annual report - The Shared Electronic Banking Services Company

ANNUAL REPORT
2013
The Shared Electronics Banking Services Company
‫‏‬Annual Report for the financial year ended
October 31, 2013
Our Vision
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To be the leaders in providing electronic payment services
To provide the best solutions for daily payment requirements
for persons, companies and the government sector
To contribute to reducing paper money in daily transactions.
Our Mission
Providing innovative electronic payment methods all over State
of Kuwait to reduce reliance on paper money in daily transactions
among different sectors of the society.
How?
• Providing innovative payment methods that meet the
requirements of different sectors.
• Developing new payment methods that penetrate the
traditional paper money market.
Our Values
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Commitment towards clients: Developing the relations in such
a manner that fulfills clients’ and beneficiaries’ requirements
equally.
Excellence: Providing distinctive and unprecedented payment
methods that create an added value to our clients.
Credibility: We adhere to the highest level of credibility in all
our decisions.
Team spirit: We work together to fulfill beneficiaries’
requirements and help Knet materialize its objectives.
Respecting others: We appreciate our staff and always strive to
motivate them and encourage their performance.
Social Commitment: We are committed to develop and realize
the best payment methods for State of Kuwait.
Creativity: We diligently strive to attain precedence in the
local market and the region in relation to developing payment
methods and keeping pace with the constant changes in such
systems.
Accountability: Every person in our Company is personally
accountable for fulfilling all internal or external commitments.
During 2013, Knet has continued to realize distinctive performance and effective presence in
the Kuwaiti market until it became the leading electronic payment services provided to banks
and all governmental and private sectors in a short period. This has been realized through
the Company’s commitment to working pursuant to a well defined strategy for the future,
focusing on its core activities and opening new vistas for electronic services that advance
electronic services provided to the financial and banking sector in the State of Kuwait and
the region.
The year 2013 was distinguished with several accomplishments and successes on the level of
services provided by Knet and through the Company’s reaching record figures successively
from one year to another. The Company has processed around 145 million electronic payment
transactions representing approximately KD 10.7 billion through different electronic payment
channels (POS, ATM, Internet and other). In addition, this year was marked with the Company’s
processing transactions amounting to Kuwaiti Dinar one billion during one month.
Knet in lines …
The Shared Electronics Banking Services Company
“Knet” was established since more than twenty years
ago as a national Kuwaiti institution operating in
compliance with the provisions of Islamic Sharia, and
striving to realize strategic partnership among Kuwaiti
banks in the field of shared electronic banking services,
and providing electronic services to clients of these
banks across all levels.
Noteworthy, Warba Bank has joined Knet member banks list so that total member banks
amounts to 11 Kuwaiti bank as follows:
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•
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Since its establishment, Knet has been committed to
optimizing its role in the field of providing a package
of electronic services throughout different electronic
payment channels for all of its clients. The outcome
of such commitment is that the Company provides
the best technological means and exploits most upto-date systems it has for serving the banking sector
and their clients by rendering distinctive and highly
sufficient and effective services.
Al Ahli Bank of Kuwait
Al Ahli United Bank
Bank of Bahrain and Kuwait
Burgan Bank
Boubyan Bank
Commercial Bank of Kuwait
Kuwait Finance House
Gulf Bank
Kuwait International Bank
National Bank of Kuwait
Warba Bank
14
12
10
8
6
4
2
-
1,200
1,000
Million KWD
800
600
400
200
Number of transactions
Transactions' amount (KD)
Million transactions
The Shared Electronic Banking Services Company - Knet Transaction on 2013
This report outlines the most important developments
accomplished by the Company during the financial year ended
October 31, 2013.
Contents
Points of Sale (POS)
8
Automatic Teller Machines (ATMs)
10
GCC Net
11
Cheque Printing Service
11
Payment Gateway
12
E-Government Electronic Payment Project (Tasdeed)
13
Non-member banks
15
Key projects accomplished during 2013
15
Company’s Plan for 2014
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The Shared Electronics Banking Services Company
‫‏‬Annual Report for the financial year endedOctober 31, 2013
Points of Sale (POS)
The point of sale service is one of the prominent services Knet provides to merchants, companies and
governmental entities in the State of Kuwait. It is also one of the primary services which the Company strives
always to develop and optimize through available state-of-the-art technologies. Knet continues its efforts in
applying the most up-to-date technology in this field, in addition to its commitment to introduce modern POS
devices on the international level in the Kuwaiti market for purpose of serving clients by the best and up to
date means.
