ALKHOBAR, 7 October — This past week the 18th Computer and Communication Exhibition (CCE) was held at the Dhahran International Exhibitions Center. It definitely was an exhibition in search of an audience. I said it last year. I’ll say it again. It is ridiculous to hold this event the week before GITEX Dubai. I’m probably beating my head on the wall though in regards to this issue, because I noticed that the exhibition company has already scheduled the show for the same week next year.
I spent three hours on Thursday evening chatting with exhibitors at CCE and came to the conclusion that this show should not be sold to exhibitors targeting the business community. All the exhibitors with high-end equipment or services that would be bought by businessmen were very unhappy. This is a consumer event. Combine the PCs and their accessories with consumer electronics and the show would probably get a great turnout.
Despite its overall low quality, there were a couple of good things about CCE. A lot of women came to see what was on offer and they were very interested in Arabic software and computer accessories. It seems that the women still aren’t the ones bringing PCs home in the first place. But once the PCs make it to their living rooms, they quickly figure out what to do with them. This is an encouraging sign.
I also want to mention some really amusing students that I found at the show. Tucked away at the back near the Internet Cafe was the booth being run by the King Fahd University of Petroleum and Minerals’ Systems and Computer Club. This is a newly formed group at the university. They were at the show giving people basic education about computers. The guys had motherboards, hard drives, CDs — all sorts of basic hardware, placed on a table and they were explaining to people how the components operated. It was quite amusing to watch men and women, young and old, enthusiastically asking questions and getting simple answers that they could understand. The students also gave general advice on purchases. They didn’t recommend specific brands but they could tell people whether a purchase was sensible and worthwhile. Next year I hope the students will be located right in front of the main entrance so that more people can take advantage of the knowledge and advice they have to offer.
While we are on the subject of hardware, Western Digital, a leader in PC storage technology, has shipped the first 100GB high-performance desktop hard drives to the Middle East. The WD Caviar 100GB EIDE hard drive is a 7,200RPM, three platter model. The 7,200RPM spin speed improves overall drive performance, which improves desktop computing performance. The 100GB WD Caviar can store a combination of 1,800 digital photos, four hours of digital video, 40 hours of digital music downloads, 18 digital games and 30 software programs. I don’t know what I’d do with that much capacity, but I’d sure like to find out. The 100GB WD Caviar definitely rates a ten on the techno-lust scale.
Now, let’s move on to some e-commerce issues and check out the findings of a new NFO Merac survey of “Banking Usage and Attitudes in Saudi Arabia.”
NFO Merac, the largest custom marketing research company in the Middle East, did the survey to discover baseline findings which will help companies create future marketing strategies for the Kingdom. The survey should also help Saudi banks better understand local customer attitudes and point the way toward an improvement in customer relationship management.
The study was carried out among working male Saudi and expatriate Arabs, 20 years or older. Around 4,500 individuals in total were surveyed from the cities of Jeddah, Riyadh and Dammam and six provincial towns.
Not surprisingly the survey found that the penetration of financial products and services is lower in Saudi Arabia than in some other neighboring markets in the Gulf. The current ownership of a credit card is at only 22 percent, while personal bank loan/financing is at just 11 percent. The number of consumers with investments is also very low, at four percent, but this is in line with other markets in the Gulf region.
Credit card ownership was far higher in main cities as compared to provincial towns, reflecting the needs of urban consumers and bank marketing efforts. It also must be remembered that there is a potential religious and/or cultural bias against credit cards. As an alternative to cash, customers often use their ATM/SPAN debit cards. The survey found that about two-thirds of customers prefer to use ATM/SPAN cards for purchases. These cards are the more dominant payment method for low-value purchases, such as supermarket shopping.
Customers attributed their choice of primary banking institution to their involvement with various banking services. Customers who had not progressed beyond basic banking services such as a current account, most valued the proximity of the bank, its network of branches and ATMs. Customers who used other products such as credit cards and mutual funds made their choice of bank through other factors such as international banking or advisory services.
Despite the low use of banking products and services, the NFO Merac study did identify four different market segments with varied needs and profiles. Understanding the driving factors behind each segment would help banks compete more effectively by adapting their products and services, and by customizing their communication strategy to the needs of each segment. The four segments identified were: (1) Traditional /Conservative, (2) Islamic, (3) Active, and (4) Islamic Assurance Seekers.
Banks in Saudi need to identify what proportion of their customer base comprised each of these segments and adapt their marketing initiatives accordingly.
For example, the Traditional/Conservative segment, was more or less indifferent to searching for financial products, was more face-to-face interaction oriented, and was less likely to deal with foreign banks. Overall, the segmentation exercise identified tremendous scope for banks in Saudi Arabia to offer differentiated products and services to specific consumer segments.
The low credit card penetration is a considerable challenge for those companies hoping to break into the B2C market in the Kingdom. Also, the difficulty of small and medium-sized businesses in obtaining credit lines does not bode well for B2B initiatives.
Saudi banks can afford to implement new technologies that would allow them to manage customer relationships more effectively and market the basic products and services they have available to appropriate channels, but most are still struggling just to keep their basic network infrastructure up and running. Fast, intelligent, creative service has never been a strong point of local banks and there is no indication that it is about to become so. On issues like the expansion of online banking and investment services, and insured credit cards, the lack of regulations from SAMA are frequently cited as impediments to progress.
Whatever the reasons for the lack of business-friendly initiatives from local banks, one fact is certain. Many of the wealthiest, most dynamic Saudi businessmen are no longer relying on local banks to fund their new projects. Disgusted with noncompetitive rates, poor service and red-tape, businessmen here are looking abroad for financing. They are having no difficulty finding the funds they need on highly competitive terms from international Western-based banks. Last week one major Eastern Province businessman told me that he specifically took offshore financing for his latest project to send his local bank a message. “Evolve or die” seems to be a lesson that local banking dinosaurs have not yet learned.
Before I go, let me mention the new website for the artist Andrew Vicari. Well-known for his images of the Gulf War, Vicari has also done paintings on a variety of other subjects from Saudi royals to horses. His artwork is now on display at geocities.com/andrew_vicari.