MASHREQ BANK MAY BE based in the United Arab Emirates, but its retail operation is beginning to look a lot like those at western banks.

Mashreq, a Dubai-based bank with $3 billion (U.S.) of assets, has been transforming itself into a more service-oriented institution. The bank now offers its customers everything from fashion shows and credit cards to photography courses and student loans.

"To most people, banks are simply a place to deposit and withdraw money and conduct business," said Abdul-Aziz Al Ghurair, chief executive officer, on recent visit to New York. "I felt strongly that to move forward and become a world-class bank, we needed to not only understand, but anticipate, our customers' evolving needs. This required a complete and total remix of our retail banking formula, one which allowed us to become far more retail oriented."

Mashreq, which does not subscribe to traditional Islamic banking principles that prohibit the charging of interest, competes against branch offices of western banks and some local institutions for business among UAE nationals.

The bank has gone through a process to convert its branches into "showrooms." The backoffice work has been removed and the bank has designed a new way to deliver products to customers.

Rolland D. Johannsen, president and chief operating officer of Furash & Co., a Washington-based consulting firm, said banks are putting much more emphasis on the retail side of the operation.

"The marketplace has become very crowded as more and more companies are offering the same products," he said. 'Everyone is fighting for the same shrinking pie, and by using retailing techniques they can separate themselves from the pack and increase market share."

To create the makeover and implement the changes, Mashreq hired Walker Group/CNI of New York. The consultants assist companies with the design of retail identifies, product lines, and delivery systems, and optimize their use of technology.

Mashreq has broken down delivery into four areas -- the automatic teller machines, the greeter, the customer service area, and the fullservice teller. Greeters welcome customers to the bank and direct them to where they need to go. They also promote and provide product information.

"When a customer goes to the teller window, they can get all of their needs met without having to move from one station to another," said Mr. Al Ghumir. "We

believe that we can meet customer needs with one stop."

Once the bank decided how to get the information to the customers, it looked at a design for its branches.

In designing the branches, Mashreq decided to segment the way it delivers services to customers.

By using an approach similar to that used by airlines which offer different classes of travel the bank has established three levels of customer service.

"The coach class" provides service for 75 % of its customers. The "business class" is offered to 22% of its customers. The remaining 3% are designated "First-class" customers.

Mashreq decides where customers fit based on how much they have borrowed from the bank and the account balances they maintain.

'"We have three different branches within the same building but each has its own entrance and is segregated from the rest," said Mr. Al Ghumir. "Each is promoted separately through different signage. In order to get into 'business' or 'first' class, the customer needs to show a card."

Mr. Al Ghurair said management wanted to take technology functions that were not directly customer related and remove them from the branches so employees would have more time to meet customers' needs.

The bank currently uses a series of local area networks that are linked to its mainframe to access customer information and handle customer service needs. Data processing is handled at a central location.

The bank primarily uses western systems, including branch automation software from Olivetti. The system, called Pinnacle Plus, allows personnel to enter customer information in one place and use it in many different areas.

Should a customer open a savings account and then want to apply for a consumer loan, the information can be moved online from the savings account to the new application with a key stroke.

"We have removed paper from the applications and have made it user friendly;' said Mr. Al Ghurair.

The bank also uses its branch system for cross-selling. The system automatically prompts the customer service representative to discuss products and special promotions with customers as they conduct business.

"We have converted the system to work for the benefit of the customer and the bank. So suddenly our staff don't have to scratch their heads and say, 'What do I do now,'" said Mr. Al Ghumir. 'It helps make the branches -- and the operation as a whole- become more efficient"

Pinnacle Plus operates on AS/486 personal computers running in Microsoft Corp.'s Windows environment.

The bank also uses an A12 mainframe from Unisys Corp.

Next year, Mashreq plans to implement a 24-hour, toll-free customer service number. A live representative will be available to answer questions and provide new product information to existing and potential customers.

Mashreq also plans to use the phone service to take consumer loan applications and open new accounts.

Once an application is taken and approved, customers can come into a branch the next day, sign the application, and walk away with the loan or new account.

"Any business, in order to survive and grow, must stay in direct, personal contact with its target market," Mr. Al Ghurair said. 'The challenge we had was to develop a true retailing product base which would meet the needs of the bank' s customers according to their age, sex, and lifestyle, and to attract these customers to the bank as members.

"People always look forward to going shopping. They feel excited, but when people go the bank it is not exciting, it is not a happy experience," he continued. "We want to provide a pleasant experience, one in which people go out of their way to come to the bank."

In addition to the three "classes" of service, Mashreq subdivides its customers into demographic categories to offer what the bank calls lifestyle products.

The products are designed to appeal to the tastes and needs of "members" who fit into each segment.

The memberships the bank offers are: Youth or Shehab (meaning "meteor") for customers 15 to 21 years old; Prime of Life or Shams (meaning "sun") for those 25 to 40; Ladies or Kamar (meaning "moon") for women -- who often take a different path than men in accessing financial services in Arabic countries; Mature Market or Kawkab (meaning "planer') for customers older than 50.

The bank also offers customers who carry a minimum balance of $250,000 a priority membership dubbed Nujoom, or "star".

In addition to offering the customers banking products and services, members receive "added-value" benefits such as discounts at local businesses, restaurants, and travel companies. The membership also gets access to cultural and social benefits such as photography classes and fashion shows.

"We want to be different and many banks think this is a crazy thing to do," Mr. Al Ghurair said. "Hopefully, we are doing the right thing. The idea is to differentiate ourselves from the rest of the crowd.

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