than before.

Another important factor in using technology in education is virtual reality technology. This technology allows students to immerse in other cultures or environments without leaving the safety of the classroom. They can see experiments, new cultures and learn new languages in just a few clicks.

Countries that make use of the power of technology have gained better results in all fields and raised more intelligent generations with better practical skills than those with traditional learning approach. In ten years’ time, the traditional method of teaching might become obsolete. The countries must, therefore, set mandatory rules, ease the regulations, and allocate budget for institutions to encourage the use technology in education.

Strategy is the universal aspect every organization should have to achieve its set goals. A word of warning, though: some organizations may not achieve success in implementing strategy as they lack a clear understanding of the DNA of strategy and what fits to each organization. Having a strategy does not guarantee success. Therefore, the organizations should understand the DNA of strategy before devising, adopting and implementing a specific strategy. It is imperative for an organization to internalize its goals by devising a strategy and evaluating the same in achieving financial milestones. The financial milestones are crucial to any organization as they are performance indicators. Hence, organizations need to map the strategy with financial milestones.

This includes ensuring survival, achieving sustainability and focusing on growth aspects. Devising pertinent strategies to ensure survival through attaining break even (no profit-no loss) in order to keep the organization afloat, repeating of such milestone to achieve profits leading to achieve Return on Investment (ROI) i.e. sustainability. After achieving ROI, the organization needs to repeat the success by achieving continuous profits. Such recurrence of success leads to accruals of cash made through net profit, which could be used to plough back into the organization for new horizons of growth (Growth). Such cycle could be called Strategic Growth Cycle (SGC), which is very vital for an organization to internalize the strategy into its entire journey. Having looked at the ways the different organizations used such cycle, numerous organizations adopted and internalized the SGC cycle throughout their journey and attained top positions in the global business world. Wal Mart is the ideal example of using SGC throughout its journey since 1950 until now.

Arguably Wal-Mart is the number one company in the world in terms of generating sales turnover (http://fortune.com/global500/list/) with US$ 500 billion for the year 2018. Looking at the SGC journey of Wal-Mart, it is clear that it went through the entire cycle of SGC before achieving its top position. However, Wal-Mart did not get complacent by achieving top position as its turnover is stagnant for the last 4 years (https://www.nasdaq.com/symbol/wmt/financials?query=income-statement) as the sales turn over since 2015 hovered around US$ 485 billion and reached US$ 500 billion mark in 2018. Looking at the profitability of the company since 2015, which has been moving towards south (https://www.nasdaq.com/symbol/wmt/financials?query=income-statement) from US$16 billion to USS 9.8 billion in 2018. But, Wal-Mart did not faze with the dip of such profits, it has commenced its SGC for its new business initiatives i.e. Wal-Mart Online and Digital Business which has been paying off and is slowly making in-roads into online and digital business initiatives using its brick and mortar business model (https://www.forbes.com/sites/andriacheng/2018/08/16/walmarts-ecommerce-tactic-against-amazon-is-paying-off/#248e9782b74d).

Although Wal-Mart is a 69-year old company (since 1950), it maintains a top position through its mammoth sales of US$ 500 billion. It focuses on continuous evolution as an organization by adopting SGC for its new business initiatives i.e. online and digital business. Such lessons have been used by numerous UAE based organizations especially by the leading universities in the UAE that continuously evolve by launching state-of-the art programs in business and IT to suit the existing business and industry requirements.

The libraries are equipped with several books on Innovation and Entrepreneurship. Modern books cover the latest theories, techniques and varied levels of innovative works. This helps us to figure out the worth of innovation and entrepreneurship for the corporate world and higher education in particular. Now universities are focusing on enabling students to be innovative in every field and not just be job seekers. Rather, they should move to be job providers by becoming entrepreneurs and being critical thinkers. Amongst the many types of innovations, something that really intrigues me is social innovation.

Social innovation in the changing world is possible but not easy. It has several challenges at its operational level. Social innovation is all about devising new ideas for existing social problems and finding solutions through creativity and novelty. This is directly linked to the establishment of Social Entrepreneurship. Muhammad Yunus’s Grameen Bank and Anil Gupta’s Honey Bee Network are renowned examples of operationalizing social innovation and providing society with the benefits of social entrepreneurship. Most social innovations include kindergarten, the cooperative movement, first aid, and the Fair Trade Movement, all of which began with social entrepreneurs and then spread internationally.

Social innovation involves the same core entrepreneurial process of finding opportunities, choosing amongst them, implementing and capturing value. However, it may differ as it is individually-driven where passion for change leads to remarkable and sustainable results. Another important area where individuals have been a powerful source of social innovation can come from the world of user-innovators. These are individuals who experience problems at first hand and often provide the trigger for change in the society.

