The rapid rate of growth in many Middle East countries has led to spiralling rent prices, traffic and a heavily concentrated population - not things that the manager of a high street retail branch wants to hear.
As a result, many banks are deciding that the best way to serve customers at their branches is to make sure that many of them do not need to go there in the first place.
Gary Marsh, deputy CEO responsible for retail and private banking, Ahli Bank, Qatar, says: "We try to automate as many things as we can and give our customers access to as many other channels as possible to avoid large numbers of people coming into branches, particularly around paydays. That includes internet banking, that includes access to ATMs, and ATMs across the country rather than just our own. We're about to launch online trading so people can do their share dealing in the convenience of their office or home rather than coming in."
Ahli Bank Qatar also separates its branches into different areas to deal with premium customers, who benefit from top class service and longer opening hours. Marsh explains: "So if we do have any queues in our standard branches, our better value customers are being looked after separately anyway."
The bank also organises its branches so that a queue in the teller area, for example, will not impact on service or sales areas - two functions that are difficult to deliver remotely.
It is also likely to set up an area specifically for remittances to cater for Qatar's growing migrant workforce.
"Another key element, particularly in a place like Qatar, is that the population will grow here by something like 50,000 to 100,000 a year, so what was right for 2005 won't be right for 2007, and that won't be right for 2009," says Marsh. "What we will increasingly find is that our branches are not equipped to cope with and deal with the volume of customers that are going to be using them in the future."
Ahli Bank Qatar is already investing in land to the north of Doha, which has little activity now but could be heavily populated after the city's expansion. "When these kinds of places start growing and taking off, they've got to be serviced and it's important that we're ready to do that," says Marsh. "So we're trying to be as far as we can be ahead of the game, and that's why I'm talking about some greenfield sites where we're going to buy some land in the expectation that that's where part of the growth will come from."
The move is particularly important considering the high rent prices in much of Qatar. Marsh discovered the extent of rent inflation when he enquired about placing an ATM in a new shopping mall.
"They requested a rental of US$10,000 a month, for three square metres," he says. "I declined the invitation as you can imagine, but that just shows you how crazy it's got.
"There would be no commercial sense at all in doing that kind of thing."
Despite high rents, the aggressive lending parameters in Qatar at the moment mean that new branches can break even in 12 to 18 months of opening, says Marsh. Ahli Bank Qatar will open its tenth branch this month and should finish the year with 16.
It expects to open six branches per year for the foreseeable future.
Profitability studies and revenue forecasts are critical when making the decision to open a new branch. Noor Al Suwaid, officer for retail marketing and business development, Oman Arab Bank, says: "We undergo a feasibility study in areas where we plan to have our branches to investigate the costs and benefits of the project as well as to give us a clear definition of the future. That in turn will ensure the balance between profitability and opening enough branches to serve our customers."
Staffing is also vital, both in ensuring there are sufficient numbers at peak times and that bank employees have the skills to serve customers quickly and efficiently. "We always ensure that the time is reduced per transaction which is achieved through automating the processes and simplifying the systems and procedures, as well as giving appropriate training to the staff to train them on working efficiently and promptly under pressure," says Al Suwaid.
Emirates Bank has adopted metric analysis of its performance in customer service as part of its Tafawouk, or â€˜operational excellence', programme.
"In implementing the "Tafawouk" philosophy, all of the branch staff received intense training, our processes and procedures have been re-vamped to be far more efficient and there has been a strong focus on having our customers make better utilisation of our self-service banking channels," explains Louis Scotto, general manager retail banking, Emirates Bank. "All branches now have lobby managers to guide our customers to the correct area of the branch to be served and we have implemented intelligent queuing systems to monitor wait times and make sure the minimum amount of time is spent waiting.
"Each branch manager has a target that no customer should wait more than five minutes to be served in the teller or the customer service queues. This target is put on a â€˜dashboard' that the manager sees in a real time mode on his PC and is given a warning whenever queue times start to exceed target levels."
The project has been successful in cutting waiting time while still keeping customers happy.
"So far the results of this initiative have been extremely successful with most branches having queue times well under the five minute target," says Scotto.