• Record figures for POS service in 2013:
In October this year, Knet has attained a new record number of transactions executed on POS terminals
where the number of transactions reached 8.1 million transactions, thus exceeding the record number
of last year that amounted to 7 million transactions. Through this new record number, approximately KD
494 million was traded. Noteworthy, the daily transactions level has risen to a maximum in September
2013 where the limit of daily transactions on the twenty eighth of September 2013 has reached 355,134
transactions. Moreover, the number of transactions per hour has reached a maximum of 39,678 thousand
transactions on August 5, 2013 at 10:00 pm.
Today, Knet provides several POS terminals with different available connection means. In this respect, the
Company has fixed 4,339 new terminals during this year, thus the number of operating terminals has risen
to 33,493 till the end of October 2013 with a rise of 14.9% compared to last year. The number of point of
sale terminals using GPRS (mobile) technology has reached 28,434 terminals which constitutes 85% of
total terminals in the market. Furthermore, the number of terminals using WIFI technology amounts to 178
terminals, in addition to 1057 terminals working with IP technology (local network) and 53 IPOS (Integrated
points of sale).
POS Transactions for 2013
550
8
450
7
400
7
350
300
6
Total amounts of POS Transactions (KD)
The points of sale service provided by Knet is characterized with acceptance of all local cards (Knet cards)
and international cards (such as Visa, MasterCard, American Express and Diners Club cards) as this service is
rendered to approximately 3.5 million cards in Kuwait. The percentage of transactions made using Knet cards
of local banks approximated 88% of total points of sale transactions, and 12% of these transactions pertain to
other credit cards.
9
8
500
Million KWD
From another side, the volume of transactions accomplished through points of sale terminals amounted to
87.91 million transactions during the year ended on October 31, 2013, 18% higher than last year. In addition,
the value of processed transactions amounted to KD 5.634 billion.
600
Million POS Transactions
During 2013, the Company’s operating performance was excellent on the level of all services provided to the
banking sector which we highlight as follows:
Number of POS Transactions
The rally of sales’ volume in different types of stores, and the significant diversification in consumers and
merchants’ behavior in daily purchases and sales, in addition to the growing awareness of elements of
convenience, safety and flexibility provided by upto date payment methods which the Company offers, all
highlight the outgrowth of the diligent efforts exerted by the Company’s Management and the distinctive
cooperation with member banks during last year in order to enhance the services and improve performance
efficiency; which was positively reflected on developing and diversifying points of sale services. This has
led to an unprecedented spread of points of sale in such a manner that made Knet card a monetary tool
used by most consumers in their daily usual purchases, including payment of dues or financial obligations
in government bodies as well.
• New and innovative services:
Noteworthy, this year has witnessed continuous working on developing approaches of using available
terminals by means of devising additional connection methods for GPRS terminals through providing a
wider coverage scope so that such terminals can be used everywhere in the country due to the relative
importance of such terminals in the Kuwaiti market as they constitute 85% of total number of terminals
launched in the market.
In line with market requirements, and to provide the best of modern technology, Knet has added other
new types of POS during 2013 in the market. A new terminal that is deemed the first of its type has been
introduced to the Kuwaiti market. The terminal is characterized with a wide color touch screen, in addition
to All in One terminal. Furthermore, a new system has been provided through which synchronization can
be made with the merchant’s system IPOS which is the most common systems used in European countries.
This system serves several commercial and governmental sectors.
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The Shared Electronics Banking Services Company
‫‏‬Annual Report for the financial year endedOctober 31, 2013
Automated Teller Machines (ATMs)
The most prominent features of propagation which Knet strives to attain is
availability of ATMs in public places such as malls, cooperative societies, government
entities , hospitals, universities and other places. The number of ATMs operated by
the Company are 515 ATMs approximately.
