Bank of Khartoum (BOK)
Since it was established in 1913 as a Sudanese branch of the Anglo-Egyptian Bank, what is now known as the Bank of Khartoum (BOK) has been no stranger to the disruptive influence of innovation and historical change. Its dominant presence as the largest Islamic bank in the country not only bears strong testament to its successful business model – it is also evidence that the bank is in a strong position to expand and develop its operations way beyond current capacity.
BOK’s scope, therefore, covers every section of Sudanese society, from investment bankers all the way down to the hundreds of thousands of people engaged in and reliant on subsistence agriculture who are yet still unbanked. While the economy of Sudan is perhaps not where it ideally should be, the country is still ranked as ‘lower middle income’ by the World Bank, which also forecasts that it will experience a healthy GDP growth rate averaging out at 4.25 percent in the next two years.
It is little wonder, then, that BOK has posted year-on-year growth of 45 percent and is confident that this will at least be maintained - if not increased - over the next few years. Not content with being the biggest player in its home market, the bank is looking to expand its offering across West African nations, while simultaneously harnessing the power of technology to further bolster its competitive position and bring yet more unbanked people onto its books.
We speak to BOK’s CEO Fadi Salim Al Faqih about how he and his teams across the country are preparing to roll out a new generation of banking, the likes of which West Africa has never seen before. He says: “While most of the [Sudan’s] businesses are based around Khartoum, the business environment and banking sector both have a lot of potential. For example, investment in mineral commodities is still quite low, so there is much potential here. The model we have set up is successful enough to sustain the growth we have experienced.”
The bank offers a variety of Sharia-compliant financial services to a range of customers, and this offering is reflected the international distribution of its ownership. A very high proportion (81 percent) of its shares are held by investors and institutions from GCC countries, including the Dubai Islamic Bank, Abu Dhabi Islamic Bank, the Islamic Development Bank (IDB) Sharjah Islamic Bank, and global telco Etisalat. The Sudanese government retains a 5 percent share (the bank was nationalised in 1970 and then privatised in 2002) while the remaining 14 percent is held by local investors.
BOK’s financial products and services are diverse, covering practically all of the financial needs for the entire country, which consist of personal, corporate, SME, investment and non-resident banking, as well as a range of micro-finance initiatives. Al Faqih explains how this offering had affected the bank’s position: “We now have the advantage of having a great reputation, sound credit and the support of our customers. Needless to say that we have a lot of great commissions coming from this.”
In 2006 BOK became the first bank in the country to introduce a full package of retail banking, prior to its merger with the Emirates and Sudan Bank in 2008. Perhaps its finest year until now is 2011, when it was delisted from OFAC sanctions and received an AA rating from the Islamic Rating Agency for its stringent work to bring its governance and operations up to internationally recognised standards.
Alongside its typical banking activities, BOK is also engaged in a variety of micro-finance projects, inspired by the spirit of Sharia and its strong commitment to alleviate poverty through education. Al Faqih explains: “Rather than simply discounting money for people and projects, we provide vocational training and technical know-how. This is the model with which we are leading with the IDB as our main partner. We want to expand organically to ensure that poverty alleviation remains part of the core values of Islamic banking and our operations.”
“One of the main sectors we work in is agriculture. With one project, we built greenhouses and provided technical expertise; we also built houses and created a whole community while fostering the people involved to have self-reliance as a business. We created another community with fully integrated agricultural services, with animal grazing all the way down to marketing and retail. Both projects received global awards and have become a model for Islamic micro-finance and a reference point for future IDB projects of this kind.”
The bank’s expansion has taken place both organically – as the economy of Sudan develops – and also as part of a concerted effort to bring its business to new markets and new levels of service. Al Faqih says: “While part has come from the organic growth, we have also expanded by adding more ATM machines and through building the branch network – we have opened nearly 40 branches on a year on year basis.
“We are going to keep expanding our branch network and ATM services, plus we're looking into service rated products such as e-banking and mobile banking. This will complement the retail banking expansion; for corporate banking we're looking at expanding further into cash management products in relation to large cash corporates. We are looking to further grow our micro-finance activities in 2016.”
He explains that the bank has even been able to expand into difficult areas, utilising the latest technology to do so: “Geographically Sudan is a large country but has a relatively small yet dispersed population, so outreach is difficult; we have been able to work past this using mobile technology, supported by local network providers.
“We got the licence to go mobile in December 2015 and we will become operational in the first quarter of 2016. We want to become a landmark in areas where banking is not as available as it is in more developed populations. We are also looking at moving into Nigeria, since it only has one small Islamic bank there.”
He also highlights the particularly crucial role that mobile banking has played in extending BOK’s reach, he says: “Our outreach is achieved in hard to reach parts of the country using all kinds of solutions such as iPads to actually open the accounts and get the signatures of the customers rather than getting them to a branch to open an account.
“Our expansion plans are very aggressive. We have West Africa in mind particularly, because if you go into one market there you can then move into others easily since they are all run by one central bank. While it's going to be easier for us in terms of penetration, we need to focus on getting the right partner - that's the issue which makes it a bit more complex. We want to employ local people who better to understand the local market and to give them the training to be in line with the business.”
To expand business and enhance the level of services, BOK relies on a variety of technological solutions. These include the modern currency recognition and cash processing solutions provided by GRG Banking, a leading player in the global market. Since 2011, a number of ATM machines including the ones with the latest cash recycling capability have been widely deployed in BOK’s nationwide network. In parallel, large deposit machines and sorting machines are also servicing BOK’s customers or cash centers with outstanding performance and convenience. The technologies of today has been continuously adding force to BOK’s expansion, whether in reducing cash management costs, or enhancing efficiency, convenience and security
Banking is a career that naturally attracts the best talent into the varied roles the sector has to offer, which is perhaps a one clue as to why BOK has been able to back up its impressive growth with adequate staffing – a number which currently stands at around 1,600 but is certain to rapidly increase in-line with the sustained growth of the bank.
Al Faqih says: “Obviously talented people are needed for any organisation to succeed; we make sure to always have an open door policy, so that our staff are always able to communicate at all levels - even at the level of the CEO. We liaise with our staff at all levels to ensure that they are getting the best training possible, both terms of generic skills and on a more specific basis.
“Due to the terrain of the country, we require a large sales force - we do a lot of work to maintain these staff. Layers of progression have been created along with the expansion and there are great opportunities to progress. So far it's doing well - we've developed our staffing model and it has proven to be strong and sustainable - we look at it every time we go to open a new branch or expand our network.”
The recent and future activity of BOK has shored up its success in Sudan and has cemented its place as a market leader in modern Islamic finance. Having developed a competitive, forward-thinking business, the bank has grown to a level of sophistication that makes it a standalone in not only its founding country but also the entire region. It is poised to exploit this advantage and grow into Western Africa with much deserved confidence, securing prosperity for the business, its shareholders, and the populations that it will diligently serve.