Forg­ing solid bonds

Na­tional Bonds CCO Mo­hammed Bi­tar ex­plains why the in­vest­ment com­pany is on a self-de­clared mis­sion to strengthen the UAE’s sav­ings men­tal­ity

Gulf Business - - CONTENTS -

How would you as­sess the past year for Na­tional Bonds? What have been the ma­jor suc­cesses and and chal­lenges?

“This year has been a strong year for Na­tional Bonds with sig­nif­i­cant growth wit­nessed in our core busi­ness. In 2016, the com­pany recorded a 75 per cent in­crease in its reg­u­lar savers in the UAE com­pared to pre­vi­ous years, clearly re­flect­ing the grow­ing con­fi­dence in our pop­u­lar Shariah-com­pli­ant sav­ings and in­vest­ment scheme. Since Jan­uary 2017, we have wit­nessed a 27 per cent in­crease in the num­ber of ap­pli­ca­tions for monthly sav­ing plans com­pared to the same time pe­riod last year. In 2016, we reg­is­tered a to­tal of 17,474 ap­pli­cants and in 2017 this fig­ure in­creased by 4,718, to­talling 22,192 ap­pli­ca­tions to date.

“Our strong per­for­mance so far in 2017 high­lights that there is a strong ap­petite for sav­ings. How­ever, our big­gest chal­lenge re­mains to be that most peo­ple cast aside their orig­i­nal sav­ings plans – with the best in­ten­tions – once they set­tle into life in the UAE. It is for this rea­son we are work­ing hard to raise aware­ness of the im­por­tance of fi­nan­cial plan­ning and sav­ings for all sec­tions of so­ci­ety. From our mar­ket re­search, we know peo­ple want to save but strug­gle to put a plan in place.

“We are pas­sion­ate about help­ing peo­ple meet their fi­nan­cial goals and we be­lieve in rais­ing aware­ness of the im­por­tance of sav­ings today, for a bet­ter to­mor­row.”

The Mid­dle Eastern re­gion has en­dured some dif­fi­cult eco­nomic head­winds in re­cent years – how has that af­fected the com­pany, and sav­ings in general?

“While I can­not say for cer­tain whether or not there is a di­rect cor­re­la­tion be­tween UAE sav­ing habits and the eco­nomic en­vi­ron­ment, our re­search has found that sav­ing is in­creas­ingly be­com­ing a key con­cern for UAE res­i­dents, with many find­ing it harder to save than ever be­fore.

“Over the years, we have wit­nessed an in­crease in the num­ber of sav­ings – high­lighted in our 2016 sav­ings in­dex. The Na­tional Bonds In­dex found 91 per cent of reg­u­lar savers saved monthly in 2016, mark­ing a 4 per cent in­crease from 2015. Fur­ther­more, 86 per cent of UAE res­i­dents do not be­lieve they are sav­ing enough, while 64 per cent of re­spon­dents planned to save more in 2017. In terms of the sav­ing en­vi­ron­ment, how­ever, fewer par­tic­i­pants felt that 2016 was a good year to save, in com­par­i­son to 2015.

“So what does this data tell us? The UAE has his­tor­i­cally lacked a sav­ings cul­ture among its res­i­dents – par­tic­u­larly among mil­len­ni­als – but since the fi­nan­cial cri­sis we have seen an in­crease in an aware­ness of the im­por­tance of sav­ing and money man­age­ment.”

How has the sav­ings cul­ture in the UAE changed since Na­tional Bonds was launched in 2006?

“The sav­ings cul­ture in the UAE has come a long way since we opened our doors in 2006. The con­cept of sav­ings has been widely adopted through the years and we are con­tin­u­ously see­ing pos­i­tive changes through­out the re­gion. We have seen a rise in savers since 2006 with the vast ma­jor­ity of peo­ple un­der­stand­ing the im­por­tance of sav­ing money through a struc­tured scheme, es­pe­cially dur­ing eco­nomic down­turns.

