Banking On Savings Story

24 Business Today MARCH 2014 www.businesstoday.co.om

C O V E R S T O R Y

'Saving is a very fine thing.

Especially when your parents

have done it for you'. This

famous quote from former

British Prime Minister Winston

Churchill could easily sum up the

prevalent, popular attitude

towards savings.

Saving money is always a

difficult proposition for everyone

but even more so for the young

Omani. Be it on cars, phones, or

even holidays, the opportunities

for splurging are many. In order

to change that attitude and

introduce a systematic saving

habit, the banks introduced the

prize draw saving schemes.

The key objective was to

provide customers a financial

incentive for saving with the

bank while providing them with

safety and liquidity for their hard

earned money.

A clear indicatorRising deposits from Omani

customers is a clear indicator that

things are improving. Says Amjad

Iqbal Hassan al Lawati, head -

products & services management

at Bank Muscat, “The bank’s

savings deposits have consist-

ently increased over the years

and Bank Muscat has over a 45

per cent market share of savings

BANKING ONSAVINGSBanks have been offering weekly, monthly and yearly draws with hugeprize money – is this encouraging people to save more?

By Maheswaran P

Cover story/E1:BusinessToday 2/27/14 9:30 PM Page 1

www.businesstoday.co.om MARCH 2014 Business Today 25

deposits. The remaining 55 per

cent of the deposits is distributed

across the remaining banks. The

high market share is a testimony

to the trust customers have

reposed on the Al Mazyona

brand over the years.”

Moosa al Jadidi, acting head

of retail and private banking,

National Bank of Oman (NBO)

says, “The kind of growth we are

witnessing in our deposit

portfolio clearly shows that the

response has been extremely

good. A large portion of our

deposits growth comes from our

Omani customers. So this is a

clear indication that there is a

savings habit among them. We

have seen double digit growth in

our Omani deposit portfolio from

2012 to 2013.”

The situation is the same at

Bank Sohar. R Narasimhan, DGM

and head of retail banking at

Bank Sohar, says, “The savings

deposits portfolio of the bank

BANK MUSCAT’S SAVINGS DEPOSITS HAVE CONSISTENTLY INCREASED OVER THE YEARSAND OUR 45 PER CENT MARKET SHARE STANDS TESTIMONY TO THE TRUST CUSTOMERSHAVE REPOSED ON THE AL MAZYONA BRAND, SAYS AMJAD IQBAL HASSAN AL LAWATI

crossed the RO215mn mark by

the end of 2013. Similar achieve-

ments have taken competitor

banks a much longer time and

branch base to realise. This

performance manifests the

public’s appreciation of the bank’s

innovative schemes and services

that have been offered. This year



too, the upward trend will

continue at an even faster pace

based on optimistic initial

customer feedback about the

2014 scheme.”

Such has been the response

from customers that banks are

now increasing the total prize

money every year.

The treasure chestBank Muscat has a savings

scheme called Al Mazyona which

gives customers a chance to win

cash prizes by maintaining a

minimum balance of RO100. The

scheme, which is two decades

old, had started with wrist

watches as gifts for the winners.

This gradually increased to

higher value items such as cars

and houses before graduating to

pure cash prizes.

The response from customers

has been excellent and as a result

the bank has now increased its

total prize money for 2014 from

RO7mn to RO8mn.

C O V E R S T O R Y

BANK SOHAR’S POPULAR AL MUMAYAZ SCHEME IS AIMED AT THE PUBLIC TO MEET THEIRFINANCIAL NEEDS, ASPIRATIONS TO ACQUIRE ASSETS AS WELL AS TO ENSURE THAT THEYHAVE ENOUGH FUNDS TO MEET UNFORESEEN CONTINGENCIES, SAYS R NARASIMHAN



“The response from

customers has been very encour-

aging. The increase in customers

who are participating in the Al

Mazyona savings scheme shows

that there is demand for the

product,” Lawati says.

NBO has a similar prize linked

savings deposit scheme called Al

Kanz. “For us, the response has

been amazing and that's why we

are consistent with the prize

scheme. We are also increasing

the prize money every year. In

2012, we launched the million-

aire scheme where an individual

can win up to RO1mn. Our

concept is to stick to the brand

that we have created for Al Kanz.

If you look at the figures from

January to September last year,

NBO was the top bank which

experienced the fastest growth

in the market.”

Bank Sohar introduced the Al

Mumayaz scheme in 2007. “This

is a branded bank savings

scheme aiming to encourage the

public to meet their financial

needs, aspirations to acquire

assets as well as to ensure they

have enough funds to meet

unforeseen contingencies. The

scheme is a very popular one.

Majority of the Omanis have

good awareness about the

importance of savings and we as

a bank, pay a lot of attention to

this matter,” says Narasimhan.

The Al Mumayaz scheme is

the only scheme to have hourly

prize draws which no other bank

has done so far.

“The distinguishing feature of

our scheme is that we are the

only bank in the market to have

hourly prize draws; thereby the

number of beneficiaries under

this scheme is the highest in the

market and it also keeps the

clients’ interest in the scheme

alive to encourage more and

more savings,” adds Narasimhan.

Special offersNBO is also encouraging

customers to save during the

festival season and not spend

their hard earned money, by

increasing the interest rate by five

times during certain months of

the year.

“Last year, we launched a

savings scheme called Super

Saver Account in which we offer

0.5 per cent interest. Customers

have a tendency to spend the

money especially during the

festive seasons. In order to dis-

courage customers from

splurging their hard earned

money and make them save

more during festivals like Eid or

during Ramadan, we increase

the interest rates by five times.

