A chat with Wio Bank, a fully digital, platform-based bank

I recently had a nudge to talk to Wio Bank, who claim to be the Middle East's first fully digital, platform-based bank launched in Abu Dhabi in 2022 (not sure about this as there are over 20 neobanks operating in the Middle East).

Backed by major shareholders like ADQ and FAB, it provides digital banking solutions for personal and business customers, including SMEs and creators, focusing on streamlined, cloud-native services.

So, I took a call with Jayesh Patel, CEO of Wio Bank. Here’s our chat:

Chris Skinner: Tell me about Wio bank’s history and story.

Jayesh Patel: We started just over five years ago now, and it started from our shareholders and the government recognizing that there's a new economy powered by digital and there's going to be a lot of new capabilities required for it, including new regulations and new infrastructure. This led them to believe that we needed a digital bank that enables this new economy, and the new f businesses and the new individuals who are going to be part of it.

As part of that vision, they said, let's start a new bank.

The objective of the new bank wasn't to build just existing products but was to rethink everything from the technology to the product and proposition for this new economy.

We started about three and a half years ago, in 2022 just after Covid, and we launched with the focus on SME banking, which is often the hardest area, but we felt it's a customer segment that probably needed the most amount of service.

We launched with that focus and now have the largest number of SMEs banking with us in the UAE. Around one out of three new small companies choose us, and I think over 70% of the customers join us through referral.

So, we started with SMEs about two years ago, and then we launched retail banking, and that has been incredibly successful for us here. We have over 350,000 customers in total and continue to grow.

Chris: what about yourself? I see that you have worked in Qatar and various other countries. How did you end up with Wio bank?

Jayesh: It's a great story. I had an engineering undergrad and a master's, and then I realized the business folks are the ones who make money, and not the poor engineers who do all the hard work. So, I decided to turn to the dark side and get a business degree. I got an MBA.

I did a little bit of consulting for about four years in the US, but my focus was always on innovation and changing industries and got an opportunity in 2008 to move to the UAE to do a startup in FinTech, when the word FinTech wasn't even coined.

It involved an incredibly exciting group of folks from all over the world, and so I joined a FinTech that had already started and then the financial crisis hit.

We learned a few great lessons from it, as in things not to do when doing new business.

Then I was in Qatar for a little time and got an opportunity to join Emirates NBD about 14 or 15 years ago, and there was a unit they had formed which looked at new businesses and new opportunities. I joined them and ended up in retail strategy by accident and ended up launching a digital bank for them. So, when the opportunity for Wio came up, I think the shareholders said, Hey, would you be interested in this? and I said, it's a fantastic opportunity. We'd love to do this. So that's my background.

Chris: What's interesting as you talk through your background is that I've dealt with Emirates NBD, Mashreq and other banks in the region, and there is a pretty competitive market across the region. So, when you're positioning and talking about Wio, how does it match up against those older banks?

Jayesh: I get this question a lot with people asking whether it is your technology is better. I fundamentally believe, if you look across industries, when you see new digital platforms succeed, I think it's more the principles that are different. IT is not that the technology is better looking or sexier.

We are in the business of serving customers.

We happen to do banking. Banks are in the business of banking. They happen to serve customers. Our capabilities, our processes, our organisation is built to make sure the customer succeeds, and we believe if our customers succeed, we will succeed too. Everything we build and do – everything from our design experience to the kind of products we built and the products we don't build – is based off that.

Consultants have always used the word customer centric, but we try very hard to make sure the customer's best interest is at heart regardless. This means that, if you look at our products, they are simpler. Our experience is super transparent. We bring the power back. The power that has been taken away from customers, we bring it back. We give you simple, clear knowledge, so that you make the right decisions for yourself.

So, our responsibility is to give you the insights. It's your choice to make your decisions. We work very hard to bring these capabilities to our customers. I will give you an example. We launched a wealth platform in addition to our retail banking platform, to make sure customers have a better tomorrow. You don't just live today, but you live for tomorrow too.

You save up enough, so your tomorrow doesn't become tougher, and the seamless nature in which information is provided on the platform and decisions are made … we remove a lot of the jargon, and we make it simple for you. I think that is what customers want.

Customers are smarter than they've ever been.

They can get information now with ChatGPT and other platforms. They can get information better than most of us bankers can. This means that it's our responsibility to give them easily digestible information and good choices for them, and it's their decision on what they end up doing, and we spend a lot of time on that.

What is the difference?

It's the principles by which the new digital banks operate, and maybe and not just banks but also how businesses operate, and the way some of the more traditional businesses operate. We may not have the depth of products they have, but the few products we do have, we want to make sure we do them very well for our customer. That's the learning from good digital platforms across industries.

Chris: What's the vision of where the bank is going? Will you upscale or will you stay in your niche?

