Blending High-tech and High-touch Approaches in Financial Services

6:16 – User Onboarding for Banks

Moderator: Those are great insights. Jayanth, do you want to add something to that?

Jayanth Ananthakrishnan: I fully agree with what my colleagues said here. In banks, maybe 30 days are a little too early. What we measure are the first 90 days. The first 90 days make or break.

Even though we have a bank account opening journey, which is relatively seamless, it only takes two-three minutes — it is a big decision for the customer to open a bank account. So, even though the journey is smooth, the customer must have done some research before committing to open a bank account and parking some funds with us.

We must keep up with the trust and ensure that the first 90 days are as engaging as possible. We try to ensure that customers do their first activities with us, like park at least 100 Dirhams in funds as their first amount. So, that’s what we always target. However, we know that the moment a customer makes a commitment of at least one thousand Dirhams in the bank account and starts using our services, we have the customer for at least the next five to seven years. Typically, customers don’t change advanced accounts. So, that’s what we’ve seen. If you are a transacting customer in the first 90 days, on average, we know that customer is sticking with us for the next seven years. So, we put a lot of emphasis on ensuring that customers are engaged and transact in the first 90 days.

7:48 – Metrics that Influence Retention

Moderator: That’s a great point, Jayanth, which gives me a beautiful segue into my next question.

In a typical banking system, an end user would not be looking at changing their apps or primary banking account regularly. So, as you mentioned, in the first 90 days, if the consumer is making a transaction of 1000 AED, then apart from it, are there any other metrics or factors that you look for in retention specifically?

Jayanth Ananthakrishnan: Yeah, so, especially in the bank account world, if you see, you can have as many bank accounts as possible. Nothing stops you, but you can have only one bank account where your salary comes in. So, the moment you decide to switch your salary to that account, it means that you value this account and value the service of this bank and chose this as your primary bank account. We have seen that customers who transfer their salary to Mashreq neo and keep that as the primary account are the most profitable customers for the bank. They are also the happiest customers of our service as we provide them with the best possible experience. We are trying to keep them as much engaged and comfortable as possible.

To return to the question, yes, in the first 90 days, we see many customers deciding to transfer salary in month two or month three because in month one definitely, nobody makes the decision. They play around with the system. They play around to see if their items are accessible, to see if they can deposit cash. If they are comfortable, then definitely in month two to month three, they start transferring their salary to us, and that’s when it becomes a long-term relationship. We also know that customers take the time, and we don’t bombard customers on day one to transfer their salary or earn cashback. We don’t do that. We try to give the customer the time and the free space to experience our services for the first 30 days. Then, we slowly make them take baby steps, like first depositing a thousand Dirhams, then using our ATMs, and finally, we start talking about transferring salaries and other things. That’s like a gradual step-by-step process.

10:02 – Early Retention vs. Stagnant Retention Strategy

Moderator: Haris, Yasmine, do you guys also relate to the same? Do you emphasize more on retention for, let’s say, 30 or 90 days, or do you guys have a stagnant retention strategy?

Yasmine Mohamed Youssef: Yeah, so definitely, it’s not stagnant. In Egypt, specifically, because I work in Egypt, the market is very competitive and dynamic. So, each consumer segment needs a specific way of retention.

Whether you’re going to retain with a value given to the customer, whether it’s an offer or whether you’re going to retain by giving them value-added services that are embedded like an experience — you provide the user both ways.

It’s a very competitive market, so we adjust the retention strategy and how we approach the customers. You can say that the retention strategy can change every quarter, and this is not because it’s that dynamic. It’s because it is competitive. In Egypt, it’s very competitive, and as I have been studying other markets like Saudi, the financial services market has become very competitive. Every day you find different strategies for retention and acquisition. So, I think it’s much slower for banks to change the retention strategy, but with fintech, I see it as very fast. If you don’t act fast, you lose the customer on the spot because he’ll go to the other option, as there are many different options for the customer.

