Reaching a dispersed population across 2.15m sq km has always been a key challenge for Saudi Arabia’s commercial banks. While coastal business centres and the capital are well served by banking infrastructure, the connection between the public and the industry is patchier in other parts of the country. According to the World Bank’s most recent data on global banking density, the Saudi market was served by 8.9 commercial bank branches per 100,000 customers in 2015. This is a relatively low number compared to developed markets such as the US (32.9 branches), and emerging markets such as Brazil (20.7) and Indonesia (17.8).

This makes Saudi Arabia an interesting market for the digitalisation trend. Javelin, a US-based digital research and advisory firm, reported in 2015 that mobile banking had outpaced branch banking for the first time in the US. According to the report “Digital Banking Adoption in MENA 2016” produced by Arabnet, a regional business intelligence firm, around 86% of the Saudi Arabian population was using a smartphone in 2016.

Rapid Progress

Arabnet’s report shows that there has been a rapid uptake of the digital channel in Saudi Arabia and the region. In 2012 a study conducted by management consultancy firm AT Kearney titled “Online Banking in the GCC” showed that one-third of all regional banking customers were signed up for online services, and only half of those – or 18% of the total – were active online. Over the intervening period, however, regional populations have become increasingly accustomed to online financial transactions. Arabnet’s 2016 study shows that 75% of Saudi Arabian survey respondents made use of digital banking – the highest percentage of the five countries sampled, which spanned the UAE, Egypt, Lebanon and Jordan. Around 60% of Saudi customers used both online and mobile banking services, highlighting the increasing convergence of these streams within the digital channel as banks roll out seamless interfaces to be used across an array of devices. Industry players are noticing the trend. “The main distribution channels of real estate finance for Bidaya are on the digital space, with telesales as a support function. A branch presence is still required for Bidaya from a KYC-Know Your Customer perspective,” Mazin Al Ghunaim, CEO of Bidaya Home Finance, told OBG. “Today 75% of our website engagement is on smart phones.” Nevertheless, the predominance of transactional traffic remains: the most popular digital activities were bill payments and money transfers.


Moving beyond transactional business and increasing digital sales, thus, remains a key objective. The pursuit of this ambition is resulting in innovative offerings in the sector. Alawwal Bank (rebranded from Saudi Hollandi) opened its first digital branch, called Ibda, in February 2017. The bank has teamed up with Costa Coffee to create a mall-based outlet that looks more like a coffee shop than a traditional branch, with baristas on hand to point customers towards banking services. These include digital portals through which customers can browse for banking products, apply for and open an account, and receive their debit or credit card before finishing their coffee. “It is a totally new concept,” Soren Nikolajsen, managing director of Alawwal Bank, told OBG. “In addition to the technology there is the advantage of increased opening hours – when the mall is open, the branch is open. We have seen more new account numbers than we expected.”

Bahrain-based Gulf International Bank (GIB), meanwhile, has chosen to commence its sharia-compliant retail operation in the Kingdom on an almost entirely digital basis. Its Meem offering is a multi-channel service incorporating an e-banking platform, a contact centre and stores in Riyadh, Jeddah and Al Dhahran. At the stores, customers can complete the account-opening process and receive their debit cards immediately.

Given the rate of digital uptake, bank branches in Saudi Arabia are likely to undergo additional changes in the coming years as the industry continues to move away from the conventional brick-and-mortar offering.