Jayesh: We decided, at least on the business segment, that the smaller businesses struggle to get a bank account and our approach is that we don't we don't want to open bank accounts. We want to provide an operating system for businesses to run. Entrepreneurs start a business because they have a vision. They have a passion for some area, not to learn to bank, not to go and go buy accounting software. And so what we do is we build these operating systems which have modules made by us and, where we think others provide better modules, we incorporate them. We make your life easy as an entrepreneur. Make you and help you make better financial decisions, and run your business, and be more successful.

So, we started with that.

We started actually with sole proprietors and sole owners. Then we added multi company, multi partners, companies. Now we've added some more complex structures, and we will progressively grow up the curve.

I do think, at the right time, with the right maturity of our platform, we will serve large corporates. Before we go there, we need to make sure that we are serving our existing customers well.

I do think there's opportunity and there's work for us to do to serve them better, and that's our focus.

I'll give you a simple example. We have a great, what I'd say, generic platform for every customer to come and work with us. We want to build in depth industry capabilities, and we want to orchestrate seamlessly and digital industry capabilities, and that's our focus.

This year, we have chosen four or five industries, and we're going to work through that so that we can create more seamless, efficient experiences for our customers, and they focus on growing their business.

Eventually, we will move up to corporate, but we still have some work to do in the small, medium and larger enterprise segment.

Chris: I was looking at some of your reviews, and a lot of small businesses are saying that there's been issues with KYC. Is this because the regulatory regime in UAE has changed, or what's going on?

Jayesh: We are in a country where over 80% of people come from different nationalities and we have quite a few licensing zones. This means that we hold a responsibility to the country and the economy, as well as to our regulators and shareholders, to make sure the system brings in the right customers. That means that, dependent upon the risk rating, we will ask more questions and will try to understand the nature of the entity and the kind of business you're going to do.

We often get cases where it is not clear to us the nature of this business. Therefore, we need to take actions in accordance with that.

We understand sometimes it displeases customers, but we need to understand what they are going to do as a basics of banking.

When we aren't certain that what we are seeing is the nature of the business, it's hard for us to open up an account for you.

We are integrated into multiple digital data sources here, and the reason we enable digital account opening is the UAE has a fantastic digital ecosystem. We can get identity information, we get company information, we get background information, and we integrate all this into models and decide to figure out: are these the right customers to serve?

Maybe we could do better, and we constantly try to improve on this, but we are a regulated industry, and we do have a responsibility to make sure the nature of businesses that join us are genuine,

Chris: if I look at Europe with Monzo and N26 and other challenger banks, they've had the same issues, which is onboarding customers, converting them to full bank services, and then the regulator steps in and says, No, you need to do more background checks. Have you had the same experience?

Jayesh: We have a very supportive regulator, and we engage with them continuously, and they provide us with areas of enhancement ideas. It's evolving at the fastest pace it's ever evolved. Every day I wake up, there's something new. So, we work very closely with the regulator, and we enable different capabilities. We improve. We always have areas to improve, and we work on those.

We are in a market where we have a large number of trading enterprises and, in that market, we are a trading hub. When you're a trading hub, it's important to understand all sorts of different aspects. So, getting that information isn't always easy, and where we can get it then account opening is fairly simple. We open many accounts within 24 hours but, where we don't have sufficient information, we do go back and request more information.

The thing is that I am a big believer in regulated industries and think that more industry should be regulated. Maybe I'm one of the few people who think this, but I think they protect the customer. I'm the same.

Protect the customer and protect the economy.

I think it is absolutely essential.

You look at social media, for example, and they can do what they want, which is sometimes bizarre. This is why I'm a big fan of regulated industries and the regulator evolves and, wherever requirements evolve, we make the changes as needed. We learn a lot from them and from our peers.

So, we have a very good banking regulatory environment here in the UAE and a good collegial environment in banking. It's good place to be at.

Chris: I think it's funny in that as we talk about how things are changing, I always go back to my favourite quote from Vladimir Lenin, the leader of the revolution in Russia a century ago, who said that there are decades where nothing happens and weeks where decades happen. And I just feel right now, technologically, that that's where we're at with AI, quantum computing and all the stuff that's going on. What? What's your view?

Jayesh: Technology is changing at a pace like never before. We look at the shelf life of our software or what we release. A few years ago, you'd buy a system, keep it for 8 to10 years and accounting allows you to amortize it for seven years. If you tell me I'm going to keep this system for seven years, as I would be very surprised if it's effective seven years from now.

Systems and operating models are changing. Everyone's moving to more operational capital, rather than capital investment. The idea is to have more subscription and more consumption-based models, which I think allows you to switch out different capabilities.

There is a general change in the way companies are built and run. Companies are pivoting to be more consumption based, that allows them consumers to switch more easily, and it allows technology to move faster.