Knet strives always to maintain the level of this service and the accuracy of
development in its various activities in this field. whereas, the Company continuously
updates and develops its devices and software, provides upto date and advanced
ATMs equipped with high technologies. The major services the Company provides
through its ATMs is cash withdrawal service in Kuwaiti Dinar, balance inquiry service
and credit cards cash withdrawal supporting different international brands such as
Visa, MasterCard, American Express and other several automated banking services.
GCC Net
In line with its strategy aiming at transforming from a specialized company working
as an operator to a company providing several banking services, and driven by its
wish to develop the services provided to member banks, new types of automated
banking services have been devised including providing integrated services of ATM
Driving. This service has been expanded, and currently includes 4 banks ; which was
reflected positively on those banks as well as Knet.
Knet plays a distinctive role in connecting local banks network on the one hand, and connecting these banks
to the GCCNet on the other hand. On the level of continuous development of this service, Knet has participated
in several meetings in the premises of the Secretariat of GCC countries in Riyadh to explore and discuss means
of developing and improving the services, as well as to discuss several issues and solutions pertinent to
the GCCNet such as the GCC claim system, and the telecommunications network available among member
countries.
In order to cope with market requirements and to provide distinctive services
that harmonize with those services provided by banks to their clients, Knet has
introduced additional services to ATMs such as:
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In this respect, several banking services are provided, such as cash withdrawal and balance inquiry through
connecting ATMs of member banks in GCC countries. During the year ended on October 31, 2013, more than
1.73 million cash withdrawal transactions have been accomplished totaling over KD 172.7 million at an increase
of 4.4%.
Cash deposit
Transfer among accounts
PIN Change
Mini statement of account
The number of transactions processed on ATMs in the financial year 2013 approximated 49 million transactions.
Total value of withdrawn amounts approximated KD 4.759 billions.
4,000
3,500
3,000
2,500
2,000
1,500
1,000
500
Total amounts of ATM transactions (KD)
10
Cheque Book Printing Service
4,500
500
450
400
350
300
250
200
150
100
50
-
Thousand transactions
Million KWD
Cash withdrawal transactions on ATMs for 2013
Cheque Book printing is one of the distinctive services which Knet continues to provide to local bank with
unrivalled success. Based on the Company’s belief in continuous striving to maintain the service quality
and to be prepared for the expansion of the service to a wider spectrum of consumers, Knet has developed
cheque book printing systems to state-of-the-art technologies. Moreover, the Company has strived to excel by
upgrading the production operations including printing and binding.
During the financial year ended on October 31, 2013, Knet has produced 123,507 cheque books of which 32%
were personal cheque books and 68% were commercial cheque books.
Number of ATM transactions
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The Shared Electronics Banking Services Company
‫‏‬Annual Report for the financial year endedOctober 31, 2013
Payment gateway transactions are considered as one of the most prominent features of e-commerce in general
and in the State of Kuwait in particular. Knet provides online payment service through its online payment
gateway. In 2004, Knet has launched payment gateway as a new channel that allows entities (governmental or
private) to collect charges against their goods or services through the Internet.
This service has been maintaining its success in terms of the number of companies and entities with which
connections have been made through the Internet, and whose number reached 475 electronic entities until
October 31, 2013 with an increase of 26% compared to the previous period. This success highlighted by the
number of transactions executed during the year ended on October 31, 2013 which amounted to 7.68 million
transactions with a rise of 42.2% compared to the previous period. Moreover, the financial value of these
transactions has amounted to KD 287 million with a rise of 33.5% compared to the previous period.
Payment gateway accepts all debit cards (Knet cards) issued by all banks in the State of Kuwait to serve
the clients and merchants of those banks. Payment gateway service is provided through the Internet to all
governmental and private sector entities through several ways such as:
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1. PCs
2. Smart phones of all types
3. Tablets of all types
1. Governmental entities: payment of charges and bills of
governmental services such as electricity and water, traffic fines,
Ministry of Finance subscriptions, lawsuit charges in Ministry
of Justice, Ministry of Communications bills and other several
governmental services that exceed 60 e- government payment
services.
2. Private sector: this service is provided for payment of bills and
purchasing transactions of companies and merchants in the
private sector; such as the following:
• Telecommunication companies: through payment of
mobile top-up and postpaid charges.
• Airlines, tourism and travel companies.
