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locating growth pockets

It’s young, yet circumspect. Assertive, but realistic. Bank Sohar, the newest bank in the neighbourhood, is getting set to make its presence felt at its own pace.

A BusinessToday exclusive Mohana Prabhakar

There is nothing about Nani Javeri to suggest that he is a man in a rush. Or to be more precise, an unseemly rush. It can’t be easy to come in as CEO of Bank Sohar in view of the wealth of expectations riding on the latest, and much talked about, addition to Muscat’s banking scene. The market has it that Bank Sohar is going about its business quietly, and aggressively: that they have done their homework very well and are looking to woo big customers away from other banks with offers that are difficult to resist.

Javeri laughs aloud at the market buzz and puts forth his own perspective. Accounts don’t move overnight unless you have a value proposition that makes sense. Bank Sohar indeed has a target list and they know that the relevant unit needs to call on them and offer them their services. In wooing corporates, there is bound to be an invitation price and this is a cost that any new entrant has to bear. Beyond that, says Javeri, “If we have a service proposition that is of interest, then we have done our work reasonably well. We have to know about the company before we call on them, and that way we will be able to offer specific products or a specific service that may appeal to them. A relationship then starts.”

Bank Sohar wants to gradually be seen as a bank that is offering solutions that are not avai-lable in the market today, or that are ‘perceived as not being available’. Research done prior to opening up showed that there were gaps in the marketplace and Javeri cites the example of the growing small and medium enterprises (SME) segment. Research showed Bank Sohar that this segment felt that it wasn’t getting the kind of services or the speed of decision-making as it should; also the SMEs thought they were being charged more than they should be. “But more importantly, no one was actually sitting with them and assisting them in developing cash flows, or saying you can manage your business better if you do it this way.”

As a business grows, the requirements of the individual or company gain complexity and the need to get a better grip on their financial needs becomes crucial. “This is a gap that exists, not just in Oman, but in most markets.”

Giving advice to treasury departments of large corporates in terms of managing their working capital, cash flow and so on is another potential area. “Those are the kind of areas that we’d like to come into.” Then the bank intends to offer a lifestyle product that actually takes the customer all the way through from a young boy to a retired individual, and migrates from one to the other in a systematic way. Other promising areas of growth include credit cards (to be offered in about 3-6 months’ time along with debit cards), mortgage, bancassurance, life insurance as penetration figures indicate that these are areas where there hasn’t been an aggressive focus as elsewhere in the world.

Getting loans of up to 60 to 70 times one’s salaries is not uncommon in this market where even credit cards are viewed as another loan facility. Javeri states that their approach is simple. “It’s not about how many times your salary will you get as a loan. The more important issue, in my perspective, is what is the person’s capacity to repay?” At the end, how much money is the individual going to be left with after the bank has claimed its share, to actually feed himself and his family, is what will determine his eligibility.

Javeri is equally emphatic in stating that with Bank Sohar, there will be no hidden charges. “We would like to be absolutely transparent and explain all the charges so that nothing comes as a surprise to an individual.” To this CEO, it is important that customers are told very clearly about what they can or cannot expect from Bank Sohar at every point in time. “For instance, there are products and services that we will not be able to offer immediately and our staff have been told very clearly not to say that it’s coming tomorrow or the day after. It will be their job to understand the customer’s needs and suggest alternative banks which they believe is in a position to service that customer’s needs.”

He is confident that these small steps will pay large dividends in the future. “At banks and financial institutions there are two things that serve as the foundation: one is trust that you have to earn along the way and the other is financial soundness. If you compromise on either of these, you can get into serious trouble.”

Bank Sohar opened its doors to the public less than a month back on April 9, and while it’s too soon to comment on progress, bank officials are nevertheless satisfied with the way business has shaped up so far. “I think we have a good marketing plan and we are clear about what we want to do and the timeline for achieving that.” The bank will be offering all the services required by corporates, even the large ones, and strongly believe that they can handle the business effectively from their single exis-ting branch.
“The SME segment services are another area that we have geared up to provide as we go forward. We will have a ‘Public enterprises’ unit, basically for government businesses.” The financial institutions group, dealing with correspondent banks, is already being worked on. Product advisory is another segment that Bank Sohar intends to enter after building up its skills in the next six to eight months.

On the retail side, Bank Sohar will cover the entire gambit though it is yet to put in electro-nic banking systems in place. Alternate channels of banking will admittedly be given heavy attention. ATMs are here and Internet and SMS banking lie ahead. “I think there’s a great syn-ergy between telecommunications and our business – everybody uses a mobile. From a convenience, it has become a necessity and the more business you can do with it, the better.”

Javeri and his team have committed to a target of six branches by year-end and by end 2008, this will go up to 15 or 20. Of this, the first one comes up in Qurm in Muscat, one in Sohar and the locations of the rest are yet to be divulged. There are over 120 people on board now and this is expected to go up significantly in a year.

Strategies, systems and people – the building blocks are in place. How it goes from here is totally dependent on the bank’s ability to scale up and deliver.