Harris Khan: Yeah, absolutely. I think I completely agree, especially on the fintech and, to be more specific, the crypto ecosystem. A lot is based on market dynamics. So, there’s a bull run and a bear market. The bull run means the prices are skyrocketing and bear when the market is just going down, which is these days if you follow crypto. So, the retention strategies within these two are very different. Whenever there’s a bull run, your conversion funnel would be great. You’ll see many people jumping into the trading, but when there is a bear market, people hesitate to listen because the prices are generally dipping. This industry has evolved so much.

Before joining Rain, I was doing spot trading, simply buying and selling. And that is pretty much impacted if it’s a bull or bear market. Now there are a few other products like, for example, staking. You stake your money for about 12 months or six months. Irrespective of the market dynamics, you’ll just get some fixed percentage increment. People make 15 to 20 percent yearly if they stake their money. So, that’s the kind of product for a bear market, while spot trading is for a bull market, which is very active.

13:15 – How can Local Players Grow in a Competitive Crypto Market

Moderator: That’s insightful, Haris. Since you mentioned the entire bull and bear market, I, for some reason, happen to be the buyer in the bull market and then the seller in the bear market, constantly losing money. Since you’ve mentioned the crypto world and the significant influx we have seen in the last year or two, the number of traders has increased. The entire crypto world has immense competition in itself. So, what exactly is your metric and the strategy you follow for growth and retention?

Harris Khan: If you even see the existing numbers and some research reports, you’ll see that some global prayers still hold a considerable market share. Now they are planning to build their setup and start to take this region seriously. Especially the MENA region, but I think we have two excellent examples from this region. One is Noon.com, an e-commerce player that was head-to-head with Amazon, and they just managed to grow. The other good example is Kareem, head-to-head with another big global player like Uber, who managed to succeed.

The key in these two examples is being just local and very homegrown. Try to understand this region much better than the global players, and I think that can be the key for local crypto exchanges other than Rain as well versus the global players. So, that can be like a region-specific homegrown understanding. This region being local can be one great strength that you see versus other players that we have globally operating here. There are a couple of other things that I can share as an example. This region, especially MENA, is in the very early stages of cryptocurrencies and needs a lot of education.

Suppose you see the search volumes of cryptocurrency like people are looking for what cryptocurrency is, how to buy, and how to sell. In that case, roughly 14 million searches are happening monthly in the MENA region in Arabic and English. So, that’s another pillar that we are using. Just educate the customers because that’s precisely what they’re looking for. So, the way we see from the growth perspective, primarily acquisition, is at the very top funnel: to educate this region and the customer. And when it comes to acquiring, there are different growth hacks and growth loops that you can use, like referral acquisition planning and all these things, specifically on retention. It’s a big topic in itself.

For example, the 12-month retention that we see is roughly 10; when I say retention, it’s a broad definition. Retention can be seen as a person just coming to your platform, or attention can be seen as someone coming and making a trade. You’ll be surprised to know that the customers that quit 12 months back, like 70-80 percent, are regularly coming to the platform to check the price of the cryptocurrencies, see how the market is moving, and see how the market is driving the news. Over time, the market dynamics define when a customer is investing versus the customer will be holding on. So, you cannot pressurize, or you cannot force anyone actually to get into a trade or to buy or sell.

For us, the key that we are following is to serve the customers by educating them, and the market will also shape its form to bring up higher retention and higher acquisition in this industry.

16:47 – Using Multiple Channels to Reach Your Customer

Moderator: Yeah, that’s a great point that we should not push the customer so that it seems like spamming them.

I would like you, Yasmine, to elaborate on what you said. You touched on it a little, but what exactly are you leveraging in terms of your app or other marketing channels to reach your customer? How do you educate them about the different product offerings and products that you have so that you can not only upsell the customer but also cross-sell the customer in your organization?

Yasmine Mohamed Youssef: Sure, as my colleague mentioned, it’s about the customer’s journey from the top of the funnel to the end. We learned through the past years about how you use your growth hacking tools and your performance to deliver.

So, through performance marketing, not only through growth tools, you can reach customers. Whenever we start, the customer enters our platform. For example, what we do is we start profiling this user, and we start putting him in the proper funnel that he should go through. Then, we start doing automated actions based on whether this customer took action or not, moving him to the next stage, and so forth.