“Money man­age­ment is fast be­com­ing an in­te­gral part of the UAE edu-

cational sys­tem, par­tic­u­larly since the Govern­ment en­cour­aged com­pa­nies like ours to em­bark on a range of na­tion­wide fi­nan­cial lit­er­acy cam­paigns to en­cour­age more res­i­dents to save.

“At Na­tional Bonds we are pas­sion­ate about ed­u­cat­ing the next gen­er­a­tion on the im­por­tance of fi­nan­cial plan­ning – it is our mis­sion to help cre­ate a new gen­er­a­tion of fi­nan­cially-savvy in­di­vid­u­als.”

Is­lamic fi­nance and Shariah com­pli­ant fi­nan­cial prod­ucts have be­come much more so­phis­ti­cated in re­cent years. What has driven this devel­op­ment, and why are in­creas­ing num­bers of peo­ple drawn to it?

“Is­lamic fi­nance has be­come pop­u­lar in re­cent years and has be­come a rapidly ex­pand­ing part of the global sys­tem. The rea­son for its suc­cess? De­mand. Is­lam is one of the world’s fastest grow­ing re­li­gions and, un­sur­pris­ingly, a large por­tion of Mus­lims want to in­vest in fi­nan­cial prod­ucts that do not com­pro­mise their re­li­gious be­liefs.

“Take for ex­am­ple Is­lamic taka­ful, a con­cept based on sol­idary co­opera-


tion and mu­tu­al­ity, cre­ated to com­pli­ment the teach­ings of Is­lam. This was the mo­ti­va­tion be­hind ‘Sanadi’, a taka­ful­based sav­ings pro­gramme that pro­vides Shariah com­pli­ant in­sur­ance cover to cus­tomers. Sanadi, our in­te­grated sav­ing and in­sur­ance pro­gramme, is based on Shariah prin­ci­ples and is ac­ces­si­ble to ev­ery­one, does not give pri­or­ity to re­turns and helps us achieve a sta­ble and se­cure so­ci­ety through in­vest­ing the share­hold­ers’ money in pro­jects that en­hance so­cial devel­op­ment.

“It is my view, in or­der to en­sure the con­tin­ued suc­cess of Shariah prod­ucts, we must en­gage econ­o­mists, so­ci­ol­o­gists, schol­ars and devel­op­ment ex­perts on taka­ful and the Is­lamic econ­omy more gen­er­ally to help raise aware­ness of the wider ben­e­fits to eco­nomic devel­op­ment.”

Your an­nual Sav­ings In­dex is a barom­e­ter of the sav­ings land­scape in the UAE. What have been the main changes to the in­dus­try in re­cent years, and do you ex­pect the 2017 In­dex to pro­duce any shock find­ings?

“Our UAE sav­ings in­dex for 2016 cov­ers a va­ri­ety of sav­ing habits in the UAE. The re­sults are based on a num­ber of UAE res­i­dents, who made up for 35 per cent of sur­veyed par­tic­i­pants across the GCC.

When it came to sav­ings, 64 per cent of reg­u­lar savers planned to in­crease their sav­ings in the near fu­ture, while a slightly

higher num­ber – 68 per cent – are think­ing about sav­ing. Some 49 per cent of the group could fore­see sta­bil­ity in their fi­nan­cial fu­ture and only 45 per cent of the par­tic­i­pants felt pos­i­tive when it came to ex­pect­ing an in­creased in­come. The re­sults also show that sav­ing is be­com­ing a topic that peo­ple are think­ing about and a se­cured fi­nan­cial fu­ture is a pri­or­ity for the ma­jor­ity of peo­ple.

“We fully ex­pect to see th­ese find­ings in our 2017 sur­vey, with a higher per­cent­age of par­tic­i­pants show­ing in­ter­est in fi­nan­cial plan­ning, with fi­nan­cial se­cu­rity be­com­ing a key area of con­cern for UAE res­i­dents. As I have men­tioned, the tur­bu­lent global econ­omy and politi­cal events in­clud­ing Brexit, are likely to play a key role in sav­ings habits of many UAE res­i­dents.”

How much of an im­pact is new tech­nol­ogy hav­ing on the com­pany? Are fin­tech and other smart tech­nolo­gies mak­ing a dif­fer­ence to you and the wider in­dus­try?

