E-banking comes of age

Things happen fast on the Net, even in the normally staid world of Gulf banking. For as delegates to IIR Holding's excellent e-Bank 2001 conference in Dubai this week discovered, suddenly everyone is banking on the Internet.

In the past year local banks such as the National Bank of Abu Dhabi, Burgan Bank and most recently MashreqBank have all crossed the virtual rubicon and launched e-banking services. This experience has brought a number of lessons, with reality not always living up to expectations in the virtual world.

'We expected more European users, but our online customers emerged from a wide spectrum of nationalities,' said NBAD product manager Jocelyn Teoh. 'In eight months we have put around five per cent of our customers online and attracted 1,150 new clients.

'This was more new customers than we expected, and we had far less people worried about security. It seemed that they trusted the National Bank of Abu Dhabi and that was enough. Again, against expectations our most popular service is third party bill payments'.

MashreqBank senior vice president Steven A Pinto only launched his bank's Net offering in the first week of May and mobile phone banking went online in July. And he was quick to point out at E-bank that being a latecomer had the advantage of installation costs around one-tenth of that of the first movers in the market.

But some substantial local banks in the Gulf have yet to move online, such as the National Bank of Bahrain and the Commercial Bank of Dubai which announced its plans this week. It seems inevitable that most larger local banks will go online. For, as several consultants noted at E-bank, the competitive disadvantage of being online means that they can not afford to ignore the Internet.

Indeed, banks are now having to work on ways of differentiating their product. One way to attract regular users is to include the financial news on a bank website, and Forrester Research in the United States found that this is the fourth most frequent reason why people visit a bank's website. In this region AMEInfo.com is one of the few content providers with a specialist package for bank websites, and several large banks are currently negotiating licencing deals.

Perhaps consultant Peter G Wray was right in asserting that all business is rapidly becoming e-business and we soon will not be able to separate out what is 'e' from everything else. He also offered a doomsday prediction for Gulf banks that fail to adopt Internet technology, and predicted shot gun weddings for the smaller banks unable to offer their customers this service, so necessary will e-services become to banking.

Meanwhile, this is clearly a market wide open for the industry experts such as Midas-Kapiti whose bold grasp of the technical problems involved in implementing e-banking solutions impressed the delegates of E-bank 2001. And it may well be that local banks decide not to abandon their future to the likes of Credit Suisse, Citibank, National Bank of Kuwait, Saudi American Bank and Emirates International, and call in the experts.

For the time being e-banking remains at the cutting edge of retail and corporate banking services in the region, and banks are increasingly defined by the excellence, or otherwise, of their Internet banking services.

And, for the record, Credit Suisse, Citibank, National Bank of Kuwait, Saudi American Bank and Emirates International do lead the field, with the National Bank of Abu Dhabi now joining their ranks.