MidEast banks need mindset change to ride e-banking wave

Middle East banks need a complete change of mindset if they are to seize e-banking opportunities, says Hassan Abdou, chief investment officer of Cairo-based EFG-Hermes Private Equity

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By  Massoud Derhally Published  March 24, 2002

Middle East banks need a complete change of mindset if they are to seize e-banking opportunities, says Hassan Abdou, chief investment officer of Cairo-based EFG-Hermes Private Equity, a full service investment bank managing assets in excess of US $200 million.

Abdou, who is also the Fund Manager of EFG-Hermes's flagship, the Horus Private Equity Fund, was speaking in advance of his appearance at next month's (April) Arab Banking Technology Exhibition and Conference (ABTEC), where he will outline the 'Egyptian experience' on e-banking technology.

"There are several challenges unique to the region's e-banking sector. Just getting customers on-line is a major challenge in its self. Then engendering an environment of trust and allaying the fears people have regarding Internet security and convincing them to conduct transactions over the net is a difficult process," said Abdou.

Abdou cites the Egyptian experience when highlighting the unique challenges that face the Middle East. "Getting consumers accustomed to using credit cards is a vital step. This requires a credit rating agency to conduct the required level of risk assessment analysis, something, which does not exist in Egypt presently," said Abdou.

He added that the 'back offices' of banking institutions need to be e-enabled. "A difficult process when many large banks in Egypt are state-owned with poor, and sometimes, non-existent I.T. infrastructure," he said.

"To change this calls for a complete switch of mindset. In some instances a drastic remodelling of a bank's modus operandi will be required. Banks will need to use open networks on open platforms with other banks and merchants. These banks will not be able to own the process from end-to-end, and this in itself requires a change in philosophy,” said Abdou, who will address delegates on the third day of ABTEC 2002, which takes place at the Jumeirah Beach Conference Centre from April 22-24.

And Abdou warned that total regional transition to e-banking could be some way off yet with some banking laggards losing market ground. "There is no doubt that some regional banks have been incredibly quick in their acceptance of emerging technology, and its subsequent implementation into their service offerings to customers, but on the whole the regional transition to e-banking will be a slow process. One by one banks will come on-line or face the prospect of serious loss in market share.

"The Middle East banking industry's late arrival on the e-banking scene gives it the luxury of being able to learn from the mistakes of others. We know what works and what doesn't meaning we can get it right first time around," said Abdou.

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