Al Rajhi Bank continued to successfully implement its Bank of the Future (BOTF) Strategy which is well aligned to the objectives of the Kingdom’s Vision 2030 in order to harness its economic and diversification opportunities. Key drivers of this success, have been the comprehensive upgrade of technology capabilities across Al Rajhi Bank and the Bank-wide implementation of its new Operating Model – “unbank the bank”

The BOTF Strategy focuses across four key verticals: “Build on the Core” aims to protect and grow Al Rajhi Bank market share of Retail, Corporate and Micro, Small and Medium Enterprise (MSME) Banking which are key areas of the Bank’s traditional competence; together with the Affluent customer segment and Treasury portfolio. The second pillar – “Outperform Competition” ensures Al Rajhi Bank Operates at a consistently high level for the benefit of customers, staff and the communities in which it operates as well as adopting and maintaining high standards of regulatory compliance; in order to strengthen its reputation as the Bank of choice for both customers and employees. The third vertical “Transform Technology“ represents the Bank investments in future fintech including the continued development of digital, scalability through cloud and agile business and engagement methodologies. The fourth vertical to “Fulfil New Client Needs” focuses on adjacent opportunities that can leverage the Bank’s core capabilities and scale and quality of the Bank’s customer franchise, including the new fintech businesses of Emkan in Consumer Finance and Neoleap in Payments in addition to Private Banking and the Bank’s Marketplace; together with a focus on meeting more customer needs through cross-selling.

The corporate synergy of Al Rajhi Bank

The successful delivery of the Bank’s corporate synergy of specialised business units supported by scalable and efficient back-end capabilities, is evidenced by the Bank retaining its leading position across a number of business segments in 2022. Al Rajhi Bank was the number one bank in the Middle East region in terms of market capitalization; with increased market share across all products and segments. This also meant the Bank closed the year by retaining its number one position in KSA across Retail Banking, Net Financing, Micro Financing (with Emkan holding top position in Consumer Finance), Payments (leader in issuing, acquiring and remittances) and Brokerage. These achievements were complemented by a substantial gain in market position in Corporate Banking, with Al Rajhi Bank rising from the top 10 in 2019 to the top three Corporate Banks in KSA in 2022.

Such focused efforts to meet rapidly changing customer needs ensured that Al Rajhi Bank retained its leading position in customer satisfaction, as measured by the Net Promoter Score (NPS) in the Kingdom for the year under review, a reflection of the Bank’s commitment to enhance financial accessibility and financial inclusivity across the Kingdom in line with Vision 2030.

Al Rajhi Bank continued to defend and grow its core franchise market share in line with BOTF strategy objectives during the year under review. In Retail Banking, Al Rajhi Bank aligned with the Kingdom’s economic and social transformation program Vision 2030; including the pivot to Private Sector growth. This resulted in the Bank redefining its risk appetite and propositions to meet the evolving demands of the Private Sector, recording a 18% growth on retail financing for the reporting period. Significant improvements in the Bank’s value proposition and Relationship Management capabilities addressed emerging needs and increased market share of the Kingdom’s growing Affluent Segment.

A 42.9% market share in mortgage in 2022 highlighted Al Rajhi Bank’s contribution to the Kingdom’s Vision 2030 target of increasing Saudi homeownership to 70%, with the Bank successfully balancing its product portfolio between government-subsidised Real Estate Development Fund (REDF) products and non-REDF products during the year. The Bank also grew its Personal Financing as well as its Auto Finance market share by focusing on product development, process improvements and strategic marketing campaigns, complemented by digital migration.

Al Rajhi Bank’s Corporate Banking segment continued its growth momentum backed by a disciplined approach, taking a substantial leap from eighth ranked Corporate Bank in 2019 to third in terms of market share as of December 2022. This growth has been broad-based, with the Bank expanding its focus from new clients to more tailored products, and restructuring cash management solutions to improve working capital solutions. With the growth in assets being matched by an offsetting growth in liabilities, Al Rajhi Bank is fast becoming the primary bank of choice for the Corporate Segment for both deposits and funding.

