RAKBank of the future: A tech firm with balance sheet, regulators and a big heart

Becoming a bank with Dh100 billion in assets is 'within our reach', chief executive Raheel Ahmed tells The National

RAKBank group chief executive Raheel Ahmed says the lender has the potential to become a Tier-1 bank in the years ahead. Photo: RAKBank

After three decades of working with global lenders across the Middle East, western Europe, Asia and Africa, Raheel Ahmed felt the pace of change he had become so accustomed to in his whirlwind of a banking career was slowing.

A new challenge was what was needed and that is exactly what he got when he chose Dubai over London to take the helm at RAKBank in January 2022.

Rolling up his sleeves and diving in head first was what he did when he set about transforming the mid-tier lender into what he calls a “digital bank with a human touch”.

Plans are now in motion, targets are set, and the goal is to make RAKBank a Dh100 billion ($27 billion) asset lender by the end of the next year. Going by the progress so far, he may hit the goal before the deadline.

“If you ask my wife, she thinks I'm working harder and longer than I did in the past 10 years, but the good thing is, I'm excited to get out of bed every day because we are building something new,” Mr Ahmed tells The National.

“I'm absolutely loving it and I've not had a day where I thought why I made this decision.”

The veteran banker was among the first few employees of Citi in Pakistan when consumer banking was launched in the early 90s. From there, he moved to Standard Chartered and then to Barclays, serving in senior roles across geographies.

Before joining RAKBank, Mr Ahmed was an executive committee member and chief products and analytics officer at Barclays, where he oversaw the retail product portfolio and the data of more than 22 million customers.

After a year-long conversation with RAKBank, when Covid-19 travel restrictions were still in place, Mr Ahmed decided to take the plunge, as he thought RAKBank “was small enough to be like a scale-up company, and big enough because it had pedigree, history and solid footing for it to be transformed”, he says.

“So, I came here, and [now], I tell people I most probably am working as hard as I used to as a graduate.”

Dh100 billion asset bank

After taking reins, his first order of business was to put a growth plan in place and, in October 2022, the board approved its 2023-2026 Jebel Jais strategy. The end of last year marked the mid-point of the plan, one of the main targets of which is to hit the Dh100 billion mark.

“It’s almost touching Dh88 billion now and it is a very important milestone, becoming a Dh100 billion asset bank,” he says. “If you go back four years, we were at Dh57 billion, so it's been a very good success story for us.”

The growth in balance sheet will allow RAKBank “the room and the lever to play, to get more aggressive”, he adds.

The asset mix of the bank, which is 53 per cent owned by the government of Ras Al Khaimah, has also changed over the past five years.

Its mortgage book has been growing at a rapid pace within its personal banking business. The lender has also expanded its corporate business by boosting funding for small and medium-sized enterprises as well as its commercial lending to diversify its risk profile.

“The highest risk products have grown the least, so it's not a run for 'let's grow wherever we can', rather it's a run for 'let's grow sustainably',” Mr Ahmed says.

“So, if there is a correction … it doesn't impact [us that much] and now, I think we are big enough and diversified enough that even if there is a slowdown, it's not like you suddenly go into a dip, into a crisis.”

Not growing for the sake of growth

RAKBank which has tripled its profit in the past three years and crossed the Dh2 billion profit threshold after tax for the first time in 2024, expects to continue outperforming the average market deposit and asset expansion this year.

The lender’s 2024 net income climbed by about 16 per cent on an annual basis, driven by “substantial growth across all business lines”.

RAKBank continues to maintain focus on SMEs and with a 25 per cent annual growth in new accounts, its SME clientele climbed to 92,000. It also lent money to 13,000 entrepreneurs, who launched their businesses in 2024.

However, despite record income and expanding client, deposit and asset base, RAKBank does not want to grow “just for the sake of growth”.

“You will not see us adding 500,000 customers … because when you scale at that level, a lot of those customers are just opening an account because you have made it easy with three clicks,” Mr Ahmed says.

“Yes, we want to have more customers, and the customers we already have – we want to do more with them. If I have 91,000-plus SMEs, I also want to bank those individuals, their families, their children.”

Economic tailwinds and expansion

RAKBank, like its peers in the UAE, has grown at a rapid pace since bouncing back from the Covid-driven slowdown thanks to sustained economic momentum in the country with the Arab world’s second-largest economy.

The UAE’s economy grew by 3.8 per cent during the first nine months of last year, growth driven by a strong expansion in non-oil sectors as the country continues to diversify away from oil.

The country's real gross domestic product climbed to Dh1.32 trillion, with the non-oil economy growing by 4.5 per cent annually to Dh987 billion, accounting for nearly 75 per cent of overall economic activity, latest government data shows.

