Meem, Bahrain-based Gulf International Bank (GIB)'s first customer-designed sharia-compliant retail bank in Saudi Arabia, launched earlier this week, has its origin in the concept of ‘co-creation.’

The bank said it engaged with a large group of target customers, called ‘meemers,’ using various social media channels, which not only helped shape the business model but also the services and products on offer, as well as the brand identity and values.

GIB said the co-creation experience was a first of its kind in the banking sector regionally, reported the Gulf Daily News (GDN), our sister publication.

According to the bank's head of retail banking Sakhr Almulhem, Meem's unique value proposition of online and mobile banking gives its customers the freedom and convenience of carrying out all services electronically.

"The name is a reflection of our core values of innovation, simplicity, boldness and transparency," he said.

Meem's non-traditional banking services include "the One-Pack" account which combines the benefits of both current and savings accounts, online flexible term (Murabaha) deposits and multi-currency debit cards.

Customers have been offered a broad range of channels through which they can open and manage accounts.

They can use e-banking, contact centre or stores and digital communication channels such as e-mail, web chat and social media such as Twitter.

Stores have been opened in Riyadh, Jeddah and Dhahran that enable customers to open accounts and receive debit cards immediately as well as withdraw and deposit cash, make transfers and do their own account maintenance, he said.

The bank also has nine ‘Nano stores’ across malls in Jeddah, Dhahran and Riyadh.

During the year, Meem will launch a range of personal finance products and a credit card.

Among the products being introduced is a term financing product, available only to existing One-Pack customers, based on the Tawarruq structure.

Customers of the product will get a lump sum amount repayable in equal monthly repayments (principal amount plus profit) over the duration of the contract (which can be up to 60 months), the bank said.

The commodity currently used by Meem for its murabaha transactions is cement.

According to Dubai-based Nirvana Wealth Management's Islamic finance expert Mohammed Lenda, murabaha is an Islamic financing structure, where an intermediary buys an asset.

"The intermediary and prospective buyer then agree upon a sale price (including an agreed upon profit for the intermediary) that can be made through a series of instalments, or as a lump sum payment," he said.

Lenda said Tawarruq is a financial instrument in which a buyer purchases a commodity from a seller on a deferred payment basis, and the buyer sells the same commodity to a third party on a spot payment basis - meaning that payment is made on the spot.

The buyer basically borrows the cash needed to make the initial purchase.

Later, when he secures the cash from the second transaction, the buyer pays the original seller the instalment or lump sum payment he owes (which is cost plus markup, or murabaha), he added.

More than 200 Meem customers attended the launch event in Al Khobar.

GIB chief executive Yahya Alyahya said at the event that the launch of the retail banking service capitalises on the immense potential in the GCC, focusing on an audience that values and relies on technology for the benefit it offers - convenience and simplicity.

"Our retail proposition is built on technological innovation and harnesses the advantage to provide a unique customer experience.

"Our aim is to provide clear and simple products and professional services to customers in Saudi Arabia and eventually across the GCC," he added.

Nirvana's chief analyst Varun Sutholiya said Meem can best be described as a direct bank without a branch network that offers its services remotely via online banking and mobile banking.

"It may also provide access via ATMs, often through interbank network alliances.

"By eliminating the costs associated with bank branches, direct banks can make significant savings, which they may pass on to clients via higher interest rates or lower service charges," he added. - TradeArabia News Service