A comprehensive study of e-banking in the Arab Middle East, published this week by Pyramid Research, reveals that 14 percent of Internet users in Arab countries where the service is available, are registered to bank online. The equivalent number in the US is 17 percent. However, such growing demand for online services seems to have cought the region’s banking sector wholly unprepared, asserts Pyramid Research.
With only 18 of the region's top 100 banks currently offering online transaction initiation services, most local players prefer to remain seated on the sidelines, waiting to see whether the experiment proves worthwhile. Until then, they either operate informational web sites or lack web presence altogether.
Regional Internet penetration figures are constantly on the rise, and as most Arab countries join the WTO, competition from multinational banks is drawing closer. However, srangely enough, most local banks still prefer sticking to their traditional ways. The Pyramid survey results should encourage more of them to jump into the waters.
Those banks already offering online services, target not only the techno-savvy young generation of the Middle East, but also the affluent Arab diaspora in the US, Europe and Latin America and European expatriates, who find in e-banking a convenient means of transferring money to accounts in Europe.
The issue of e-banking brings the tension between old world business models and new world technologies into the spotlight. The Pyramid survey shows that most of the region’s e-banking users are young people, keeping track of their personal checking and savings accounts. This figure accounts for the banks’ current focus on retail clientele.
Because most business owners and managers in the region are middle aged or older and tend to be more technology shy, e-banking registration among corporates is significantly lower than the overall average, explains Joseph Braude, Middle East analyst at Pyramid Research.
Several Arab banks, however, are soon expected to unroll corporate online services. Increased revenues, due to rising oil prices, make them more inclined these days to invest in upgrading their IT infrastructure.
This will provide a golden opportunity for technology companies worldwide to win contracts, helping banks plan their IT overhaul strategies as well as catching up on standard e-banking services—transaction initiation, fund transfer and bill payment. — (Albawaba-MEBG)
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