Video and chips for GCC bankers

Opening the conference - whose title 'Channels' does not really tell you what it is about - was Louis A. Scotto, doyen of regional e-banking and founder of meBANK.

It is always hard to believe that meBANK can find yet another new product. But Mr. Scotto presented his new 'Bank on Wheels', a mobile ATM and Internet banking unit in the back of a lorry: Truly a case of taking the bank to the customer rather than expecting the customer to visit the bank.

Mr. Scotto explained how a deliberate strategy of charging mass market customers for formerly free banking services had forced them to switch to much cheaper e-banking channels that the bank offered for free. This had saved the bank money on staff and made this previously unprofitable market segment a profit centre.

Indeed, the clever application of e-banking technology to save costs was a theme of the conference.

Chris Skinner from the Tower Group told delegates to look out for radio frequency identification chips in everything, in particular allowing the mobile phone to become a payment device; and he saw video connectivity through broadband Internet and 3G phones as the next big challenge for banking.

He rightly warned delegates not to be skeptical and recalled how many thought the mobile phone would never take off in the late 1980s, while now it is a common domestic item. His presentation demonstrated how Apple was about to launch video conferencing as part of its standard software package, and noted that Microsoft is about to follow with its offering.

With a video interface with the customer, banks can get back to face-to-face dealing with the customer which is something that e-technology has lost, suggested Mr. Skinner.

From Standard Chartered Bank regional economist Daniel Hanna reviewed the last 'two fantastic years' for GGC banks thanks to low interest rates, high oil prices and repatriated or returned investment. He saw this scenario continuing but pointed to several factors that would weigh on the sector.

First, there was a 'possible' crunch in the real estate and personal loans market; secondly, increased competition within the sector both internally and from foreign banks attracted by high regional liquidity; and finally the competition from disintermediation, the issuing of bonds and shares in place of loans.

There was also a speech from the President of Visa International CEMEA, Anne L. Cobb who highlighted the macro-economic benefits of Visa card use at a presentation alongside the Chief Economist of the National Commercial Bank Dr. Said Al Shaikh.

Visa card use jumped by 39% in the year to end of September 2004, making the GCC one of the fastest growing areas for card use in the world. Mrs. Cobb pointed to a healthy side effect.

'When cardholders use their cards at a point of sale they are helping to keep money in the banking system - using cards at a point of sale leads to an increase in household deposits. In the UAE alone household deposits increased by 14% in 2003. All these good things are connected,' she said.