While doing this, we identify this user; we start using performance marketing on different digital channels like google display networks, Facebook, and many mobile advertising tools. Not only this, we start seeing which group this customer belongs to regarding responsive responsiveness to communication. So, if this user is the type of user that responds to notifications, we start pushing him towards this type or this medium of communication. If this user responds more to the performance and Facebook ads and digital media, we begin introducing those mediums to the user. Not only this, we start seeing which users get turned off from some medium. We know many users turn off the notifications because they get disturbed by the content. Maybe it’s irrelevant. Relevance is also critical. When you group the user in the right funnel, you display to him across all channels the right content that he needs to see. So, this is on selling.

On cross-selling, we start on our platform after grouping the segments. We start seeing because we are a buy now pay later service, so our core model depends on what you buy or purchase.

So, we will see what you use. For example, if you take a gym subscription, we start showing you sportswear across all the platforms. We start analyzing what you as a user are interested in and use all the channels. We do this through MoEngage. Whether in email, WhatsApp for business, SMS, Digital advertising — everything. So, having a 360 view of the customer and knowing exactly which cluster they belong to is the right approach to use and to choose the suitable medium.

20:13 – Importance of User Education in the Banking Sector

Jayanth Ananthakrishnan: Yasmine mentioned a great point here. In a sense, we try to leverage all our types of channels to communicate with customers, and we also use a lot of cohorts and filters, which pretty much everybody does today in the banking world. But one key difference, which we probably try to use, is the point that Haris said, educating customers is an excellent opportunity to engage with them, especially if you see the UAE market. Many customers are new to the UAE and don’t know how banks operate in these markets.

So, even though banking is a bit of a debt product, wherever you go across the globe, if you are entering a new country, you always think there is something different here. Something changes. So, whenever we talk to customers we know are new to UAE, we try to use that hook and educate them about what’s different in the UAE market, what’s this sharia-compliant product, what’s an Islamic product. So, we take that opportunity to talk to and engage with them, which is great. It also shows our results whenever we try to use that line of communication. They give much better results. The second point, which Yasmine also pointed out, is that as a bank, we have several products to discuss, unlike a fintech where there is just one product.

As a bank, I am sure you must have experienced this in your personal life as well. There is a separate team that talks about selling credit cards to you, and there’s a different team that talks about selling loans to you. So it’s always competition within the bank, saying who will send the first communication and who will get the better response. So, what we try to do is, rather than product-based advertising, we first segment the customers based on their level of engagement. For the first 90 days, we ensure that only one team sends the communication to customers for the first 90 days. We also have an engagement score for customers whose engagements are a little less if they are not engaging with us frequently or not maintaining balances. For them, there is a separate team that tries to send communication to them. We make sure that nobody else tries to communicate with them, and we talk about one single thing to that specific cohort and make sure they start engaging more with us.

Customers who are highly engaged already do enough with us, so we try to cross-sell the other products only to those customers. We try not to spam customers too much because email read rates are less than five percent at the end of the day. As more fintech comes in, the relevance of push notifications is also dropping. You get tons of notifications on your app, and there is a need to channel our communication which is what we try to do. We again use education as a great hook and the other segmentation techniques that my colleagues mentioned here.

Moderator: That was a very interesting first point that you mentioned there, Jayanth, that the banking rules or even the rules or regulations change with every region you operate in.

23:26 – How do Market Regulations Impact User Acquisition

What are some of the limitations or challenges you have faced with the new regulations? How do you plan to navigate those hindrances in user engagement and acquisition or growing your user base? Maybe, Haris, you want to start with that because yours would be the most controversial or most regulated?

Harris Khan: Yeah, and I agree! I think we would probably be the ones who were craving those regulations because for this business to run, the most important thing that this company should have is a bank account. Millions and billions of dollars are going from the huge base of customers. So with that being said, you cannot get a bank account unless and until you are in a regulated exchange. No bank will give you a bank account, and Bahrain’s central bank regulates Rain. We are talking to a few other countries as well, so this is something that we are pushing. So, just to give you another quick note on the regulation — three years back, Rain co-founders were working very closely with the central bank of Bahrain to help them with these regulatory legislations. That is pretty much active. We are already working very closely with Pakistan. That’s the next market that we are looking at. We are also talking to the capital market authority in Saudi.

