Today, the Qatar National Bank is one of the leading banks in Qatar. 50% of the Qatar National Bank are owned by the government, while the rest of the bank’s shares are owned by the Qatari public. The bank was founded in 1964 and is rapidly progressing at the moment. The key strategic directions in its development are: the improvement of the quality of services and diversification of services offered to customers; diversification of sources of revenues; rebranding to improve the public image of the bank and facilitate the penetration of new markets; the focus on human resources, especially well-qualified personnel, which can give the bank a strategic competitive advantage; market expansion, both internal and external; the strategy of acquisitions and the establishment of new subsidiaries; enhancing the domestic presence; and the focus on young clients, who can become the core customer group in the nearest future in Qatar. In such a way, the bank is oriented on the development of its competitive potential and expansion of its presence in the national and international markets. On the other hand, today, the Qatar National Bank faces a number of problems and challenges it has to cope with to maintain its competitive position and positive marketing performance. Among the major challenges the Qatar National Bank is currently facing it is possible to name the high level of competition in the domestic and, especially, in the international market; the wide implementation of IT; risk management; demanding regulatory requirements at home and abroad; consumers become more sophisticated that increases their demands on the quality of services offered by the Qatar National Bank.
The Qatar National Bank is the bank based in Qatar, which was founded in 1964. In the course of its development the bank has managed to make a considerable progress and gain the leading position in the national financial market of Qatar, being at the moment one of the major suppliers of various financial services to private customers, corporations and governmental entities. In this respect, it is important to underline that the government owns a half of the shares of the Qatar National Bank while another half is owned by the public of Qatar that increases the confidence of customers in the reliability of the bank due to the participation of the government in its ownership. In actuality, the position of the bank is stable, but it needs to progress constantly in order to maintain a highly competitive position at home as well as abroad. Obviously, the bank cannot stop progressing and introducing new services and strategies because it will lead to the backwardness of the bank and to the loss of its current leading position in the national market. In such a situation, the Qatar National Bank focuses on the improvement of the quality of services delivered to customers and diversification of revenues sources that help to improve the marketing performance of the bank and create a solid basis for its further development. At the same time, one of the major priorities of the bank is the market expansions, which has been one of the dominant trends in the recent development of the Qatar National Bank. On the other hand, it is necessary to understand that the bank needs to implement new technologies and employ well-qualified professionals to carry out all the changes which are essential to the maintenance of its competitive marketing performance in the contemporary business environment.
The current business environment
On analyzing the current marketing situation and business environment, it is important to underline that the Qatar National Bank has steadily improved its marketing position since the date of its foundation till present moment. In this respect, the 2000s were marked by a stable growth of the bank and enlargement of its market share (see Table 2-3 and Graph 2). For instance, the total assets of the bank has increased from 31,055,925 in 2002 to 39,398,121 in 2004 (Table 2) that is a very substantial growth for a two-year period. In fact, the bank has increased its total assets by a quarter within a two-year period. Obviously, such a growth reveals the fact that the bank is oriented on the fast market expansion.
In actuality, this strategy is justified by the consistent changes that took place in the market in the 1990s-2000s. To put it more precisely, the rapid progress of the process of globalization contributed to the elimination of fiscal barriers and growth of international trade. In such a situation, the international banking systems grew more and more integrated because banks needed to develop their international cooperation in order to provide their customers with the possibility to transfer money and make transactions not only at the domestic level but also at the international level (Heilbroner and Milberg, 2000). In addition, it is necessary to remember about the fact that the government owns 50% of the Qatar National Bank and the government controls the export of oil, which is one of the major sources of revenues to the national economy (Chowdhry, 1999). Naturally, the Qatar National Bank can benefit from the oil trade providing its services to the government in the process of oil export and financial transactions related to this process. At this point, it is worth mentioning the fact that in recent years the exorbitant growth of oil prices consistently improves the situation in the national economy and opens larger opportunities for the Qatar National Bank to increase its revenues due to the growth of financial flows due to the increased financial resources involved in the oil trade.
At the same time, it is obvious that the development of the process of globalization has produced a profound impact on the situation in the financial market and, therefore, on the position of the Qatar National Bank. In this respect, it should be said that since the foundation of the Qatar National Bank, the bank could have counted for the support of the state and it has maintained a privileged position until the emergence of the free trade and the process of globalization which was accompanied by the elimination of fiscal barriers as well as elimination of basic privileges which could protect local, Qatari banks from the expansion of leading foreign banks. In addition, the liberalization of national economy and the financial market contributed to the emergence of Qatari banks which started to strengthen their position due to larger opportunities and fair competition (Breneman and Taylor, 1996). As a result, the Qatar National Bank has faced an unparalleled competition in recent years that forces the bank to change and improve its marketing strategies, internal and external policies, paying a particular attention to the bank-customer relationship.
In such a context, it is possible to speak about major challenges the Qatar National Bank is facing in the contemporary business environment. In this respect, it is important to underline the fact that the increased competition between banks contributed to the introduction of more demanding regulatory requirements, because the government of Qatar, as well as other countries, attempt to protect the national financial market from the expansion of unreliable and unstable banks. As the number of banks increases, the governmental regulatory policies naturally aim at the restriction of the access of unreliable banks by means of strict regulations and demands banks operating in the market should meet.
Another challenge, the Qatar National Bank is currently facing is the change of the customers’ behavior and preferences, which are also closely intertwined with the increased competition and increased offer of financial services to customers from the part of Qatari and foreign banks. In actuality, customers become more demanding to the quality of services and their expectations have increased consistently compared to the past, when the competition was lower. In addition, customer expect a wide scope of services the bank can provide for them that naturally forces the Qatar National Bank to focus on the introduction of new services to meet expectations of customers.