“The thing I feel very good about this economy is that it is significantly diversified,” Mr Ahmed says. “Now, the UAE has positioned itself at the frontier of future growth, whether it's AI, digital, FinTech, or tech start-ups.”

With economic tailwinds supporting growth, the bank is focused on strengthening its market share in the UAE and has no immediate plans to expand beyond the country’s borders.

Establishing a foothold in international markets is a long-term goal, but for the time being, the lender is content with managing its financial institution business with international FIs from other markets. For now, RAKBank remains a “pure-play UAE bank”, with a strong FI business, worth almost Dh10 billion, Mr Ahmed says.

“From this strategy perspective, until 2026, the focus is that you have to become big enough in the UAE to have the right to go and look [at other markets]," he says.

“It's about getting the foundations right”, and in the next strategy cycle, the lender will explore international expansion.

Focus on wealth

RAKBank is opening three wealth centres in the UAE that will manage investments for its retail and affluent clients and aims to attract new clientele from the influx of millionaires into the UAE.

Despite global macroeconomic headwinds and regional geopolitical uncertainty, the UAE’s appeal as a centre for international wealth has grown. Local banks are strengthening their wealth offerings in the face of growing competition from international banks and asset managers who have flocked to the Emirates.

Dubai alone is home to the Middle East's highest concentration of resident millionaires at 72,500 and is ranked the 21st wealthiest city in the world. The city has recorded a 78 per cent growth in its millionaire population over the past 10 years, according to a report by Henley & Partners, which tracks private wealth and investment migration trends worldwide, and global intelligence provider New World Wealth.

One of the fastest-growing commercial, trading and leisure centres in the region, Dubai is also home to 212 centi-millionaires (people with a net worth of $100 million or more in investable assets) and 15 billionaires, the research found.

Debt and equity capital market advisory is also part of RAKBank’s longer term strategy but for the time being, the new centre will remain a “pure play wealth management” hub for the bank, Mr Ahmed says.

'Moon shots' and M&A

While the bank remains focused on growing its traditional business, Mr Ahmed is keen to explore what he calls “moon shots”, which means investing in new entities to diversify the bank's revenue base.

“We keep on thinking about what are the new revenue models that may not be very big now, but in five to seven years [can grow],” he says.

The bank has already launched Protego, a digital insurance aggregator, while Skiply, which provides secured transaction for schools in the UAE, is also in a high growth phase, he adds.

“We are building new assets and propositions and they are all different brands. A lot is going on, which will probably reshape how the bank makes money,” Mr Ahmed says.

While RAKBank hit Dh2 billion in profit last year, it will need to consider mergers and acquisitions if it wants to more than double that.

“If I think about how this bank becomes a Dh5 billion [profit] bank, we have to consider both organic and inorganic options … it could also be portfolio [acquisitions],” Mr Ahmed says. “We are always open to acquisitions, collaboration, commercial arrangements and joint ventures.”

The bank is already working with some “good FinTechs” and is happy to invest in companies to grow with them and secure commercial agreements at an early stage.

Human touch and tech investment

RAKBank’s capital expenditure over the past few years has also risen significantly and the Dh234 million spent last year is about four times higher than the pre-pandemic level.

“This year, we are looking to go even higher,” with up to 85 per cent of capex going to technology for customers and improvement of the bank’s tech infrastructure.

RAKBank's urge to become a digital platform with a human touch is what drives investment in technology, Mr Ahmed says.

“For us, the human touch is a very critical component. If I just said to you, I want to be a digital bank, I'm no different than anybody else,” he says. “The way we think about it is that the customer should be able to do anything, anywhere, anytime … [and] should also have access to a human being at all times to advise and support them.”

Mounting challenges

Customer expectations, a fast-changing regulatory landscape, intensifying competition with the advent of open banking and the tech evolution are among the challenges that require a modern-day bank to become a "liquid" organisation.

“When we made the strategy in 2022, generative AI was not even under discussion. Today, it looks like it will be the main thing that will be used everywhere,” Mr Ahmed says.

People as well as financial institutions will have to adapt and continue to self-reorganise as “the more rigid you are … the harder it will be to turn and, trust me, we will all be turning left, right and centre over the next 10 years,” he adds.

A tier-one bank of the future

RAKBank is set to celebrate its 50th anniversary next year and Mr Ahmed is confident it has the right foundations for a rapid ascend in decades to come.

“I see RAKBank being a much larger financial institution in the next decade, and I think, it should be a Tier-1 bank” that will continue to grow above the market average.

Even the word “bank” will be “too restrictive” to describe the RAKBank of the future, as “I see ourselves as a tech company with a balance sheet, regulators and a big heart”, he says.