So, we are the ones who are just trying to help them understand because, generally, with regulators, their understanding and knowledge of crypto are minimal, and it’s something that we have to help them understand and convince them. We should regulate this because it also comes up with a considerable upside. The government can have more control and transparency if you regulate it. Otherwise, many things are happening in the crypto ecosystem, and the government will not be aware, so we are the advocate of these regulations.

Jayanth Ananthakrishnan: Yeah, I think on the regulation side, I have worked across several geographies, and I feel that the regulator in this country is progressive, especially on the banking side. At Mashreq neo, we collaborated with our regulators so that you can open a bank account with your Emirates ID and a selfie without having to give any other documentation or biometrics or anything of the chart. So, we have partnered with the regulator because they are very open to new ideas and partnerships with fintech, which I see as a very progressive step in this country.

However, banking is a regulated industry, and so are fintech and the allied industries. We must navigate these regulations from time to time, but I would rather say we are in a much better place than several other countries with progressive regulators.

Yasmine Mohamed Youssef: Egypt is one of them. So, when we first launched the consumer finance company in Egypt, there was no regulation for such activities. The law was 25 years old and outdated, so we had to do a legal workaround to launch. After we launched two years down the road, the regulation came up, and we were part of it. So, we launched with the financial regulatory authority in Egypt. The consumer finance law and then with my fellow co-founders, we’re launching buy now pay later, which is not regulated in Egypt. So, we’re doing the same and speaking to the regulator now. The fintech law is coming up to the regulator, and Egypt is starting to understand that many fintech startups are coming up. They’re starting to be more responsive, which has completely changed since the covid has hit us. They understand that fintech is the future and that we need to have a regulated framework for fintech.

27:27 – Banks, Crypto Exchanges, Buy-Now, Pay-Later – Partners or Competitors?

Moderator: Indeed. That’s the case with most countries, and before we wrap things up and open the floor for questions from the audience, I have one final question, which may be a bit controversial. From a traditional bank to a buy now pay later to an entire crypto world — do you guys see each other as partners or competition?

Harris Khan: Of course, when it comes to at least crypto, banks are the very needed partners that the crypto exchanges need, and I think when it comes to partnerships, they’re a massive opportunity that you see. At least in UAE, we know that Mr properties at mark properties started to accept crypto to sell the property, so that’s an aspect of payment. Using crypto as a currency is also happening now. So, I think payments and banking are part of one cohort.

Jayanth Ananthakrishnan: Oh yeah, absolutely, partners.

Yasmine Mohamed Youssef: Partners! Actually, we’re working with a bank in Egypt on a partnership between us, and because we work on debit cards, we work with the bank to increase the activation and activity rate on their cards. We are a solution for banks.

With crypto, Egypt is still very, I can’t say primitive, but it’s still very on the lowkey. So, I can’t say we have found synergies yet, but we see ourselves as partners with banks. And banks, in the beginning, saw consumer finance as a competition. They started launching consumer finance companies, but now they see them as partners.

Jayanth Ananthakrishnan: Yeah! I agree with both of them. Banks have had several successful partnerships with fintech. For example, master recently partnered with cashew; another buy-now, pay-later platform for instant post transactions. That’s just one example. We have several successful examples where we have partnered with fintech companies and collaborated, and both businesses have grown. It’s not that one winner takes all. So, naturally, there is an area of collaboration, and banking is a regulated industry. That’s the only catch. Whenever there is any collaboration, we must comply with all the regulations. The cost of compliance is extremely high, so that is one thing we see when we try to partner with fintech because they always come up with these radical ideas and always want to go fast, but banks are generally slow. Not because they want to be slow but because the cost of compliance is so high that it takes a little bit of time to get the momentum in the wavelength simultaneously. Once that happens, it’s a great partnership.

Moderator: That’s great because I think it’s amazing that there’s a great strategy where all three of you think that you are in partnership and not competition. The last point you mentioned is that it’s just a bit more regulations because there is a lot at stake for their customer, so having those regulations is also good.