Furthermore, the rapid progress of technologies poses a number of new challenges the Qatar National Bank has to overcome. In this respect, the wide implementation of information technologies, progress of computing and Internet resulted in the dramatic change of the banking system where electronic transactions are dominant, while demands of customers concerning online services increase constantly. In such a way, the Qatar National Bank needs to focus on the adaptation of new technologies which can attract new customers.
Finally, it is necessary to remember about the risk management. In fact, the increased competition leads to the implementation of more risky strategies not only by the Qatar National Bank but also by its competitors. For instance, banks offer loans to customers at more customer-friendly conditions in order to attract new customers, while, in actuality, such a strategy can lead to the risk of a loss of financial resources, if customers are unable to pay their loans off.
The analysis of the Qatar National Bank’s strategies
Obviously, in face of numerous challenges, the Qatar National Bank has to implement new, effective strategies in order to improve its marketing position or, at least, to maintain its current position. At this point, it is worth mentioning the fact that the bank attempts to improve its marketing performance and expand its presence in the national and international markets. For instance, the bank operates not only in Qatar, but it has already established its subsidiaries in the UK and France, while the countries of the Middle East are one of the major directions of the market expansion of the Qatar National Bank.
In actuality, the position of the bank is stable, though the recent economic crisis and global economic recession has slowed down the development of the Qatar National Bank. At any rate, the stock performance of the bank has deteriorated consistently recently (see Graph 1 and Table 1) and at the beginning of October 2008 the bank’s stock performance was worse than in October 2007 (QNB’s Outward Reach, 2008). Nevertheless, within last month the Qatar National Bank’s stock performance has started to recover, though it is impossible to speak about a total recovery until the global economic crisis is ongoing.
Taking into consideration the current challenges the Qatar National Bank is facing, it is necessary to underline that the strategies used by the bank are basically correct. In this respect, it is worth mentioning the strategy of the Qatar National Bank, which targets at the diversification of sources of revenues. For instance, the bank’s Other income increased in 2003 by 37,3%, which represented 19% of operating income compared to 14,9% in 2002 (See Graph 2). It should be pointed out that the increase purely relates to core business activities and excludes income from sales of investments. Obviously, the diversification or revenues contributes to the higher flexibility of the Qatar National Bank and, therefore, the bank becomes less susceptible to the deterioration of the situation in certain segments of the financial market since the decrease of revenues from one source can be compensated by the increase of revenues from other sources.
Furthermore, the change of customers’ expectations and new demands force the bank to introduce internal changes which can improve the quality of services and, what is more, to diversify services the bank can offer to its customers. The current internal changes that took place within the Qatar National Bank aim at the improvement of efficiencies and maximizing return on equity. At the same time, as the bank meets expectations of customers, it can count for the customers’ loyalty.
The latter is of the paramount importance in the contemporary business environment, especially when the competition in the financial industry has increased dramatically. In such a context, the focus of the Qatar National Bank on rebranding is quite logical. In fact, the bank attempts to change its logo and improve its public image. The ultimate goal of all these changes and rebranding is the adaptation of the public image of the bank to a new business environment. What is meant here is the fact that the bank needs to have an image comprehensible to customers not only in Qatar but also in other countries of the world, including such countries as the UK and France, where the bank has already established its subsidiaries and where the local culture is totally different from Qatari culture.
In this respect, it should be said that the bank has widely implements the strategy of acquisitions and the establishment of new subsidiaries, which meets the strategic goal of the bank of the market expansion, which relates to both domestic and international market. For instance, the Qatar National Bank is planning to open the newest branch within Qatar’s Educational City, thereby increasing the local network to 34, which is supported by 64 ATMs (QNB’s Outward Reach, 2008). At the international level, the Qatar National Bank mainly focuses on countries of the Middle East, though it has its subsidiaries in Europe as well. The expansion on international markets will enlarge the scope of operations of the bank and diversify its sources of revenues.
Furthermore, another important strategy is the engagement of additional staff and highly qualified professionals. This strategy is very important because human resources constitute a strategically important part of the bank’s assets. In addition, the involvement of well-qualified specialists will improve the competitive position of the bank.
Finally, the Qatar National Bank pays a particular attention to the young clients, which are strategically important for the bank and is viewed as one of the major target customer groups. For instance, in terms of this strategy, the bank has introduced the Young Investors’ Program, which makes services of the bank more available to young people (QNB’s Outward Reach, 2008). In such a way, the bank creates the foundation of its future clientele.
Thus, taking into consideration the major challenges and strategies applied by the Qatar National Bank, it is possible to recommend continuing the implementation of strategies of market expansion and enhancing of the potential of human resources employed by the bank. At the same time, it is possible to recommend paying more attention to the introduction of new technologies since the enlargement of the scope and international expansion of the bank will inevitably raise the problem of the introduction of the latest information technologies in order to enable customers from other countries to use services of the bank without any restrictions. The development of online banking services should become one of the major priorities of the Qatar National Bank since the technological advancement of the bank will put it in an advantageous position, at least in Qatar and countries of the Middle East, where the bank increases its presence. In addition, the bank should pay more attention to markets of developed countries. Due to the current financial crisis, the bank can easily enter European or American markets by means of acquisitions or establishment of new subsidiaries because entering barriers have dropped dramatically. In such a way, the bank can strengthen its position on international markets and successfully implement its strategy of the diversification of sources of revenues.