National Bank of Kuwait Innovations
National Bank of Kuwait: SWIFT Global Payments
Products, Market and Activities
The National Bank of Kuwait is the nation’s longest-serving bank and first Shareholding Corporation in Kuwait and GCC that was established in 1952. NBK provides customers a full range of financial products, investment services, and other solutions for financial institutions, individuals, and corporates. NBK is the leading banking group in the country in terms of total assets (KD 29.30 billion), customer deposits (KD 15.90 billion), and consumer loans (KD 16.60 billion)(Annual Report, 2019). In the last 68 years, NBK has transformed itself as the leading financial institution in Kuwait, extending its banking franchise through the Middle East and global markets. Currently, NBK has over 150 branches located in 15 nations across four continents. With a global footprint, the bank’s operational focus is on the MENA region. This paper examines the innovations associated with the NBK’s business functions, focusing on banking operations management to analyze the significance of the innovations in banking. The main focus is on the varied innovative processes and methods implemented in the NBK banking operations to gain competitive advantage.
Analysis of Innovations in Marketing and Operations Functions
NBK Marketing Function
First, the marketing function plays an informative role in the global banking sector. Marketing is used to reach out to a large customer base in Kuwait and internationally to elucidate the varied benefits of depositing their cash with NBK, thereby generating vast customer deposits. Hence, NBK’s marketing is summative of functions directed towards the provision of services to fulfill the financial and other associated customer needs and wants in view of the bank’s objectives (Grima & Bezzina, 2016). The marketing function plays a pivotal role as it aids in identifying and addressing the NBK’s innovation needs in terms of the ongoing digital transformation and implementation of digital marketing strategies. The marketing function supports the delivery of outstanding acumen. The digital innovations influence the customers’ decisions and guarantee a unified and frictionless consumer journey to maximize revenues generated by the NBK’s digital touch-points. The digital marketing team supports the overall Group’s objectives through Social Media, Digital Customer Experience, Owned Digital Marketing Assets. Digital Media Strategies and Digital Acquisitions.NBK Operations Function
The core business divisions are corporate banking, Islamic banking, consumer and private banking, as well as investment banking and asset management. The NBK retail banking operations provide services to the public, comprising deposits, checking and savings accounts, as well as consumer loans and advances. The global banking industry is highly competitive. Hence NBK focuses on the provision of highly convenient, flexible, and accessible financial services to build a large consumer base. Hence, the NBK’s core internal banking operations include opening accounts, provision of loans, funds transfers between accounts, and management of deposits (Henderson, 2019). Furthermore, the business banking segment accounts for a large portion of NBK operations since businesses need a wide assortment of banking services, including business loans, collection of deposits, investments, funds transfers, and treasury functions. The investment banking segment has highly sophisticated bank operations, such as underwriting services, debt and equity, creation of securities markets, stock trade, and consultancy services.
The operations function plays a fundamental role since the ongoing Core Digital Transformation is NBK’s comprehensive program aimed at transforming operations in the Kuwait market to deliver the best banking experience continuously to the bank’s customers. The program encompasses vast innovative processes and techniques that have been implemented through the NBK’s operation function, constituting three core workstreams. First, these innovative processes encompass the customer-facing initiatives aimed at enhancing all touchpoints. Secondly, the internal initiatives are implemented to transform processes at the NBK’s back-end to support the delivery against the client’s promise. The final workstream includes innovative processes that focus on building a robust digital culture and enhancing the execution capacity.
The NBK SWIFT’s Global Payments Innovation
In the last six decades, NBK has succeeded in building a progressive financial institution that provides a full range of innovative and matchless investment and financial services and other solutions to corporate, institutional, and retail customers. Thus, NBK is a pioneer in the adoption and introduction the state-of-the-art banking technology innovations. On January 3, 2019, NBK publicized the launch of SWIFT global payments innovation through the integration capabilities of the ACI global payment engine (Sokhi, 2019). In recent years, the banking industry has been under enormous pressure to fulfill the increasingly and complex real-time and digital customer demands. The innovation is at the core of addressing these issues. For the first time in the history of Kuwait’s Banking industry, customers could execute the same day use and transfer of funds due to the ACI World wide’s real-time payments.