“Fi­nan­cial tech­nol­ogy is rev­o­lu­tion­is­ing the fi­nan­cial ser­vices in­dus­try. Tech­nol­ogy is help­ing fi­nan­cial in­sti­tu­tions pro­vide ser­vices that are easy, quick and tai­lored to per­sonal needs to make de­ci­sion mak­ing eas­ier than be­fore.

“As a busi­ness, we un­der­stand the need to adopt tech­nol­ogy to not only ben­e­fit our busi­ness, but also our cus­tomers. We launched our new web­site in early 2017 which al­lows our cus­tomers ac­cess to var­i­ous prod­ucts and we are get­ting ready to launch a mo­bile ap­pli­ca­tion.

“Re­cently, we also signed a part­ner­ship deal with MySky Tele­com Group, the pre­mier dig­i­tal en­abler of com­mu­ni­ca­tion ser­vice providers and the con­sumer tech­nolo­gies sec­tor in the UAE. The three-year part­ner­ship of­fers Na­tional Bonds cus­tomers the op­tion of mak­ing on­line pay­ments and pur­chas­ing sukuk (bond cer­tifi­cates) through MySky’s por­tal, point-of-sale ma­chines, and mo­bile ap­pli­ca­tion.”

What can we ex­pect from Na­tional Bonds in the com­ing months and years? What growth and devel­op­ment plans does the com­pany have on the hori­zon?

“Na­tional Bonds will con­tinue to raise aware­ness on the im­por­tance of sav­ings. Through our var­i­ous prod­ucts, we will con­tinue to tai­lor our ser­vices to so­ci­ety’s need and con­tinue to push fi­nan­cial lit­er­acy both on­line and of­fline.

“It is our job to ad­dress the fact that we live in a coun­try where sav­ings is still a rel­a­tively new con­cept. This is pri­mar­ily be­cause it has never been a top pri­or­ity for fam­i­lies here. As­pi­ra­tional life­styles are of­ten pro­moted as highly de­sir­able, which of­ten puts all thoughts of sav­ings to the back burner.

“Na­tional Bonds’ goal is to con­tinue to change this mind-set and pre­pare all fam­i­lies and in­di­vid­u­als for un­ex­pected ex­penses or life events.”

What are the com­pany’s most pop­u­lar prod­ucts and ser­vices?

“We cater to all as­pects of sav­ings and have de­signed ser­vices to suit in­di­vid­ual needs and goals.

“MyPlan is a highly cus­tomised sav­ings plan of­fered by Na­tional Bonds to all cus­tomers through a reg­u­lar sav­ing man­date ei­ther through di­rect debit in­struc­tions, pay­roll de­duc­tion or stand­ing in­struc­tions to the bank where cus­tomers can al­lo­cate/ save a pre­de­ter­mined amount into their Na­tional Bonds ac­count.

“The pro­gramme recorded a strong up­take among UAE na­tion­als in 2016. The num­ber of Emi­rati mi­nors en­rolled in the pro­gramme surged by an as­tound­ing 99 per cent in com­par­i­son with 2015, while the num­ber of Emi­rati women grew by 80 per cent and the num­ber of their male com­pa­tri­ots rose by 78 per cent. The num­bers of ex­pat reg­u­lar savers also wit­nessed a sig­nif­i­cant in­crease com­pared to 2015 – mi­nors by 95 per cent, men by 88 per cent and women by 74 per cent.

“We have re­cently launched ‘ Sukuk Ex­press’ which en­ables cus­tomers to de­posit up to Dhs20,000 daily in their Na­tional Bonds ac­counts through self­ser­vice ma­chines. This has proved hugely pop­u­lar as the de­posits can be made us­ing quick pay­ment ma­chines that have been in­stalled across the coun­try. Some 1,000 self-ser­vice ma­chines have been in­stalled through­out the UAE and have been de­signed and in­stalled by MBME (The Cube).

“Our monthly sav­ings plan is a strong hit as cus­tomers are en­ti­tled to en­try in all the draws, with one chance per bond.”

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