Arab Bank at the top [Archives:2004/725/Business & Economy]

April 1 2004

By Peter Willems
One would expect that a manager placed in a country far from his country of origin by an international corporation would be moved from one country to another regularly or sent back home not too far in the future.
But Mahdi Alawi, the Jordanian Regional Manager of Arab Bank based in Yemen, has spent nine years in Yemen and is not expected to leave soon. The reason Arab Bank has not moved him elsewhere is obvious: the bank in Yemen has grown dramatically under Alawi's leadership.
According to Arab Bank, it was ranked sixth out of eight commercial banks based on total deposits nine years ago. Today Arab Bank is ranked number one out of 17 commercial banks.
Alawi believes the reason Arab Bank moved into the top slot three years ago was by making necessary changes to attract and satisfy customers.
“The core issue is to satisfy your customers,” said Alawi. “And we have been concentrating on that core issue for a number of years.”
To help service the customers, Alawi implemented a restructuring program inside the bank.
“The staff is the main core of your success,” said Alawi. “If you don't take care of your staff, how can you serve your customers?”
Alawi established a training center when he first arrived, and a training program has been ongoing to work with the entire staff, from employees all the way up to upper management. He has also implemented an incentive program to encourage the staff to perform well: bonuses and salary increases are based on their performances each year.
To help generate greater efficiency, Arab Bank was the first bank in Yemen to install the SWIFT system five years ago. It has offered a faster network that operates in real time.
“Our standard at Arab Bank in Yemen is to always try to keep up with the way banks operate around the world,” said Alawi.
Alawi also focused on developing retail banking to attract more customers.
“Retail banking is one of the keys to becoming number one,” said Alawi. “You have to focus on what the customers want.”
Arab Bank was the pioneer in offering a number of products and services. It was the first bank in Yemen to set up ATMs, starting off with having ATMs at their branches. Recently, it was the first to branch out placing ATMs in public places: There are now Arab Bank ATMs at the Sana'a International Airport and the Sana'a Trading Center.
Arab Bank was also the first to issue credit cards in Yemen under the bank's name. In 2002, it brought in Visa cards that could not only be used at local ATMs but could also be used at other branches in other countries.
Four years ago, Arab Bank was the pioneer in telephone banking. Up to now, telephone banking has been used mostly to get information, such as checking balances. Now, the bank is upgrading telephone banking to include financial transactions. Arab Bank was also one of the first to offer online banking. It is in the process of upgrading online banking so that money transfers will be part of the package by the end of the year.
Arab Bank, which has 10 branches located in major cities of Yemen, has one more advantage: trust.
According to bank managers, Yemeni customers are hesitant in using financial institutions. But the Arab Bank Group, which is based in Amman, Jordan, operates worldwide with branches in the United States, Europe, the Middle East and Asia, and it had nearly $23 billion in total assets at the end of 2002. Many believe that Yemeni customers feel safe working with Arab Bank.
“Arab Bank was well established and has been well known in the Middle East for a long time,” said Ali Abdul Rahman Al-Bahr, former Minister of Oil and the Chairman of Housing Credit Bank in Yemen. “Customers believe Arab Bank is a safe place to put their money and know that it is well organized.”
One question, however, is whether Arab Bank will be able to hold on to its number one position in the banking sector in Yemen.
Some Yemeni-owned banks in the local market have caught on to the importance of retail banking. Yemen Gulf Bank, which was just established in 2001, brought with it a strategy to go full force into retail banking. It was the first to offer online banking, offers telephone banking and was the first Yemeni-owned bank to install an ATM.
Soon after Yemen Gulf Bank, International Bank of Yemen rolled out similar products, such as online and telephone banking and now has ATMs at its branches. It recently announced that it offers a Visa card that can be used worldwide.
Both Yemen Gulf Bank and International Bank of Yemen have a strategy to go further: They have plans to put ATMs in public places and develop point-of-sale by issuing cards to customers that can be used in different retail outlets, such as stores, hotels, restaurants and supermarkets.
Tadhamon Bank, which prides itself on operating on Islamic principles, has climbed up rapidly in the ranking of total deposits in the last few years. According to Al-Bahr, Tadhamon Bank will continue to grow because it is well diversified, is integrated into the local business community and handles numerous projects.
But Al-Bahr said that it would be difficult for other banks to overtake Arab Bank. “Not only has Arab Bank established itself through a long history of trust, but it has also become known as the bank full of reliable services,” said Al-Bahr.
And Arab Bank has plans to continue to grow and stay on top of the market.
“To stay on top, you always have to do your homework,” said Alawi. “It's important to know what your customers want, work with your staff and continue re-engineering your procedures.”
Each year Arab Bank focuses on particular targets to enhance their operations. According to Alawi, the targets are based on the Yemeni market and customer feedback, as Arab Bank Group allows the local bank to make decisions on enhancing operations independently of what other Arab Bank branches are doing in other countries.
On the retail banking front, along with upgrading previously launched products Arab Bank has plans to offer more products and services to fit the need of the customers, such as expanding lending. But just as important, Alawi plans to focus on streamlining the services at Arab Bank. Instead of customers having to move around the bank to seek out different services, there will soon be tellers able to manage whatever a customer wants. “Streamlining will make life easier for the customers,” said Alawi. “A teller will be able to handle all services for each customer. Arab Bank will be the bank for one-stop shopping and services.”
If Arab Bank sticks to its strategy that took it to the top, it will be difficult for another bank to take the number one spot in the near future.