• Small enterprises: Knet supports these projects by
facilitating the payment gateway for those merchants,
in addition to assisting such merchants in adapting their
websites to accept online payment.
• Service companies of different types.
• Retail companies: by selling commodities through the
websites of such companies or those merchants, and paying
electronically through Knet payment gateway.
800
30
700
25
600
500
20
Million KWD
Knet’s payment gateway provides online payment services to several
entities in the State of Kuwait such as:
Online Electronic payment transactions for 2013
400
15
300
10
200
5
100
-
Total amounts of online
Payment transactions (KD)
Thousand transaction
Payment Gateway
Number of online
Payment transactions
During this year, Knet payment gateway ranked first in Kuwait’s award of Kuwait Foundation for Advancement
of Science , and the Company was honored by receiving such award on June 5, 2013 by His Highness the Amir
of the State of Kuwait,
Knet applies the latest information and e-commerce technology on its payment gateway. In addition, the
Company strives to apply upto date safety and security technology on this gateway to protect all users against
hacking or other issues. In this respect, Knet received international certificates such as PCI and EMV.
The primary goal of having a payment gateway for Knet is:
1. Facilitating e-commerce transactions in the State of Kuwait.
2. Connecting and integrating the governmental sector, private sector, users and banks to e-commerce
transactions in the State of Kuwait.
3. velocity, accuracy and security in processing electronic financial transactions with all entities (governmental
and private).
4. Serving national economy by providing a payment gateway that enhances using banking cards for
payment instead of traditional usage of money.
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The Shared Electronics Banking Services Company
‫‏‬Annual Report for the financial year endedOctober 31, 2013
E-Government Payment Project (Tasdeed)
Ecommerce is an integral part of the technological system that aims at facilitating daily financial and commercial
deals. The most prominent of those deals within this framework is the e-government program provided to
different governmental entities in the State of Kuwait due to the direct impact of such programs on natives
and expatriates’ dealings in the country. Therefore, facilitating payment transactions for the e-government
program will necessarily be reflected on the level of providing the service to those clients.
The governmental electronic payment program (Tasdeed) provided by Ministry of Finance in cooperation with
Knet and in coordination with the Central Agency for Information Technology is deemed one of the most
prominent features of e-government in the State of Kuwait and in the region as a whole. This program is an
electronic system that connects several ministries and governmental entities in the State of Kuwait (Ministry
of Finance, Ministry of Interior, Ministry of Health, Ministry of Social Affairs and Labor, and other entities) to
the banking sector through Knet for facilitating commercial and governmental transactions on the levels of
individuals as well as institutions , in addition to applying the best techniques of electronic payments in those
ministries and entities to support the e-government program on the one hand, and to facilitate the procedures
and transactions for visitors of the entities, on the other hand.
In this respect, Knet optimizes its role in the governmental electronic payment system by providing the
following electronic services:
Payment Gateway
POS
Integrated POS
M-Commerce payment
E-Stamp payment
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ATM payment
Accordingly, POS terminals have been installed in 24 governmental and independent entities in the year
ended October 31, 2013 distributed in service centers and different vital places in the country. Through these
POS, 700,000 transactions, at a growth rate of 97.7% compared to last year, valuing KD 142 million have been
executed, i.e. with an increase of 49.5% compared to last year.
Furthermore, Payment Gateway service was operated for Ministry of Finance, Ministry of Interior, Ministry of
Justice, Ministry of Telecommunications, Ministry of Electricity and Water, Ministry of Public Works and Public
Authority of Civil Information, Ministry of Social Affairs and Labor, Kuwait University and other entities in
collaboration with the Central Agency for Information Technology. Through this service, 276,000 transactions,
with an increase of 60.5% compared to last year, valuing KD 15.7 million have been processed; at a growth rate
of 57% compared to last year.
The year 2013 was characterized with Knet launching the E-stamp project in Ministries and different
governmental entities. The project was launched in April 21, 2013 and was tested preliminarily at four main
ministries i.e Ministry of Finance, Ministry of Health, Ministry of Interior and Ministry of Social Affairs and
Labor. After completion of pilot phase , Ministry of Finance has circulated the project to all ministries and
governmental entities to apply the E-stamp system which was applied in 17 ministries and governmental
entities . Implementation of this project in all governmental enetities is expected to be completed by the end
of 2013.
