Areeba was conceived a couple of years ago as a carve-out of Lebanon's largest bank. Our mother company, M1 Group, approached Lebanon's largest bank with the idea to carve out the card payment and electronic services department of the bank into an independent entity that we have acquired, and I became the CEO of that entity. Today, Areeba is the largest issuer and the largest acquirer in Lebanon with an issuing presence in Egypt, Jordan and Iraq. Since we are both an issuer and acquirer, we have two different sets of customers. So on the issuing side, our customers are the banks, and the challenge over there is to be able to come up with a product development process that is quick, efficient, and able to roll out quickly into the market. On the acquiring side, our main customers are the merchants, but also the main challenge is the culture that we need to change, both from the merchant perspective, for them to realize that going cashless has a lot of benefits versus cash. So that's the main challenge. But also it's the culture of the country, for people to be able to use cards rather than use cash.
The issuing side of the business is a scale matter, where it's about the cost efficiency that you are able to extract from that business, so the immediate impact for the bank is cost savings. The second immediate impact is the ability to invest in a lot of research and development and coming up with new products. So for the last two years what we have done is to rationalize the portfolio for Bank Audi, in Lebanon, but we have also done a lot to improve the products that are in circulation at the moment. We are also in the process of launching new products, an ultra-high net worth product to be targeted to the top-tier customers, either the top depositors or the top spenders. And that has its own set of benefits with...it’s going to be quite a special product with a number of differentiated benefits. And that’s something that we as Areeba have built, negotiated with the schemes, negotiated with the card manufacturers, negotiated with the different benefits to add on to that and we were able to do that and we hope to launch that in June of this year.
The Areeba team could take credit for creating the best issuing portfolio in Lebanon. And that team is now part of Areeba. But the main challenge now is to change the mindset of the team to become much more customer-centric, because they were used to serving themselves, now they need to act as a service provider. And for us to do that, we embarked on a journey, as we heard this morning in one of the presentations, introducing the agile framework into the company and starting to work in an agile manner internally. We’ve invested a lot in recruiting software developers internally, we’ve invested in an innovations center, or ”garage”, we are now starting to develop our own products, one of the ideas right now is that we develop our own product from A to Z that we will eventually market to banks as a white labelling solution for them. And we are calling this product a parent-child product. So it’s really targeting the 10-18 year old section of the market, when the parent wants to control his or her child, his spending, and maybe controlling the process of setting allowances, etcetera. And the child wants to be able to use electronic forms of payments, because children want to buy on iTunes, they want to buy credit on their favorite game. It’s interesting, because they are going to able to tap into a segment that for them, it’s brand recognition at an early age. And normally, if a child is introduced to Bank A at an early age, then most likely, they will remain with Bank A for a really long time.
The WAY4 system has been installed on our premises since 2011, so since before the carve-out. And today it is the key, or the core system that enables us to do everything that we do today. We rely on WAY4 to support us in our new initiatives, going forward. So far we have had an amazing experience with the team. It’s a true partnership that we appreciate and cherish, and we are looking forward to a lot of amazing initiatives in the years to come.
Our expansion is twofold: one is geographic, expansion into the region, we are in the process of expanding into Iraq. We have applied for a local license as an acquirer, issuer and processor. We are also setting up a physical presence in Egypt. These are the two regions where there is enormous potential and a lot of promise in the future. They have a big demographic, they are a market that is cash-dominated today. And governments in both entities are doing a push towards electronic payments. So that’s on one level, geographic expansion. On the second level is product expansion. We would like to be involved in electronic transactions in general. Not in just the area of plastic cards, but in the area of bill payments, electronic voucher sales, to be able to introduce mobile wallets, and move into electronic forms of payments beyond the form of a plastic card.