Interview: Karam Bechara, General Manager, Shahba Bank, on challenges and opportunities facing the sector amid reconstruction efforts
In what ways is the macroeconomic environment shaping conditions for banks and their customers?
KARAM BECHARA: What we are seeing on the ground is that inflationary pressures are still present, even as headline figures show early signs of moderation from earlier peaks. People continue to feel financial strain. The gradual removal of subsidies is adding to household costs, eroding purchasing power. For banks, this translates into a more constrained operating environment. Customers are more cautious, liquidity in the market is tighter and there is a general sense of economic strain. These pressures naturally affect credit demand and the overall financial behaviour of households and businesses. The sector is operating in an environment where economic hardship is deepening or at least has not begun to recover, and that inevitably shapes both banking activity and customer engagement.
What are the main constraints facing banks as they prepare to support reconstruction efforts?
BECHARA: Banks have a strong appetite to play a major role in reconstruction, especially given the scale of the projects expected. However, the sector is facing significant structural constraints. The most pressing issue is under capitalisation; banks need substantial capital injections to take on large-scale financing commitments. In addition, technological systems are outdated and require urgent upgrades. For years, restrictions prevented the introduction of many modern, tech-enabled services, and that left institutions behind regional benchmarks. Addressing these gaps is essential before financial service providers can effectively participate in financing major reconstruction initiatives.
To what extent can the expansion of digital banking improve financial inclusion?
BECHARA: Digital banking has real potential to broaden financial inclusion in Syria. Even if people remain hesitant to place their savings in banks due to past experiences and systemic mistrust, they are increasingly open to using digital services for everyday payments, transfers and basic transactions. That shift is helped by the fact that many Syrians became accustomed to using mobile platforms before the conflict, which makes the transition to digital banking more intuitive.
However, trust remains a barrier. The mistrust is rooted not in the banks themselves but in the broader regulatory environment and a history of strained relationships between citizens and government institutions. These dynamics limit the depth of customer engagement and make it unlikely, at least initially, that digital adoption will translate into higher deposit levels. Nevertheless, digital services can significantly increase usage and bring more people into the formal financial system for daily transactions.
How are structural challenges in the real economy affecting the banking sector’s ability to lend, attract talent and plan its medium-term strategy?
BECHARA: Banking performance is linked to the real economy. Banks are not the drivers; they move when industry, manufacturing, construction, tourism and agriculture move. Many of these sectors are operating below their potential. Without strong activity in manufacturing or contracting, or renewed momentum in areas like tourism or agro-industry, there is not enough credit demand to catalyse robust banking growth. This uncertainty complicates strategic planning. Institutions are reluctant to make long-term commitments because it is unclear how quickly the real economy will recover, even though reconstruction is expected to be a major initial driver. At the same time, the sector faces a talent challenge. A large portion of skilled professionals left during the war, and many continue to emigrate because they are uncertain about the country’s future. While the diaspora could bring valuable experience back when conditions stabilise, the talent pool is limited, and that affects the sector’s capacity to modernise and expand.
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