The launch of the SWIFT GPI services innovation solved various problems by enhancing the speed and transparency in fund transfers. Also, the innovation leveraged the rich data obtained from the Swift GPI messages resulting in the development of value-add services, optimizing the consumer experience and differentiating against the competitors. Hence, the innovation has contributed positively to the bank’s progress in building a strong digital future. The ACI innovation added value to the bank in terms of the creation of a safer, easier, flexible and highly enriched banking and investing experience for all customers through the elevation of their experience in sending and receiving money. In 2019, NBK received Global Finance achievements from as it was named the Best Bank-Real Time End-To-End Payment Tracking, Consumer Digital Bank, Mobile Banking in Kuwait (Annual Report, 2019). As a result, NBK enjoys a leading market share with a vast and ever-growing local, regional, and international clientele who are served in the global branch network that spans the majority of business and financial centers globally.
Implementation of SWIFT’s Global Payments
The ACI licensed GPI module qualified NBK to configure the ACI Money Transfer System as the first Kuwaiti Bank and among the first banks in the MENA region as a Swift GPI member. NBK implemented SWIFT innovation by upgrading its existing framework to support the GPI Data Services and Connect capabilities as an element of the ACI UP Real-Time Payments solutions and Money Transfer Systems. ACI Worldwide, as a certified vendor of SWIFT GPI solutions, permitted NBK to plug into its central database to execute and monitor outbound and inbound GPI transactions. The new multi-hop system allows NBK to accept and forward payments without any bilateral relationships between beneficiary and originator financial institutions. The primary benefit of the innovation is that NBK can offer its customers more traceability and transparency across cross-border transactions, which in turn, simplifies reconciliations and improves communications for customers (Vilar, 2019). Now, the customers benefit from same-day transfers, utilization of funds, reduced timelines, and more transparency.Main Challenges
NBK faced a myriad of challenges such as tightening budgets, continuous demands of reduction of costs, and constant streams of new funds transfer regulations the Anti-Money laundering guidelines. Other challenges arose in the evaluation of core data, structural changes, legacy systems, and standardization of operations across the bank to enhance the better utilization of collection of data for managerial decision making and implementation of the innovation.
The NBK Innovation Culture
The Digital Factory team is one of the essential tools used in fostering the NBK innovation culture that is firmly embedded throughout the company – across markets and units. The bank places heavy emphasis on the attraction and retention of highly qualified talent to nurture the human capital, which is critical in the delivery of long-term ambitions. In 2019, the Digital Factory was established to support the NBK’s progress toward a digital future – mainly people and culture to drive forward the bank’s digital roadmap. The conceptualization and implementation powerhouse has full ownership of the bank’s digital value chain while augmenting the impact of collaborations with third-party specialists (Annual Report, 2019). The Digital Factory team consists of a diverse group of talented employees, including web developers, UX specialists, app designers, and digital architects handpicked as the best and brightest in the FinTech space in Kuwait and globally. The vision is achieving market leadership using sound digital channels, through the commitment to innovations. At the core of the Digital Factory are the customers. The Factory’s team uses external and internal resources to analyze customer needs and digital trends across various industries. In summary, the NBK innovative processes and methods are applied in designing touchpoints and experiences, appealing to customers whose demand is shaped by the international leaders within the digital space.
Grima, S., & In Bezzina, F. (2016). Contemporary issues in bank financial management. Bingley, UK: Emerald Group Publishing Limited.
Henderson, J. (2019). Retail and digital banking: Principles and practice. London: Kogan Page.
National Bank of Kuwait (2020). 2019 NBK Annual Report. Kuwait: The Bank. Retrieved from https://www.nbk.com/nbk-group/investor-relations/latest-annual-report.html
Sokhi, P. (2020). National Bank of Kuwait launches SWIFT GPI with ACI Worldwide
IBS Intelligence Research. Retrieved from https://ibsintelligence.com/ibs-journal/ibs-news/aci-worldwide-nbk-swift/
Vilar, H. (2019). ACI Worldwide plugs National Bank of Kuwait into Swift’s gpi. Fintech Futures News. Retrieved from https://www.fintechfutures.com/2019/01/aci-worldwide-plugs-national-bank-of-kuwait-into-swifts-gpi/