Middle-east Arab News Opinion | Asharq Al-awsat

First online bank to launch in Saudi Arabia - ASHARQ AL-AWSAT English Archive
Select Page
A Saudi man explores a website on his laptop in Riyadh, Saudi Arabia, on February 11, 2014. (Reuters/Faisal Al-Nasser)

A Saudi man explores a website on his laptop in Riyadh, Saudi Arabia, on February 11, 2014. (Reuters/Faisal Al-Nasser)

Dammam, Asharq Al-Awsat—The launch of the first online bank in Saudi Arabia will be announced on Friday evening, informed sources told Asharq Al-Awsat.

A source close to the Manama-based Gulf International Bank, which will be launching the new bank, said it would be an “online-only” service, with customers making deposits and transfers online and checks to be deposited via self-service machines at branches to be opened across the Kingdom.

Customers will meet with an employee from the bank only once, the source said, when they register for a new account.

The service will be open to individuals only and not institutions or companies.

Several banks in Saudi Arabia offer online banking services but there are currently no online-only banks in the country.

A recent study by management consultant firm AT Kearney found that despite having relatively low penetration rates for Internet banking, the Gulf region has great potential to assimilate new online banking services.

Only 20 percent of banking customers in the Gulf region have opened online banking accounts, the study found, much lower than penetration rates in Japan, Korea and the Scandinavia region, for example, where they stand at approximately 70 percent.

However, Internet penetration rates in Gulf countries are comparatively high: 99 percent in Bahrain, 96 percent in the UAE, 95 percent in Qatar and 66 percent in Saudi Arabia.

In comparison, Internet penetration in the United States stands at 87 percent, Germany at 89 percent, the United Kingdom at 90 percent and France at 83 percent.

The Gulf numbers are also already much higher than Internet penetration rates in the Europe and US during the early 2000s when Internet banking first took off, which stood at 25 and 40 percent respectively.

Changing demographics among the main users of banking services in Gulf countries also make them well-positioned to capitalize on Internet banking, the study concluded.

Those in the 41+ age category—described by the study as “digital deniers”—account for 20 percent of all banking customers in the region.

But the largest chunk of banking customers fall into the more tech-friendly 31–40 category, accounting for 32 percent of all customers. They are quickly followed by the 21–30 age group—the so-called “Facebook Generation”—which accounts for 27 percent of all customers. Together these two age groups account for 70 percent of all Internet banking usage in the region.