Louis A. Scotto

'In technology the UAE, Kuwait, Bahrain and Saudi Arabia tend to be early adopters, and I don't think that is a trend that is likely to change,' he says.

'Having smaller markets is actually an advantage in implementing new technology, and allows you to establish a base that you can use to cost effectively enter other markets if legal restrictions allow it.'

This is how Mr. Scotto sees the Gulf retail banking sector developing. Individual national banks will gradually regionalize their operations by using their home base as an infrastructure hub for technology from which to diversify into other regional markets.

His own bank established its first branch in Saudi Arabia last August on this principle, and he hopes to open one or two more branches in the Kingdom this year.

'We have taken our Al Shaheen offering into Saudi Arabia which targets the upper market segment. We don't aim to be a mass market bank competing with the local giants. It is a niche operation but we have been pleasantly surprised by the number of Saudis who want a bank with branches in both the UAE and the Kingdom.'

At the same time Emirates Bank International is also applying for a license in Kuwait but Mr. Scotto refuses to elaborate on his plans. 'We will have to see where the opportunities lie,' he says. 'We need to find where the white space sits and put a strategy together'.

Meanwhile, the National Bank of Kuwait has made no secret of its intentions to enter the UAE, and Mr. Scotto says he will be very interested to see what the NBK has in mind for the UAE. NBK has also opened in Qatar and is preparing to enter Saudi Arabia.

However, what does not appear very likely is a series of grand banking mergers to consolidate the GCC banking sector.

'It just does not seem practical to think of a Kuwait bank taking over part of the UAE banking scene, for example,' notes Mr. Scotto who spent seven years with NBK earlier in his career. 'On the other hand, we have seen a few mergers in Saudi Arabia in recent years, and that sort of activity might be seen again.'

From the product perspective Mr. Scotto is keeping a careful eye on the nascent mortgage market in the UAE and possibilities elsewhere in the GCC.

'But we have got to have a framework of law that gives lenders the right comfort level,' he says. 'Will banks be able to reclaim a primary residence if belongs to a national or an expatriate? Experience in the region suggests not, but we really need to know before we can start lending. We want to see mortgage laws and legal titles before entering this business.'

Technology will also define new product areas. Mr. Scotto can envisage the use of meMILES to buy goods at an electronic point-of-sale in the not too distant future, and the possibility of combining functionality on smart cards. He also reveals that he is looking at mobile phone payment technology to complement his existing mobile phone banking services.

It certainly looks as though Emirates Bank International's meBANK will continue to be a market leader in the UAE, and spread into other Gulf countries, and will lever its technology to advantage. But a steady cross-fertilization of the sector is far more likely than a big shake up.