Abdullah Ali Al-Khalifa

TBY talks to Abdullah Ali Al-Khalifa, CEO of Alinma Bank, about recent milestones, fintech, and Vision 2030.

How has Alinma Bank evolved recently, and what milestones have you met?

Alinma is the most recent full-service bank in the Kingdom, established in 2006 and launched publicly in 2009. The bank initially focused on large corporates and project finance, because of the liability of having such significant capitalization. Our focus today is on growing our portfolio, and adopting a more holistic approach to products and services, that leans heavily in the direction of the digital space, allowing us to leverage our historical technological advantages and to break new ground with regard to banking innovation. And it should be noted that, in this regard, because it such a new institution, Alinma has one of the most modern, up-to-date IT infrastructures in the industry. So, our technological evolution continues at a rapid pace; and we expect to evolve significantly as we navigate our current strategic cycle. That cycle began at the start of 2021, when we set building a new strategy as our top priority. This developed into our formal Strategy 2025 initiative, which was approved by our board in March of that year. This strategy allows us to differentiate more substantively from the more traditional Saudi banking model that focused on trust, loyalty, and location. These remain imperatives in terms of building and maintaining the customer relationship, but in a post-COVID world with new technologies and new expectations for customer service, driven by app-based services, we recognize that speed and convenience have become ever more important, and they are the pillars of our strategy. In the digital space, customer experience is exceedingly important, and our focus is on ease of obtaining products and speed of execution. Toward this end, we have invested in building a digital factory and have outsourced to an international advisor to do so. The effects have been noteworthy, especially in terms of our retail business, where we have been able to build high-net-worth and affluent franchises, which are the main source of non-interest-bearing deposits. We have also reoriented toward youth, with development of products and services catered to their needs and aspirations taking. And if we can continue to execute, we expect to become the number one employer of choice, with the number one net promoter score – that is to say, the kingdom’s best service provider.

Are fintechs your competition, or your partners in the market?

We see fintech as an opportunity; and because the market is developing quickly in the direction of digital in general and fintech in specific, Alinma can find many new and innovative ways to ensure that we consistently introduce or improve quality services and products. Because the opportunity is so great, we have established a wholly-owned fintech subsidiary, which has launched ClickPay, a payment aggregator, and AlinmaPay, our a digital wallet service. And our fintech strategy is one of both opportunity and cooperation, whereby we continually scan the market for worthy fintech investments, with the intent of partnering where and when it makes sense. In fact, we are well-known in the market as a truly fintech-friendly bank.

What opportunities do fintechs provide that you can leverage in your own operations?

There are many opportunities, such as supply chain financing, where we have signed with a fintech company to provide supply chain solutions. Wealth management is also an opportunity where we are eager to leverage fintech to provide for our affluent customers. Through these services and innovative products, we can attract new customers and significantly grow the customer base. Youth also present numerous opportunities; and we currently have a targeted, youth-oriented smart app under development. Through that app, we intend to introduce innovative features that currently do not exist among many digital banking solutions around the world. We believe this will create a great deal of excitement in the market, which will, in turn, continue to attract youth.

What are your efforts at diversifying the kingdom’s sources of income and bringing it closer to Vision 2030?

Banks always play an important role in the economy, in terms of providing capital facilities for projects that the government is sponsoring and launching. It is a critical role for banks because the kingdom now relies on public-private partnerships (PPPs), which have replaced the typically government financed projects of the past, such as sewage treatment, water desalination, and power generation. With Vision 2030, the private sector is stepping forward and taking a more active role in the financing, building, and operating these projects. Previously, our role was really to provide short-term, working capital facilities; and though such support is important to mobilize projects, of greater importance is the financing of entire projects, and Alinma has taken on this critical role. We are expanding, and have one of the most capable project finance teams in the kingdom, with a track record that has engendered trust among all major project developers. Nevertheless, we anticipate an increased influx of foreign capital into the kingdom, and, as part of the government’s financial development program, increased activity from the capital markets.

Alinma Bank is financing many projects. What is your role when it comes to Giga-projects?

Giga-projects require significant financing, and are aggregates of multiple project components. Take the example of NEOM – we are now finalizing our financing for employee camps to be built through that model. Certain companies bid for and won those construction contracts, and will lease them to NEOM. We have yet to see significant demand from Qiddiya, Red Sea, and Amaala; and the Red Sea project is primarily financed through the Public Investment Fund (PIF) and Red Sea Global Still, where an MoU was recently signed to allow private sector participation. And as far as the private sector is concerned, we anticipate demand for bank financing once those interests finally decide to invest. So, our role in the financing of giga-projects is set to expand continuously.

What opportunities in the financial market will be driving Alinma’s business growth?

Over the past few years, mortgages have fueled the demand for credit; however, we now are starting to see a strong backup in the corporate market. We saw significant growth in the second half of 2022, and we expect a stronger performance in 2023. Our targets are sectors that have yet to create demand for incoming projects. So far, we have not seen significant demand from mining, which is set to become an important element of Vision 2030. Similarly, we have yet to see significant demand for renewables or military industries; however, I believe that over the next three to five years, there will be significant demand in these areas, and the banks will play an important role.

What are your next strategic steps, and where would you like to take an Alinma Bank in the upcoming year?

Over less than two years, we have delivered 38 of Alinma’s 76 Strategy 2025 initiatives, which focus on areas in which we both have the skill and resources to deliver. And thanks to our approach to leveraging human capital, we have one of the best management team in the kingdom. With this strategy and with these staff members, we have put the bank in a unique position, not only in terms of customer service, but also in terms of innovation and growth.