Every now and then, I find a LinkedIn or Facebook post of someone in Morocco literally ranting about how bad their banking experience was when they needed to close an account(my case, for another post), order a new card, freeze a card, get cash on the counter, unfreeze their mobile access or just set a pin for their card.
Everyone thinks that it’s just a fact of life that banks are sh*t as if we need banks while banks don’t need us. However, that’s just not true because if we think about it for a second, banks would be nothing without the money we decide to store in their vaults. Thus, one should ask, why are banks so comfortable offering mediocre quality of service without being afraid of losing customers and revenue.
First, let’s establish some facts:
- According to Bank Al Maghreb(BAM), as of 2017, there are 19 traditional banks in Morocco, excluding participatory banks and other financial services firms.
- 7 banks control ~90% of the market.
- 2 banks(AWB&GBCP) control ~55% of the market
- AWB’s largest shareholder is the royal holding Al Mada Group
- GBCP’s has a very unique shareholder structure where the regional branches own the ~54% of the bank while the rest is owned by retirement and savings institutions.
- According to BAM, Customer Deposits make up ~60% of the banks’ assets
- As of 2017, there are ~27 million bank accounts (~4 million inactive accounts, but that’s for another post) with an average growth rate of ~6%
The good thing about Moroccan banks is that they are financially stable. The top three banks by market share are all listed in the Casablanca stock exchange. As a result, they all release their financial results as the law dictates and they all have at least one foreign shareholder which makes them slightly more legitimate and transparent.
Furthermore, Morocco’s top banks are mature and comfortable enough to support the economy’s needs and even extend their reach beyond Morocco and to African and European markets which is an enabler for local companies doing business in Morocco and abroad.
There are certainly plenty of bad things about banks and banking in Morocco today which can be split into three main categories:
- State-run mentality: until recently, the top three banks in Morocco were all state-owned, as a result, their corporate cultures is still highly influenced in one way or another by that fact. In other words, banks run their businesses with the same pace, arrogance, sense of comfort, inefficiencies, dinosaur-like ideas and execution as a state owned service. Furthermore, I believe it is this mentality that causes the sh*t customer service the banks have. They don’t treat their customers with respect, they don’t try to help the customer and even make the customer’s life hard if they make comments about their quality of service.
- Fees: every single bank in Morocco charges their customers for the most basic services they offer and by that I mean account holding fees, OTPs and others... It does not matter if this is your salary account, savings accounts or spending account, the bank charges you for giving them access to your money, the same money they will give out as loans and charge obscene interest and fees for. Also, the banks have somehow managed to live this long without anyone calling them out on the numerous fees they charge for every single movement in their customers’ accounts and here is an example:
In the screenshot above, you see that this account was charged MAD15.40 for the “existence” of the account, MAD3.30 for an SMS One-Time-Password(OTP) to confirm a transaction, MAD 15.00 for a commission on a direct debit and MAD1.50 for VAT. As a result, the customer was charged MAD35.20 for basic services in the first week of the month, the total cost could easily jump to MAD50.00 for a couple of transfers and bill payments during a calendar month.
Technology: In the last few years, all the major banks in Morocco started advertising their new online and mobile services. They claim that now you can make online transfers, view your transactions, and even pay a utility bill from your phone. The truth is that those services and their quality would have been state-of-the-art if we were living in 2012.
One way to know if banks are investing in the right products from a technology point of view, is by going to a branch and seeing how many people are lined up to make a basic banking operation, the more people in the branch, the less they are using the digital version of their bank..
Sadly, the truth is that branches are always full of customers waiting in line with a security guard who wants to run the branch and bully customers into telling him what they need from the bank.
However, I cannot deny the fact that they have made significant investments in this side of the business and they are now in a far better state than 10 years ago.
Now we get to the worse part. This part is about the potential strategic cost of the current state of banking and where it is heading.
By not putting the customer at the center of every product and initiative the banks currently invest in, they -banks- risk becoming a growth blocker instead of an enabler.
In today’s world, banking as we know it has become this commodity that everyone expects to act and serve in a certain way. Thus, the actual value of banks now lies in the services and the quality of those services they offer on top of boilerplate banking.
- Using data to quickly assess a business before extending business critical credit lines.
- Offering new products that limit the use of cash in the economy (saving Morocco 1.6% of GDP in cash management costs).
- Opening their Application Programming Interfaces(APIs) to startups so they can offer new ways to do business, new business→new jobs →more growth.
- Seriously tackling the financial inclusion problem Morocco has by collaborating with startups offering new and innovative financial services.
- Educating customer-facing employees on how to treat customers with dignity and not waste their time.
- Offering bank switching services to unlock true competition.
- Changing their public image from institutions that only look out for themselves to something that looks out for the customers’ best interest.
Those examples and more are the only way banks can avoid being a growth stopper because sooner or later Moroccans will understand that banks are literally f***ing them from the day they open an account until the day they get the courage to close(if that’s even possible…) it and move somewhere else.
Every functioning society relies on a functioning and healthy banking sector, therefore, for society to grow and prosper, banks have to stay up-to-date with the business and society’s needs, facilitate them and support them in a way that is sustainable for everyone.
Note: since I left Morocco, all of my banking services have been free and state-of-the-art. I only pay for one “premium” plan and that’s by choice. Meanwhile, I am fighting with GBCP in Morocco to close my account which has been unlawfully incurring fees… I will write about that in the future.
As always, thank you for your time reading this.