Taking Yemen to the new age of plastics [Archives:2004/766/Business & Economy]

By Peter Willems
Yemen Times Staff
The International Bank of Yemen recently brought a new service to the Yemeni market that allows customers to make payments using plastic cards and so reducing their dependence on carrying cash.
In June, the bank introduced a point-of-sale service in which customers are able to use cards to make purchases at retail outlets, such as supermarkets, restaurants, hotels, airlines, gas stations, hospitals and airlines. Companies accommodating of point-of-sale transactions already include big names, such as the Yemenia Airline, FedEx, Universal Travel and Tourism, Shumaila Hari, Happy Land Supermarket, Al-Shaibani Restaurant, and Hertz.
“This service is a part of our focus on expanding on retail banking,” said Ahmed Al-Absi, General Manager of the International Bank of Yemen. “We believe that it is important to offer the best retail services in the market.”
The bank has over 80 locations in Sana'a, but has already started expanding in other cities, such as Aden, Taiz and Hodeidah. According to Al-Absi, the bank will have 1,000 locations in Yemen by the end of the year.
The point-of-sale service can be seen as a revolutionary approach to carrying out transactions in Yemen, which has always had a cash-based economy. The number of Yemenis using banks is estimated at a little over a half-a-million out of a population of 18 million. The International Bank of Yemen's customers can now acquire a card that can be used to make payments at each and every location involved in point-of-sale transactions, as an alternative to carrying and paying in cash.
“This service covers many different types of customer,” said Nada Al-Hutam, Manager of Delivery Channels at International Bank of Yemen. “The points-of-sale will be used by foreigners based in Yemen, and Yemeni customers who will find that it is easy to make such a transaction. It is a new chance for Yemenis to use plastic money instead of paper money, which will be more secure and easier to use. Now is the time to modernize transactions in Yemen.”
Customers at the bank have shown interest in the new service. Abdulla Al-Arasi, Marketing Supervisor at International Bank of Yemen, said that between 30 and 50 customers a day go to the bank to acquire a card. The bank is also targeting its corporate clients. Employees working for companies and organizations that use the bank's payroll system, such as Canadian Nexen, Yemen Hunt Oil, Halliburton, UNDP and the US Embassy, receive the card free of charge.
In the last few years, banks operating in Yemen have been focusing on developing retail products. Arab Bank, the largest financial institute in Yemen that is based in Amman, Jordan, was the pioneer in bringing out new products and services to customers in the local market. It was the first to offer phone banking, credit cards under the bank's name and was the first to setup ATMs at its branches and in public locations.
Yemen Gulf Bank, which was established in 2001, came to the market concentrating on retail banking. It was the first Yemeni-owned bank to install an ATM and was the first financial institute in Yemen to offer online banking.
This year, International Bank of Yemen has made an effort to take the lead by expanding its retail products. It jumped aggressively into the ATM market and now has over 25 ATMs, the largest number of ATMS held by a bank in Yemen. Many of its ATMs are located far from the bank's branches, where, the Bank argues, easy access to cash is just as important. Al-Absi says that the bank aims to have 100 ATMs across the country in six months.
In late spring, International Bank of Yemen was the first bank to offer a Short Message Service to its clients. Customers can now check their balances, transactions, bill payments and when to collect new ATM cards, credit cards or checkbooks by using their mobile phones.
The bank has also been moving rapidly into the card market. Last January, the International Bank of Yemen became the Representative of American Express, while two months later it became the Principal representative of Visa. This month, MasterCard also chose the bank as its Principal representative in Yemen. Not only does the International Bank of Yemen benefit from having close relationships with these credit card companies, but its customers also benefit from the numerous advantages. “People coming from all over the world that have a Visa or a MasterCard can use our ATMs and points-of-sale,” said Al-Hutam. “Local customers will not only be able to use ATMS and points-of-sale in Yemen, but they will also be able to use our cards anywhere overseas that accepts Visa, MasterCard or American Express.”
The International Bank of Yemen are spearheading the drive to fully develop retail banking and are already seeing positive results. “During the bank's first 24 years, it opened 13,000 accounts. But in the last six months, around 20,000 new accounts have been opened,” said Al-Absi.
The bank predicts that its fee-based income will increase as a proportion of total income from 15% in 2003 to 30% this year and soar to 50% in 2005. Six months ago, the International Bank of Yemen expected gross profit to jump from $900 million in 2003 to $1.6 billion this year. Now, the bank believes that it will surpass its goal: gross profits cleared $900 million in the first half of 2004.
And with the point-of-sale service replacing cash with cards, it is customers who will benefit, believes the Bank. “Our new service makes life easier and more convenient to customers,” said Al-Arasi. “The International Bank of Yemen is very competitive in retail banking, which will always benefit the customer.”
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