I also think, with AI capabilities beginning to mature, that some of the stuff we did with traditional coding is no longer effective. We have a bunch of young students we've brought in, from top colleges around the world, and we give them tough problems, and they solve them in a few weeks, and their solutions are decent. I can tell you that, five years ago, if I give my amazing software engineers these problems, it is at least a six-month project with five engineers staffed on it, and it only works in around 60% of the cases.

So, things are moving quickly and it's going to change the nature of the industry.

I'm one of those optimistic people and believe AI is going to help us serve customers better. For years we've talked about, I'm sure you've heard it, the segment of one. How can I serve my customer better? It's just not been possible. That's the reality of it.

Yet everyone has similar banking needs, and then they have specific situations. I think we've been very good to address similar banking needs. I think AI helps us address specific situations better and so we are very excited by AI. We are also a little worried that the pace of change is very quick, because we have to keep up every day. But that's going to change a lot.

The result is that it will change existing organisations and bring the emergence of new organisations that are structured and built differently. The thing is that technology will mean their proposition is so strong for the customer that it's hard to compete. It's an opportunity as well as a threat.

Chris: I just did a webinar yesterday around the third revolution in FinTech, and saying that the first was the back office with the mainframe automation of mundane processes, and the second was the digital revolution through cloud and smartphone to build a new customer experience connection. And now we're in this intelligence revolution, which I think is a fundamental change to the whole industry. It's not just an add-on or a new development. It's revolutionary.

Jayesh: I fully agree with you. I think Chris, most people haven't understood exactly what you just said and the impact of it. It's not just one more thing you do. It really is going to redefine how you operate. Many companies haven't realized this.

Chris: Regarding your plans for the future, looking to expand into Saudi Arabia and Qatar and other countries?

Jayesh: So look, we will. We'd love to expand regionally and globally. I think one of the advantages of a digital platform is that you can scale, and I think many of the new banks like Revolut have shown this.

But, right now, we see so much opportunity in the UAE.

We're serving individuals. We're doing wealth. We're doing we're doing SME banking. We want to go deeper into payments. We see a lot of opportunity to broaden in the UAE and then, as opportunities come by, we will look at expansion.

Banking is a lot more complicated when it comes to crossing borders, and we still have a lot to gain in our market. We're a small team. We've grown, but we are still a small team. We want to be super focused right now, and then eventually we will expand.

Chris: It’s funny because I didn't see that much innovation in other GCC countries compared to the UAE, but now everywhere is catching up. Saudi Arabia is a particular hotbed of innovation. So, there is a kind of race for the chase across the region.

Jayesh: If you look at us relative to banks in the region and globally, we achieved profitability in the first year of operation. We have 400,000 customers. Our strategy is incredibly focused. We focus on customers with $10,000 and above value. We want to build longer term wealth.

My team jokes around longevity and, right now, we are building longevity for financial services. We want to build help for our customers. We've launched family banking, which we are incredibly proud of, which allows you to bring your spouse and the kids onto one platform to manage how you're spending money. It's one app, and you give out the rights, like social media for what to see.

We want to make our customers achieve more of their financial goals. More of their life goals and the financial needs we can support them in that, so we're very excited about some of these products and building those out. That’s where our focus is.

We are the biggest digital bank regionally on revenues and profitability. NPS is around 76 right now. We serve customers well, although we do have room to improve. We have customers who we let down on an almost everyday basis, and we need to focus upon solving that.

In fact, that's one of the biggest areas we are focusing on, as we scale, is to make sure we don't let our customers down and this is where we are seeing AI do a lot of really cool stuff for us.

This is one of the other differences between traditional platforms and more digital platforms. The obsession with serving the customer and the customer experience remains the same regardless of the stage of growth, and I speak to founders of some of the biggest digital platforms, and I see it from them. The obsession remains. How can I do the best for my customer? It's difficult to stay on the path, but it's absolutely necessary.

Chris: Final question. In 2036, what do you think things will look like?

Well first, I think about the AI topic. I think the fundamental banking experience will be changed. I see a more interactive, customized experience. I think the app disappears when I talk to my AI, whichever one it is.

People now have their own AI. It knows me. It knows my behaviours. It knows what's important. It shows me content in a manner I understand and that is relevant to me. It not just helps me understand decisions to make, but it takes the decisions and actions.

This is what I see from a proposition perspective.

Sometimes we can't serve the finest niches because we don't have enough data. I think this problem gets addressed, and we can go smaller and smaller in addressing whether it's credit or any other area where we have a lot more customization. This means that the ability to serve customers increases significantly.

For Wio, hopefully, we are operating in multiple countries. We are multiple verticals of businesses that we own across financial services, and we have customers who say “I'm happy I'm with Wio” because Wio helped me manage my money better. That's what I see,

Chris: Oh, and why is the bank called Wio?

Jayesh: It's a name that was picked out by an AI based on a bunch of criteria we put. So, our bank’s name was generated five years ago by an algorithm based on key criteria of affinity, trust, easy, simple and to do everything digital. This is what it's all about.