By retaining and building on its leading 37.5% market share in merchant acquiring, Al Rajhi Bank was able to grow its Small and Medium-sized Enterprise (SME) business during the reporting period. The Bank increased lending against POS payment cash flows, and is continuing to build a full set of lending products to meet the needs of the Micro and Small Business sector. This growing customer segment is set to benefit from the Bank’s investments in automation and enhanced user experiences; aligning with the Kingdom’s Vision 2030 to increase the contribution of SMEs to its GDP.

The Bank also experienced a growth in total deposits in 2022 through a combination of efforts; the unrivalled reach across the largest branch network in the Kingdom, growth of Affluent, SME and Corporate business verticals, and the application of more advanced analytics. The UrPay digital wallet introduced by the Bank’s fintech subsidiary Neoleap largely helped to both retain as well as grow balances, and became the fastest growing wallet in KSA since its launch in 2022.

As a result of growth across all core banking verticals; with the Bank securing a greater share of business; fee income as a proportion of both the Bank’s total operating income and total operating expenses increased significantly during the reporting period, improving the Bank’s revenue mix.

Al Rajhi Bank enjoyed the leading Net Promoter Score (NPS) in the Kingdom’s banking and financial services sector for the reporting period – a strong measure of consistent customer satisfaction across all segments, services and related products, also translating to an increased customer franchise value for the Bank in the long-term. Beyond the enhanced digital journey and enriched functionalities that greatly contributed to an unrivalled NPS; the Bank also established a consolidated, dedicated standalone Group Contact Centre in Qassim in 2022, to further enhance customer experience while also providing back-end support to the business.

The Qassim Contact Centre is also fully staffed by a newly recruited female team, contributing towards Saudi Vision 2030 female empowerment targets, whilst also strengthening the Bank’s reputation as a highly preferred employer in the Kingdom. Attracting, retaining and developing the next level of talent continued to be a priority at Al Rajhi, with the Bank increasing the number of participants in its Graduate Development Program (GDP), and equipping them with specialist capabilities in emerging tech including digital technologies and cybersecurity among other focus areas. In line with the BOTF Strategy, the Bank also remained on track to increase its proportion of qualified employees through the recruitment of graduates outside the GDP, placing significant focus on training via the Al Rajhi Bank Academy and nurturing a stronger, more capable, more adaptable workforce to cope with the variety of challenges that lie ahead.

The Bank’s loyalty programme Mokafaa continued to grow its membership to 6.2 million customers during the year under review and retained its position as the Kingdom’s preferred loyalty programme. Supported by advanced data analytics and more rapid responses to changing customer behaviour, Mokafaa delivered an integrated value proposition in terms of customer choice, merchant coverage and redemption offers; successfully attracting and on-boarding the largest and most diversified merchant network in the Kingdom, totalling over 126 instant-redemption merchants.

Al Rajhi Bank continued to embrace and encourage sustainable best practices, continuously improving its third-party ESG ratings as a result of its operations as the World’s largest Islamic Bank. Al Rajhi Bank also concluded the biggest ESG and Sharia-compliant syndication in the Middle East in 2022, becoming the first Islamic Bank in the world to do so.

Al Rajhi Bank also has done much to prepare for the changes to regulatory guidelines and technical standards being introduced as part of the Open banking framework announced by the Saudi Central Bank (SAMA) in 2022; ahead of the launch of Open Banking services in the Kingdom in the first quarter of 2023. The initiative aims to empower customers with the authority to securely share their banking and financial data held by their banks with trusted and authorised third parties. Given Al Rajhi Bank’s farsighted investments in fintech, and the synergies between the Bank and its subsidiaries going beyond banking to other solutions; Al Rajhi Bank is equipped with the infrastructure, systems, expertise and capacity to successfully move to Open Banking, reducing friction in financial services to enable the Kingdom’s digital economy, while exploring new market opportunities in a highly competitive environment.

