The UAE’s retail banking segment has been experiencing an ongoing shake-up, most recently evidenced by Barclay’s decision to exit the retail banking business in the UAE. Where do you see the retail banking sector in the UAE heading? How is NBAD positioning itself in a consolidated retail banking landscape?

THURSBY: I think that over the next five years, there is going to be a massive change in the retail banking sector in the UAE. It has been, over the last five to ten years, very much based on loans to deposits, lending money for personal loans, credit cards, the revolving of mortgages, getting deposits, and current accounts. There has been some work done in terms of good delivery channels but it's been, in a global basis, not a simplistic but a basic model that has been very, very effective. Now, that will continue, as it does everywhere else in the world in developed countries and developing countries. But what I do see as the next stage of this model is the emergence of wealth management as a serious part of the retail proposition. I think that those who bring that wealth management proposition, in addition to developing further new ways of doing the asset-loan model more effectively and doing the deposit model more effectively, will be key.

The second, I think important, change is that branches will turn more and more into sales centres, and I think we've already started to see that. I think a number of the UAE banks as a whole are moving from service in branches to sales. As service and daily transactions become more and more an integral part of mobile telephones, your iPads, and various other new instruments, people are going into branches less. Does that mean the end of the branch network? No. What it does mean is a transformation of the branch network, and that's what I think you'll start to see. At NBAD, where we're a little bit light on retail, we have to move very quickly to that change.

What do you see as the most promising areas for growth in the domestic market?

THURSBY: Firstly, I would say that the market is going to continue to grow in the UAE, over a multitude of different areas. So if you look at the United Arab Emirates in terms of a global market for banks to succeed in, I think it's very good. It's one of the most attractive markets, certainly in the region, and probably across the West-East Corridor to be frank. I think the areas of growth are in all three of our major businesses. In wealth management, I see enormous opportunity as people want to buy more insurance products, they want to buy more investment products, they want to buy more bond products, they want to look at real estate in a different way to what they have in the past, all of that will develop as customers demand more types of investment asset classes. So I'm very positive about that area.

The second area is within the retail space. I also think there's a lot of opportunity in terms of providing services much, much more effectively and efficiently, through the utilization of smart phones and iPads. And within that, I think a lot more of what I would call the basic products will be sold through those mediums going forward. So you won't have call centres so much as I think. Well, call centres have been a very important part together with branches in selling products, but I think what will be the big delta will the be selling of products through the net and through the various areas. So things like mortgage applications and personal loans, all of this will become more and more, end to end, delivered by the net.  And I think that's a marvelous opportunity.

Lastly, if I move to the wholesale bank, I think what is going to really develop over the next three or four years, is more product requirements around flow products, such as foreign exchange, options, more bonds and capital markets development will come about. So again, the traditional side of corporate banking, which has been lending led, will still be there but it will change more to the capital markets. We'll see more sophistication in the way we deliver trade services. You'll see more sophistication as we deliver cash management, and I think that's already started in a very aggressive way in the UAE, the latter two. But I think there is going to be enormous opportunities in these areas in the UAE. So I see the UAE from two ways, margin compression in one way, but new opportunities in another way and that will challenge us all to change our banks.

How would you describe the state of liquidity in the UAE’s banking system today?

THURSBY: I think the state of liquidity in the UAE banking system is good, and I think the Central Bank has done a great job, together with all of the banking industry, in managing the balance sheet. I think everyone around the world, with the possible exception of a lot of the Asian banks who are traditionally very strong in liquidity, learned from 2008, and realized that strength of liquidity, strength of balance sheet, is what keeps you in the game for a long, long time for your customers. If you can't meet your customer requirements when there is tightness of liquidity globally or within the country, then you have a position that your customers may go elsewhere. So I think the state of liquidity of the banking sector here is good. Is it outstanding? Not yet. But this is part of our development and we at NBAD are very clear that the foundation that we must live off is the strength of liquidity, not only from our government and corporate business, which has been our traditional, but increasingly from our retail business. We're seeing good growth, in the 4-5% per quarter range, in our deposit base from our retail customers. So this I think holds us in good stead that we will be in a very strong liquidity position for a number of years, and that to me is the key of banking.

What is your overall outlook for the banking sector in the UAE? Which indicators are showing positive trends and which remain challenges?

THURSBY: Let me try and break up, in summary, what I think will happen to the industry here in the UAE. I think there will be a continuation of banks who will be domestic led and domestic based, and that's good. Those banks though will change their models and I think, particularly in the retail space, you will start to see new changes in their business models, which I think have already started to come about. I think that if margin compression continues, they will just accelerate the pace of that.

And then I think there will be two or three banks that will start to emerge from the UAE, and of which NBAD will be the lead, that will create a broader proposition. They will still be powerful within their local market, and in our case we want to get stronger in the local market, particularly in the retail and commercial space. But they will also spread their wings around the strategic relevance of the UAE, this part of what I would call this West-East Corridor, and then they will start to move into those areas. And it's interesting to see that already the Singapore government has started to see the virtue of the Gulf, and specifically the UAE, in trying to build commercial connectivity that will allow easier movement of trade and investment. So not every bank in the UAE will take that strategy; it requires you to be different, not better, not worse, but different in order to be successful. We will be one of those banks and that's part of the transformation that we're going through, and it is a big transformation. It requires different culture, it requires different approaches to risk, and it requires different approaches to how you deliver technology. I think the benefit, if we're successful, is it will make the local banking proposition for us stronger, but it will also help the industry. But I'm sure we won't be on a stand-alone basis, and I do see in two or three years’ time, potentially other banks doing the same, if they're not already.