Social innovation and entrepreneurship do not exist without challenges. No innovation and start-up come easy, and setting such a venture that is social in nature faces business, economic, political and especially financial obstacles. Resources are not easily available and may require broad networking in order to secure funding. Mostly social innovation and startups seek grants and donations that are largely unpredictable.

Social entrepreneurs face difficulties in scaling up their startup. As these initiatives are focused to a large section of the society, scaling up is essential but also a great challenge. It is vital to note that it requires continuous funding along with people who share a similar passion and consensus in achieving goals.

Adding to this there is a human resource challenge as well. As social entrepreneurship is voluntary in nature and people dedicate their time and energy due to their core values and beliefs, the traditional management approach and motivational yardsticks may not work effectively thereby posing a difficulty in availability of expertise and helping hands.

Nonetheless, in spite of all challenges, there is a huge movement towards social innovation and social entrepreneurs in the contemporary world. Millennials and post-millennials are engaging with these thoughts with a clear intention to make the world a better place to live and do business. Social innovation and entrepreneurial initiatives can be a driving force for a country’s intellectual output too.

The accessibility and consolidation of retail sectors into offline and online platforms are triggering exceptional growth. On one hand, it’s an advantage for consumers who can use Omni channels for exploring and shopping. On the other hand, it’s a disadvantage for vendors to classify and implement strategies to satisfy the desires of consumers. The UAE scenario is no different story, and with digitization leap, the gap between online and offline shopping is plummeting. With internet infiltration rate as high as 99% and with 62% population rate of online shoppers (increase of 25% from 2017) in the UAE, the challenge of giving updated information is a daunting task. According to PwC Middle East 2017 report, 52% of consumers use social media to get an updated information about products. Another important aspect to consider is that companies are focusing on contents that need to be posted on these social media channels. Content creation for social media w.r.t. omni-channels, though pretty straightforward, gives updated information which leads to purchase.

Figure 1 is a proposed model for integration of omni-channels and content creation using social media:

As mentioned in the figure, for omni-channel presence, the first challenge is the selection of social media channels. Facebook, Instagram and YouTube are three effective channels used by companies.

• Facebook and Instagram– Companies use Facebook and Instagram for visual content in the form of images, infographics and videos as magnets for engagement. Facebook and Instagram are great sources of content consumers can really enjoy.
• YouTube– Consumers are going to YouTube to search for answers for queries and reviews of the products they’re interested in. Creating explainer videos and how-to's is one Omni channel tactic for searchers, and help boost search engine results page (SERP) rankings as well.

Secondly, once effective on social media, companies are drawing consumers to land on website and post reviews (after buying the product).

• Website Reviews - These reviews serve as first-hand experience of consumers who are ready to buy the product. Souq.com (now Amazon) and Namshi, and even stores like Carrefour are using website reviews to boost the sales.

Thirdly and most importantly is the generation of blog contents. Blog contents are used for both pre and post sales reviews and used by consumers as a key source of information. Social media sites also fall in this category, however, some companies are also websites (like Sitejabber, Medium or Tumblr) for review generation.

• Blog- Even though companies know that blog isn’t where most of your traffic comes, it is important to have informative and interesting content there. Blogs serve as an essential source to redirect consumers back to the website.
• Third-party blog sites– Companies use third-party blogs to extend its reach. Getting into third party blog sites such as Medium, Tumblr or Sitejabber is easy and a great idea to start with.

The paper investigates the influence of gender (male and female) over technology acceptance model (TAM) towards using smart phones. The study conducted in the Sultanate of Oman among 296 smart phones users (male and female). The study used SEM approach to identify the influence. The results are: 1) gender (male and female) elicit a negative influence over perceived usefulness towards using smart phones; 2) male respondents elicit a positive influence over perceived ease of use; 3) female respondents elicit a negative influence over perceived ease of use. The model revealed the male influence over perceived ease of use towards using smart phones.

http://www.inderscience.com/info/inarticle.php?artid=94570

The paper investigates the influence of gender (male and female) over technology acceptance model (TAM) towards using smart phones. The study conducted in the Sultanate of Oman among 296 smart phones users (male and female). The study used SEM approach to identify the influence. The results are: 1) gender (male and female) elicit a negative influence over perceived usefulness towards using smart phones; 2) male respondents elicit a positive influence over perceived ease of use; 3) female respondents elicit a negative influence over perceived ease of use. The model revealed the male influence over perceived ease of use towards using smart phones.

Changing patterns in the international business, trade and currency, ever increasing and highly volatile customer demand, strategic alliances at all levels of business, increasing globalization, unstable investments by world