JEDDAH — The Saudi banking system was established shortly after the discovery of Kingdom’s oil in 1939. Economists quickly realized the need for a method of managing the government’s newfound inflow of royalty revenues following World War II.

Since then the development of the Saudi banking system has faced many challenges arising from turbulence and volatilities in global financial markets, slumps in the domestic economy, international finance crisis, two Gulf Wars and the system’s restructuring that was the result of the 1970’s oil boom.

Nevertheless the system has always remained solid and has become one of the largest private banking markets in the world.

The Saudi Arabian Monetary Agency (SAMA) reported that as of 2006 there are 13 commercial banks with 1,251 branches in Saudi Arabia.

One of the biggest challenges in the Saudi banking system is gender inequality and the small number of women working in this sector. Considering that 30 percent of accounts worth SR27 billion ($7.2 billion) are opened by women, and that women control 21 percent of the country’s private investments and a fifth of all Saudi mutual funds, the need to empower women in this sector is seen as important to the country’s development.

Saudi women are still found to be the most under-utilized resource to the Saudi economy even tough the government estimates that 56.5 percent of the Kingdom’s college graduates are women. Some estimates by local portfolio managers say up to 60 percent of new stock investors and 40 percent of new real-estate investors are women.

Unfortunately, the problem of gender inequality isn’t unique to Saudi Arabia. Recent studies done by the United Nations concluded that women do nearly two-thirds of the world’s work but earn only 5 percent of the world’s income. Women worldwide are largely excluded from the role of economic decision-making. They are denied lucrative employment opportunities based solely on their gender.

Figures on women’s economic participation in Saudi Arabia vary. The permanent representative to the United Nations from Saudi Arabia, Abdul Wahab Attar, said earlier this month that Saudi women make up 14 percent of the work force. The Labor Ministry says women make up 5 percent of the work force. Whatever the case may be, it’s apparent to anyone living in the Kingdom that women are glaringly absent from the workforce, even in retail establishments catering specifically to women’s needs — something the government has pledged to resolve as part of its overall ongoing Saudization policy to reduce the country’s dependence on foreign workers, who themselves are predominantly men.

Average wages for all Saudi workers has been stagnant, which is also posing a challenge for spurring employment of Saudi men and women. The Labor Ministry reports that the average monthly wage declined slightly in 2005 to SR1,359 ($362), down from SR1,385 ($369). It’s interesting to note here that although women make up a sliver of the work force, they earn a higher average wage, SR1,795. (This may have something to do with the fact that the Saudi women who participate in the work force tend to be professionals rather than unskilled laborers.) At the same time the decline in the average wage from 2004 to 2005 for women was steeper than for the general workforce, three percent compared to 1.9 percent.

So what about the banking sector?

Some progress has been made. In 2004, the private banking sector in the Kingdom employed 24,590 workers, including 1,518 women, or 6 percent of the total. A year later the number of total employees in this sector grew by 20.7 percent to 29,685. The number of women in that period of time grew to 2,168, or 42.8 percent over 2004. These figures show that the growth rate for employing women in banking women is faster than the rate of growth of all workers in this sector.

Still, the overall representation of women has a long way to go. SAMA reports that for the entire Saudi financial services industry (which includes real estate, business and investment services, and insurance) employed 93,940 workers in 2005, of which only 2,281 (2.4 percent) were women.

Saudi banks are beginning to gradually awaken to the concept of women’s empowerment, realizing the impact that Saudi women are making to the economy. Women have come a long way from 1980, when National Commercial Bank (NCB) opened two women-only bank branches in Jeddah and Riyadh, the first bank to make the move. While women have been allowed to enter any bank, the idea of bank branches for women came about as a way to attract women customers that might prefer services catering to them specifically. In fact, NCB blazed the trail of catering specifically to women by unveiling different services specifically targeting them, including borrowing plans and credit cards. Recently the bank opened a VIP Center for Women on Jeddah’s Al-Andalus Street that offers Internet access, brokerage services, special swipe cards to avoid filling out forms to women who hold accounts over SR1 million.

“In the VIP Dealing Center we provide services that we believe will support women with a comfortable environment,” said Nouf Al-Nowisser, the manager of the center. “We focus on our clients and help them to build knowledge and experience unlike any other.”

A pioneer in the field of banking that targets women, a local bank Operations Manager Layla Hoshan recounts how she became an example of the empowerment of Saudi women in economy. After returning to Saudi Arabia after a number of years abroad in the early 80’s to be a stay-at-home mom, Layla decided after her kids were old enough to go to school to look for a job.

“Because I had the good fortune of speaking English I got my first job with Radio Riyadh as a librarian and presenter in the European Section,” she recalls. “I remained there for two years before moving to Jeddah.”

It wasn’t until 1992 when she joined one of the local banks that her career in banking began to take flight while working in the bank’s Branch Support Department, which at the time was still in its infancy, an experiment by the bank that included promoting women in back-office work. Ladies departments soon opened in Riyadh and Dammam.

“I am proud to have been part of this major move since I was one of the first team of Saudi ladies to work in such a department,” said Layla. “I feel that social attitudes have changed in the Kingdom toward women tremendously during the last couple of decades with career women given the respect they deserve. There are more job opportunities for women, which are far more diversified with bigger and better chances for development. I don’t feel there are any real obstacles. Our society has accepted the fact that women have a role to play with a second income becoming a need as well. And don’t forget that women worldwide faced the same challenges for almost half a century, from the 50’s onward, and still speak of inequality.”

Layla said that she hopes to see someday women holding broad membership in Saudi banks, “but this is a global challenge that women face, otherwise women in Saudi Arabia have covered all aspects of banking, such as training, marketing, sales, investment and even auditing and human resources.”

The Corporate Banking Department of Banque Saudi Fransi is another example where progress is slowly but surely being made. Farah Serafi, an employee of the bank for the past three years who was recently promoted to manager of corporate relations, is one of the first Saudi women to enter the field of corporate banking, five years ago.

Serafi says there are many obstacles in the social attitude toward female bank employees, but that the clients themselves bring some of these issues on. “Some of our bank customers are conservative and therefore reluctant to meet with female staff,” she said. “Others outright refuse to do business with bank representatives that are women, and they request a man instead.”

Serafi is quick to point out that as long as women “uphold modesty and Islamic principle” then there should be no limits.”

“I chose banking as a field because I believe it is a very good start that can lead to an opening up of other branches of financial services (to women),” she said.

So what would Serafi tell young Saudi women about their future in the Kingdom?

“I advise the next generation of young Saudi ladies to continue to progress in social advancement,” she said, “Because I feel that Saudi women’s social advancement won’t happen unless we empower ourselves to succeed and push for change.”