A key success story stemming from the BOTF Strategy is the unprecedented pace and scale of digitization implemented by the Bank during the reporting period; one that sets the benchmark for sector-wide technology transformation across the Kingdom. Al Rajhi Bank successfully completed the replacement of its core Corporate Banking and Treasury systems, while making significant progress in both the extensive Retail Core Banking System replacement and Card Platform replacement projects during the year under review. These transformation projects support the Bank’s overarching goal to become a more scalable, real-time and future-fit financial solutions provider.

The Bank leveraged data-driven insights to enhance responsiveness across its customer segments, expanding its omni-channel reach to provide personalised solutions and offers to customers in real-time; further increasing customer engagement and enhancing customer satisfaction.

Operations and Contact Centre functions across the Group were centralised during the reporting period and absorbed under a newly established entity Tanfeeth, greatly improving operational efficiency. This level of high efficiency and performance was achieved largely through modernising technology, broad scale implementation of robotics as well as the re-engineering and automation of processes. With greater potential for expansion in an untapped market, Tanfeeth will explore further levels of efficiency and offer unrivalled customer experience.

Al Rajhi Bank was able to leverage both its agile culture and agile delivery approach during the reporting period as demonstrated by the pace and scale of its implementation of the BOTF strategy; particularly with the adoption of “Lean and Agile” methodologies across the Group operations, which enabled the Bank and its subsidiaries to rapidly adapt and evolve to changing market conditions and emerging opportunities.

One of the BOTF Strategy’s greatest successes comes from Emkan Finance, which continued its strong growth due to the appeal of its convenient digital offering, becoming the Kingdom’s leading microfinance company during the reporting period. Positioned for further growth, Emkan continues to open up to new market segments previously unserved by the Bank, and has a pipeline of products currently in development to meet the needs of this growing customer segment.

With payment solutions becoming a point of entry for new players in the financial services sector, the Bank continued to defend and grow its already leading position in merchant acquiring through its fintech subsidiary Neoleap. The subsidiary offers a full set of Business-to-Business (B2B) solutions across E-Commerce and Marketplace with Point-of-Sale (POS), Electronic Cash Register (ECR) and Third-Party Processing solutions, servicing the entire value chain of merchant activities. In terms of Business-to-Consumer (B2C) payment solutions, Neoleap’s highly successful digital wallet UrPay became the fastest growing electronic wallet in the Kingdom due to its appealing value proposition; attracting over 3 million registered customers by the end of the reporting period.

Al Rajhi Bank has been focused on strengthening its Private Banking offering to retain and grow customer deposits, and enhancing its Relationship Management capabilities to better meet evolving high net worth customer needs during the reporting period. The Bank introduced innovative investment products among other solutions, complemented by exclusive benefits including an exclusive Credit Card offering comprising a concierge service, membership to the leading loyalty program in KSA, dedicated Private Banking Centres and highly proficient Relationship Managers for enhanced customer servicing.

While growing in active customer numbers in line with the BOTF Strategy, Al Rajhi Bank strengthened relationships with its customers through a “needs-based” cross-selling approach, increasing the number of products per customer. This is supported by the Bank’s materially improved analytics and AI capabilities, which are assisting in identifying and offering customer-specific solutions across the most relevant channels in real time. Application and servicing also evolved with improvements to customer journeys, enabling customers to explore a range of financial solutions from members of Al Rajhi Group.

While a majority of the performance metrics of the BOTF Strategy has been met in 2022, Al Rajhi will carry the growth momentum into 2023 by focusing on promising segments such as Affluent, non-REDF mortgage opportunities and Private Banking. With the rising cost of funds becoming a global issue and funding by and large becoming less available or more contested, Al Rajhi Bank remains ahead of the curve with highly successful Sukuk issuances among other funding, balance sheet, and margin management initiatives.

Al Rajhi Bank also remains focused on balancing the growth of both deposits as well as funding, and will continue to be more selective by growing high margin assets and managing a healthy asset mix, to offset the yield impact. The Bank will also continue to maximise its Corporate synergies across its growing network of overseas branches and independent, high-performing subsidiaries creating value for all stakeholders; as the Bank successfully achieves its overarching strategic objective of establishing itself as the Bank of the Future, in the Kingdom and beyond.