"Follow-up interviews with our customers indicate that satisfaction levels have risen dramatically."
Standard Chartered Bank uses metrics to measure performance and waiting times through its branches and other service channels so that it can be sure its customers are being served efficiently.
"The uptake of activities we've migrated to phone banking has been fantastic and we've seen our key times fall significantly," says Owen Belman, head of consumer banking, Standard Chartered UAE. "We use a metric of the percentage of customers who can be serviced in 10 minutes or less, which is our standard measure of key waiting time. Our percentages have gone up dramatically in our busiest branches having introduced some of these changes so our customers are responding very well to that."
As an international bank in the UAE, there are limitations on the number of branches Standard Chartered can open - although it currently has the most of any international bank, at 11 - so new channels are vital.
The bank has worked on expanding its ATM network, which expanded from 22 to 50 machines last year, and will see another 25 added during 2007. "We've got very positive feedback on the ATM deployment and the ATMs that we've rolled out have been higher usage than the ones that we already had," says Belman. "One of the new ones that we rolled out is the highest-used ATM in all of the UAE for any bank. So we feel very good about the new services that we're providing and our ability to locate them as well."
It has also introduced a mobile ATM that visits areas which have high customer concentrations but are not necessarily commercially viable locations to open a branch or ATM. Standard Chartered has also opened customer service centres in strategic locations. They do not offer a teller service but can take care of many other functions, relieving some of the strain on other branches and giving customers convenient access to the bank.
The bank also makes efforts to ensure that its branches look fresh and up-to-date. When it does open brand new branches, the process is made easier by previous experience.
"From the moment you take possession of a site, I would say it's as quickly as six to eight weeks if you do it quite aggressively," says Belman. "I think one of the advantages we have is we've got 1,400 branches globally. That gives us an edge in that we've templated the branch layout, the look and feel and so forth. Because our sourcing is modulised, we have central suppliers, so we can actually pull it together quite quickly."
Louis Scotto says that Emirates Bank has a similarly fast turnaround time. "If we build the branch from scratch, it could take upwards of two years," he says. "If the branch is being located in an existing building we can fit it out and be ready for customers within 90 days or so."
Arki Group Design is one company that works to fit out and design banks. Part of its design process is to consult with officials at the bank to discuss details like the number of tellers and private banking rooms. It has worked with Emirates Bank, Commercial Bank of Abu Dhabi, Commercial Bank of Dubai and Ahli Bank Kuwait, among others.
"We discuss the design with the bank, we talk to each department head," says Hani Al-Qasem, executive director, Arki Group Design.
"We can do a fit out in 90 days. The design takes one month, then approval from the Municipality takes a few weeks. It can take five months in total."
The current success and high levels of growth seen by the region's banks has also kept local suppliers of furnishings and office equipment busy. Al Aqili Furnishings, and its sister company Al Aqili Flooring, have also undertaken projects with local banks, including HSBC, Doha Bank, First Gulf Bank and National Bank of Dubai.
Laurent Messara, managing director of Messara Trading, a contractor and distributor of carpet tiles, says: "We have supplied a branch of National Bank of Dubai, the Bur Dubai branch. It was about 500 square metres, and we will also be doing another floor."
UAE furniture supplier, Marlin Office, has furnished branches of Abu Dhabi Islamic Bank, Abu Dhabi Commercial Bank, Emirates Bank and National Bank of Dubai.
"NBD will have more than one hundred workstations," says Shahid Abbasi, sales manager for Marlin Office, which provides panel-based furniture, free-standing workstations and a range of seating, for employees ranging from PC operators to executives. Abbasi adds that the banking sector is generating a lot of demand for the company.
This reflects the fact that, despite the need to provide alternative service channels for customers, it is still imperative that physical branches give a professional effect. Most sales and applications are still conducted in person and the environment in which they take place could be a deciding factor in acquiring a customer.
However, by measuring performance across all of their points of contact with customers, banks are also trying to keep service levels high across all parts of their operation. As their networks of branches, call centres, ATMs and online services expand, banks need to ensure there is no weak link in the chain.
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