Knet has issued approximately 46,000 stamps this year totaling Kuwaiti Dinar 212,000 .
Governmental online payment transactions for 2013
Ministries and government departments
Affiliated and independent entities
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•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
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Ministry of Justice
Ministry of Interior
Ministry of Social Affairs and Labor
Ministry of Telecommunications
Ministry of Public Works
Ministry of Information
Ministry of Electricity and Water
Ministry of Awqaf and Islamic Affairs
Ministry of Commerce and Industry
Ministry of Health
Civil Service Commission
Ministry of Finance
Ministry of Defense
Ministry of Education
Ministry of Higher Education
Ministry of Foreign Affairs
•
•
•
•
•
Public Authority for Civil Information
Fire Department
Public Authority for Agriculture Affairs and
Fish Resources
Kuwait Municipality
Public Authority for Housing Welfare
Kuwait University
Public Authority for Applied Education and
Training
Council of Ministers Secretariat
Million KWD
Noteworthy, Knet has provided such electronic services to approximately 24 governmental entities, namely
the following:
18
16
14
12
10
8
6
4
2
-
160
140
120
100
80
60
40
20
Thousand transactions
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•
•
•
•
In fact, improving the government financial system and introducing an electronic government system that
aims at automating government payment systems through Knet was reflected on the increase in the volume
of transactions for this year as the number of government electronic payment transactions through Knet
amounted to 1.04 million transactions valuing KD 158.2 million.
Amounts of governmental
online payment transactions
Number of governmental
online payment transactions
Non-member banks
In continuation to the Company’s policy in providing support to non-member banks operating in the State of
Kuwait by providing its services to these banks and connecting them to Knet network, Knet currently provides
its services to all banks operating in the State of Kuwait.
Further, the Company shalll maintain this approach to attract all foreign banks operating in the State of Kuwait
in order to provide provide more services to the clients of these banks, and expanding the base of dealing
between the clients of these banks and the services offered by member banks through Knet.
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The Shared Electronics Banking Services Company
‫‏‬Annual Report for the financial year endedOctober 31, 2013
Key projects accomplished during 2013
In line with its strategy and plan for 2013, Knet has carried out several projects during this year, whereas these
projects were characterized with distinguished level of achievements and distinctive success. Among the
most prominent of these projects are the following:
1.
2.
3.
4.
5.
Implementing Corporate Governance in the Company.
Launching the new generation of POS terminals Project .
Integrated POS project project.
Government e-stamps project.
Developing the Network’s main servers in coordination with international companies to accommodate
the accelerated growth in operations and new services.
6. Commencing implementation of Phase I in updating the Network system project in cooperation with
international companies to comply with international requirements.
7. Applying and testing Disater Recovery plan 4 times during 2013 successfully.
8. Developing the infrastructure of networks in cooperation with local service providers.
companies, automated services companies and other companies. Moreover, Knet has connected the
banking sector to the government and the private sector.
In addition, the Company has and will launch other banking services that can enhance and increase
efficiency of the banking sector and member banks. These services include the following:
1.
Continuing provision of the service of managing and developing ATM on behalf of banks (ATM Driving)
as the Company has offered this service to several member banks. Through this service, the Company
accomplishes all development and operation works including cash replinshment, reconciliation,
settlements, monitoring ATMs and other works on behalf of the bank. The Company is currently
striving to expand the spectrum of this service so that it comprises all member banks. Furthermore,
the Company aims at providing this service to non-member banks as well. As a support of this object,
the Company will endeavor during next year to increase the number of banks to which this service
will be provided.
2.
Providing payment services through ATM terminals to member banks by connecting the government
sector including ministries and governmental entities, in addition to the private sector which includes
telecommunications and other companies to the banking sector through ATMs which will make it
easy for natives and expatriates to pay fees for the services provided from these sectors (such as
telephone, electricity and water bills, traffic fines and other charges) through ATM terminals of the
Company and member banks.
Major activities of the Company performed during 2013
2. Qualifying and equipping the Company to be able to provide services to member banks efficiently:
May 27, 2013
General Assembly of Knet approved Warba Bank›s joining its shareholders list.