This offer is for one or two

months a year and customers

will only be eligible if they don't

withdraw money during this

period,” Jadidi says.

The scheme was launched last

year and so far NBO is the only

C O V E R S T O R Y

The key objective of the prize draw savings schemes

introduced by banks in the sultanate was to provide

customers a financial incentive for saving with the bank

while providing them with safety and liquidity for their

hard earned money

SELECTION OF SAVINGINSTRUMENTSThe top three factors

affecting savers’ selection

Oman: Sound reputation of

the provider, attractive returns

and sharia compliance, in that

order

Saudi Arabia: Sharia

compliance, capital guarantee

and attractive returns, in that

order

Bahrain: Sharia compliance,

attractive returns and the

sound reputation of the

provider, in that order

Kuwait: Sharia compliance,

the sound reputation of the

provider and attractive returns,

in that order

Qatar: Attractive returns, sharia

compliance, and the sound

reputation of the provider, in

that order

Source: GCC Savings Index Report 2013, National

Bond Corporation


www.businesstoday.co.om MARCH 2014 Business Today 29

bank with this kind of a product.

Catch them youngIn order to introduce banking

and a savings habit to customers

at a very young age, banks have

introduced different schemes for

young children and teenagers to

save money.

Bank Muscat has a children’s

account called Al Mazyona

Children's Account, which offers

a host of benefits such as

separate draws for the childrens’

birthdays. With a monthly

minimum balance of RO50 they

become eligible for the monthly

prize draw of RO100. The bank

will also contribute RO100 per

month towards the child’s

schooling expenses until they

turn 18, should anything unfor-

tunate happen to the parent. Not

just that, the child will also be

THE RESPONSE FOR NBO’S AL KANZ HAS BEEN AMAZING AND THAT'S WHY WE ARECONSISTENT WITH THE PRIZE SCHEME. WE ARE ALSO INCREASING THE PRIZE MONEYEVERY YEAR, SAYS MOOSA AL JADIDI



eligible to apply for an interest-

free four-year education loan

once he or she turns 18.

NBO's child deposit savings

scheme, Al Amaal covers

children till the age of 18.

Jadidi says this account offers

a host of benefits, first and

foremost of which is the interest

rate which is 1.5 per cent.

“It is given on a monthly basis

and is the highest in the country.

We are offering this because the

parent wants to open a child

account so that the money

grows when the child grows. All

banks are offering various

accounts for children but none of

them are offering interest. On

top of this we are giving a free

life insurance of RO50,000 for

both the parents together. So if

anything happens to the parent,

the child's future is safe.”

NBO has also a youth account

called Mustaqbali savings

account. Any youngster between

the age of 18 and 25 can open

this account. Under this account

the bank offers the customer a

student loan if he or she is

planning for higher studies. The

bank will also offer personal and

housing loans at a discount and

a credit card with the first year

free of charges.

For youngsters who love trav-

elling, the bank offers free travel

insurance up to US$10,000

under the Mustaqbali scheme.

Encouraging expatriates Even though these schemes

were initially popular only with

Omanis, they have now become

quite popular among expatriates

as well.

There is a general misconcep-

tion that only Omanis win the

top prizes as opposed to expatri-

ates. Jadidi says this is not true

and expatriates too have an

equal chance to win and the

reason why Omani customers

win most of the time is because

the ratio of Omani customers to

expatriates is 85 to 15.

“So the probability of an

Omani customer winning is

higher. In 2014 the bumper prize

money of RO100,000 was won

by an expat, which shows that

the prize draw is not only for

Omani customers. We want

to highlight this year’s winner and

convey to all expats that they

have an equal chance to win.

They can maximise their chances

by increasing their investments in

Al Kanz and keeping their money

for a longer period.”

Lawati adds that the response

from expatriates have been

encouraging and there is a

healthy and growing contribu-

tion of savings deposits with

Bank Muscat from other nation-

alities to the overall bank’s

savings deposits portfolio.

Bank Sohar also has several

expats who have won the savings

scheme prizes including high

value tickets and their savings

grow on sustainable basis.

The futureEven though the banks are

bullish about savings with their

deposits going up, findings of

the National Bonds 2013 Saving

Index report for the GCC paints a

different picture.

The survey says that 52 per

cent of the people in Oman have

indicated that their savings are

not adequate for the future. The

study further revealed that 13

per cent believe their savings

were sufficient for the future,

and only one per cent felt that

their savings were more than

enough for the future.

However the survey also

indicated that general bank

savings accounts had emerged

as the most popular savings

option in Oman, Bahrain, Kuwait

and Qatar. So, with the rise in

deposits in the banks, there is a

definite hope that things are

moving in the right direction. g

C O V E R S T O R Y

CURRENT SAVINGS77% of the respondents in

Oman believed they were not

saving as much as they had

planned for in 2013, which has

gone up in comparison to the

72 per cent of 2012


Bond Corporation

KEY PRIORITIESFOR SAVINGg In three of the six GCC

countries, Oman, Kuwait and

Qatar, respondents indicated

that children’s education

ranked first in the savings

priorities. In Saudi Arabia,

purchase of property for

personal use and in Bahrain,

retirement were the key

priorities behind savings

g In Oman, retirement and

purchase of property for

personal use were ranked

second and third respectively


Bond Corporation

Innovative products introduced by the banks keeps customers

interested. Bank Sohar’s Al Mumayaz scheme offers hourly

prize draws, NBO's Super Saver Account offers five times the

usual interest rate during the festive period if money isn't with-

drawn, while Bank Muscat's children’s account offers a host of

benefits such as separate draws for the children's birthday


Documents

Banking On Savings Story