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Tue 6 Oct 2009 04:00 AM

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Brand builder

A year after its launch Dunia's CEO, Rajeev Kakar, tells Claire Ferris-Lay why launching in the middle of the global economic downturn wasn't so bad after all.

Brand builder

A year after its launch Dunia's CEO, Rajeev Kakar, tells Claire Ferris-Lay why launching in the middle of the global economic downturn wasn't so bad after all.

September 2008 was a month like no other. It was the month that Lehman Brothers filed the biggest bankruptcy in corporate history, when financial institutions the world over were nationalised and stock exchanges plummeted.

It was therefore unsurprising that when Dunia - an Abu Dhabi-based financial services company with a start-up capital of $149.8m - launched in the same month it went largely unreported. Backed by two of the world's largest government-linked funds, Mubadala and Singapore's Temasek, Dunia's entrance to the UAE consumer finance sector - Mubadala's first in the region - should have been more significant. But as the firm's CEO, Rajeev Kakar, explains there is no such thing as bad timing.

"It was great because we reacted well; we didn't have the legacy so we were able to recalibrate very quickly," he says. "It would have been far harder in normal times if we had tried to build a brand because in normal times we would have got lost in the crowd. In advertising, we probably would have struggled against the real estate companies... [and] banking and financial institutions."

Kakar's proof is in his firm's figures. Although cagey about revealing exact numbers, he claims Dunia, which means ‘the world' in several languages including Urdu and Arabic, has already captured a third of the UAE's market with its products, which include personal loans and credit cards.

There have been a number of factors that have helped the firm claim such a large proportion of the market in such a short space of time - most notably its cash-rich backers. While the firm is 31 percent owned by Abu Dhabi-based investment fund, Mubadala, it is 40 percent owned by Fullerton Financial Holdings  (which is wholly owned by Temasek) so cash during the downturn hasn't been as tough for Dunia as it has for other financial institutions.

Kakar himself is also no stranger to financial start-ups having founded Citicorp Maruti Finance (a group venture between Citibank and Suzuki in India) in 1998 and opened Citigroup's first consumer bank in Egypt in 2000.

The fundamentals may have been helpful but consider that more than 50 commerical institutions are all battling it out for their share of the UAE market and the figures are impressive. Much of its success is down to the market Dunia opted to target. The brand aims its products at the low to medium end of the pay scale as well as small to medium size enterprises (SMEs), areas that Kakar believes are all underserved.

"Seventy percent of people in the country in the market are not served... There are a large amount of people at the bottom of the pyramid that don't even have bank accounts, even today. There is a lot of unstructured money lending, a lot of private money lending and a lot of money transfers through exchange houses," he says.

"People don't have the institutional means to borrow and wealth management isn't controlled. There is definitely a large gap [in the market] and this is validated by research. If you look at the segments we are serving, there is a huge gap and that's what we are trying to fulfill."

Kakar's approach has been a back to basics one. For him this has meant having better customer service than its competitors. "Bankers are known to be fair weather friends but I think they need to be relationship oriented; you need to go back to basics. Three years ago when we started looking at Dunia we realised there was a need to look at the customer."

Dunia also profiles its clients, enabling the lender to offer its customers appropriate products as well as further strengthened its risk management model. "[We use] a CRM, which gives a 360 degree view of customers," explains Kakar.

"It sounds invasive but it's automated and it gives a complete solution... All of our risk models are based on research. We have the courage not to offer certain products to certain people if they are not right for it," he explains.

It's a far cry from a few years ago, when UAE lenders handed out loans to almost anyone who applied, paying little attention to whether or not they had loans with other banks.

"If a person comes and applies for a Maserati and is not good for a Maserati - even if the person is willing to give the money for it - we would not lend. We are not trying to take the moral high ground here but we do believe that the quality of credit, response and being able to manage the risk we inherit and the customer is important."

Although Dunia currently has just one branch in the UAE, Kakar plans to expand aggressively over the next few years. The firm currently has 19 branches under construction, which will be open by the end of the year, and aims to have around 150 in the UAE. He is also growing Dunia's staff at a similar pace, adding an average of 100 new staff per month to it's existing 800. "We are increasingly building customer relations and on the credit and research side. If our growth plans continue, this should go on for a while. We would like to take people only if we can train them and we have capacity in our training," he says.

As well as aspirations to become one of the UAE's top three financial institutions in its chosen segments, Kakar also plans to extend the brand across the GCC.  "The GCC is important. I think there is a huge similarity in terms of the mix and aspirations. It's no different; many of the currencies are pegged so depending on regulations and approvals we would certainly like to go."

In the meantime, Kakar is ensuring that Dunia customers are aware of other Fullerton Financial Holdings services in their home countries - handy for when they remit money. "We have businesses in many of the neigbouring countries - India, Pakistan and Indonesia - and there is a chance for us to create host country and home country synergy. That's a huge value that people see and that would take about 70-80 percent of the target market."

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