ALKHOBAR, 7 June 2005 — Some people think that since I’m a technology journalist, I never face frustrations with technology. That thought would be radically wrong. The truth is, I frequently run up against examples of technology run amok and it’s generally due to the human factor, not to a problem with the hardware or software. What makes this situation even more frustrating to me is that I know what is possible with technology if companies just wanted to make it so.
The Saudi banking sector is a particular nightmare. In other countries, banks are constantly attempting to be more customer oriented. Customer relationship management (CRM) and data mining are two of the hottest technologies being used by the financial sector in many other developed nations. Online banking is such a time saver that many customers, both East and West, have abandoned brick and mortar branches.
Banks in modern, dynamic economies want customers to use their credit facilities. Credit cards and consumer loans are readily available, some say perhaps too readily available. Lose a credit card? No problem. Just phone the toll free hotline and your credit card will be in your hands again within 24 hours. No annual fees, low interest and cash back are strong selling points for many credit card issuers. If a customer opens an account with a bank or decides to take a credit card, there are gifts and incentives offered.
The financial sector in the Kingdom operates a bit differently. The customer relationship is adversarial at best and downright antagonistic in many cases. A few months back I wanted to take a home mortgage. I went from bank to bank asking for a loan. I had one-third of the house purchase price as down payment. I have worked in the same job for more than five years and have a spotless credit record. Bank after Saudi bank turned me down for the mortgage. Their reasons were that I did not work for a company such as Saudi Aramco, which was on their approved list, and that I was not a man. My excellent credit record and the fact that I could pay were inconsequential.
Finally the Saudi British Bank (SABB) agreed to investigate the possibility of awarding the mortgage to me “out of policy.” Six weeks later the deed was done and I was provided with a 10-year mortgage accompanied by some of the most frightening legal documents ever written. The documents basically state that at any time, for no reason whatsoever, the bank can either change the terms of the mortgage or demand full payment of the mortgage balance. Thus, the risk of the bank taking the house at any moment is constantly there. Without other options in sight, I had no choice but to sign if I wanted a home for my family. Surprisingly, the bank’s officer told me that this mortgage, with its disturbing conditions, is considered to be Islamic Financing.
It should be pointed out that because my husband is a foreigner, neither his salary nor credit history were considered by the bank. Even worse, in the event of my demise, according to Saudi law, he will not be the owner of the property. Additional legal documents are currently being created to protect his financial interests.
That issue aside, after a bank awards a mortgage to a customer, one would think that there would be a strong relationship between the two parties. However, this is Saudi Arabia, so such a thought would be wrong. The very next action SABB took in our relationship was to stop my credit card. My Mastercard credit card expired on April 30. When the new card didn’t show up I went to a SABB branch for assistance. A customer service representative there chirpily advised me that I should hand write a letter begging for my credit card to be reinstated and she’d do what she could. Ten miserable minutes later she had the letter and I was in the street without a card.
I waited and waited. A fat renewal fee appeared on my Mastercard invoice but no other charges. I didn’t have a card so how could I charge anything? After three weeks I called SABB customer service for assistance. They told me to send a fax to Riyadh detailing the problem and they’d get back to me. I spent 30 minutes writing and sending the fax. Again I waited and there was no reply and no credit card. After another two weeks, I re-sent the same fax I’d sent before. Twenty-four hours later, there was still no reply, so I called customer service again. The representative told me that the first fax didn’t show in the system and the second fax wouldn’t show for another two business days. He advised me to call back in three days. At that point I went “nucular.” It didn’t do me any good.
If I were living elsewhere my credit card account would have never been stopped in the first place. If the card had been lost somehow on the way to my post office box, a new one would have been provided rapidly. As for that $100 annual fee, it would never appear on my bill. I am certain that since I charge over SR100,000 each year, I would have been able to find some financial institution willing to offer me a no fee card.
Bank customers in the Kingdom continue to get hit with high credit card fees, astronomical credit card interest payments, high checking account fees and there is no relief in sight. This is coupled with huge lines for customer service at any branch and constant problems with the Kingdom’s payment networks.
For the last month consumers in the Eastern Province have struggled with the electronic payment systems. In the middle of shopping there will be a sudden announcement at the supermarket that all payments must be made in cash as the payment machines are down. At the malls on the weekend it’s a disaster. The cash register lines are out of control because the electronic approval process is so slow. Two weeks back some of the airline offices could only accept payment for tickets in cash. That’s right — no SPAN, no credit cards. At the same time that their machines were down, other machines were working. One weekend it was only possible to get cash from one’s own bank’s ATM.
No valid reason is given for all these problems. Rumors abound. One week the explanation was a network crash. The next week all the merchants blamed it on poor communications infrastructure. One business told me that they have been trying to get their antiquated SPAN machine changed for two years. Despite numerous requests, a new machine has never been provided.
The powers that be are completely silent on all these issues and consumers and businesses keep suffering. Is there an end to this misery? Perhaps for some. Overseas banks with online, offshore facilities are now actively soliciting clients in Saudi Arabia. They are offering current accounts that pay a return, credit cards, debit cards and even investment advice. These are reputable names such as Lloyds, HSBC, Citibank and Barclays. Certain banks in Bahrain are also making their offers known to potential clients in the Eastern Province.
As people become more and more comfortable with the Internet, offshore banks stand a greater chance of siphoning off the most profitable customers and they are working hard to attract them. Where will that leave the local banks? Stuck in the muck with millions of tiny accounts that cost more to maintain than they earn.
Some might imagine that the incidents I relate are exaggerated. I wish that were so. One of the most painful banking stories I’ve ever heard was told to me just last month by an expatriate businessman. Born and raised in Saudi Arabia, he is the CEO of his own IT firm. His company does millions every year in turnover and his current account balance is generally several hundred thousand riyals — funds the bank makes use of interest free.
His company has been expanding. In a bit of a financial crunch, a few months back he asked the bank for a brief overdraft facility. Despite daily requests the bank never made a decision on the situation and eventually he found an alternative way to manage the liquidity problem. At the same time that the bank wouldn’t give him an overdraft, they offered to increase the limit on his credit cards.
Furious, a customer of that bank for over a decade, the businessman is now planning to pull his account from the bank and take it elsewhere. Some of it will go offshore and the remainder will be moved to the local bank that “offers the best deal.” As much as possible the CEO has sworn to keep his profits away from the Kingdom’s banks. Thus, once again we have another splendid example of Saudi banks effectively managing customer relationships right out of the market.
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