Saudi Arabian banks race to offer services online
Kingdom's banks fear that they will lose high value customers if they do not offer Internet banking services.
Saudi Arabian banks are racing to take their services online. Capital Intelligence, a respected banking industry analyst firm, says that most banks in Saudi Arabia have announced plans to offer Internet banking by the end of the year or early next.
The race is being driven, according to Saudi banks, by a fear that institutions without online banking services will lose customers to those that do.
“We see it as a trend in the industry. We decided to introduce it as if we didn’t, others would and maybe take our customers,” Abdulrazzaq al-Saleh, Internet banking manager at Arab National Bank, said in a Reuters report.
Saudi banks not only fear domestic competition, but also international online banks targeting customers in the Kingdom.
Internet banking has failed to take-off in most GCC countries because the potential volume of online customers is limited either by low Internet penetration or by small populations.
This has caused most banks to shy-away from the high upfront investment required to offer online services.
Saudi Arabia, however, has the potential for a large and wealthy community of online customers if Internet penetration increases.
“We expect to see more and more people banking online as the infrastructure improves in the Kingdom,” said Saleh.
Before Internet banking takes-off, legislation for online transactions will have to be strengthened, according to Hamad Saud Al Sayyari, governor of the Saudi Central Bank.
“We are looking carefully at the risks associated with Internet banking and we are making sure we have the legal aspects in place and that the risks for both banks and customers are adequately dealt with,” he told Reuters earlier this year.