June 5, 2013
His Highness the Amir of Kuwait, sponsored Kuwait Electronic Award
ceremony granted by Kuwait Foundation for the Advancement of Sciences,
and Knet ranked first in the field of e-commerce - the Company›s payment
gateway.
June 9, 2013
Knet participation in the National Conference on Electronic Legislations
July 5, 2013
Knet ceremony on occasion of winning the first position in Kuwait›s Award for
Advancement of Sciences, and for launching new POS terminals.
September 18, 2013
Knet participates as a golden sponsor in the ceremony honoring disabled
athletes.
October 31, 2013
Knet held its annual ceremony for the Company›s staff and their families
Company’s Plan for 2014
Since its establishment twenty one years ago, Knet worked as a shared platform for electronic banking, focusing
on its prmimary goal to provide shared electronic services among member banks as well as serving all banks
through the provision of technological support and added value to banks’ clients. Undoubtedly, the services
and products which Knet has developed and launched along its history have added real value to the primary
objective of the establishment of the Company; which is clear from maintaining the Company’s continuous
growth and strengthening its position in the Kuwaiti market.
In fact, the strength and solidity of the strategy that Knet applies, in addition to the Company’s policy in
developing the offered services and expanding its partners base, together with Knet’s striving to apply latest
information technology to improve operational environment and devise new channels in all fields and on all
levels, made the Company an example to follow in the region. The Company has focused on several points in
this respect, chief among which are the following:
1. Shifting from a company specialized as an operator to a multi banking services company:
Knet Company has expanded the spectrum of offered services to comprise several sectors in the Kuwaiti
market; among which is the government and the private sector which includes telecommunications
16
Knet is concerned with connecting automated banking transactions between member banks on one
hand, and banks in GCC countries on the other hand; which drives the Company to apply the means and
techniques that can provide the opportunity to offer these services with high efficiency and accuracy.
Among these means are the following:
1.
Continue in updating and developing the Company’s systems to ensure enhancing efficiency of
services provided to member banks.
2.
Continue in laying policies and procedures for the Company’s operational and administrative
processes.
3.
Continue in developing and training human resources within the Company for the purpose of
improving staff experience level and pushing them to keep pace with latest developments in the
Company’s field of business, in addition to updating and increasing flexibility in the job structure to
guarantee enhancing staff efficiency level to ensure providing distinctive service to member banks.
3. Building a strong relation with governmental entities:
Knet has adopted a set of policies and projects that can enhance relations with governmental entities to
ensure continuity of provided services. Among these projects and policies are the following:
1.
Continuing other phases of the E-stamp project after the success of this service during current year.
2.
The Company will increase electronic payment channels for government services to comprise ATMs.
3.
Increasing the number of government services provided through expansion in concluding secondary
contracts with different governmental entities for the purpose of increasing the number of these
entities ; thus increasing government services provided.
4. Developing work policies and procedures and existing ones to verify their efficiency:
In order to fulfill the principles of efficiency and effectiveness in providing electronic payment services for
member banks and other entities, Knet has carried out the following:
1.
Applying corporate governance principle in the Company to ensure undertaking operational and
administrative processes according to international standards.
2.
Developing work policies and procedures for administrative and operational processes in the
Company to ensure providing better service to member banks and different entities.
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The Shared Electronics Banking Services Company
‫‏‬Annual Report for the financial year endedOctober 31, 2013
3.
Conducting periodical review of these policies and procedures to ensure keeping pace with updates
and developments that the Company makes to these services and operational processes.
4.
Adapting these policies and procedures to all updates and developments that the Company performs
at all levels.
3. Company’s strategic Projects during 2014
Among the strategic projects that Knet shall apply during next year, which aims to developing the
Company and adapting the recent technologies pertinent to electronic payment are the following:
1.
Launching new types of POS.
2.
Expansion in additional services to the banks.
3.
Second phase of the E-stamps project in cooperation with Ministry of Finance.
4.
Bill payment project through ATMs.
In conclusion, and on occasion of the end of financial year 2013, we extend thanks and appreciation to the
Company’s Board of directors and employees for the distinctive efforts during this year, hoping that this will
continue to serve the banking sector and its clients.
Best regards,
Abdullah Khalid Al-Ajmi
General Manager
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Jasim Mohamed Safar
Chairman