Challenges Facing Arab Banks In light of the globalization of banking services

With the entry of the third millennium, the banking sector in the Arab countries is facing radical changes, as the distinction between banks, brokers, insurance companies and investment funds will become less than before with the provision of financial and banking services via the Internet, as customers today prefer to use self-service channels to complete their banking business.

Arab banks are expected to focus on maximizing the return on equity, which requires phasing out activities whose returns do not cover the cost of capital allocated to them and transferring more capital to banking businesses whose returns are rising over time. Profitability can be increased by reducing operating expenses through the effective use of modern technology such as the Internet if it is to face fierce competition from abroad. If there is any doubt about the impact of this competition on local markets, just take a look at what has happened in online stock trading in recent years.

1. Structural changes in international markets for goods, services and capital:
In recent decades, the global economy has undergone major structural changes and international markets for goods, services and capital have become increasingly interconnected. In light of these changes, Arab economies face major challenges, most notably the shift in economic thought and forms of cooperation and economic bloc. Arab countries cannot remain immune from interaction and integration into the new global economy. The Arab region, with its strategic location, various riches and potential future markets, will not be able to isolate´-or-close, and therefore cannot remain outside the global economy. While emphasizing the importance of the banking sector in the Arab countries, which has witnessed significant changes in the regional and global financial sector, it is expected to have a significant impact on the banking sector, namely:[1]

[1] – See, Henry Tawfiq Azzam, Chief Economist and Managing -dir-ector of the Middle East Investment Group, Arab banks and their ability to adapt to emerging changes, liberalization and globalization of banking services, Middle East, Issue 13751, dated 4/11/2000, page 13.

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Challenges Facing Arab Banks In light of the globalization of banking services
Contents
Structural changes in international markets for goods, services and capital: 2
Liberalization and globalization of banking services: 2.
3 – Transformations in the administrative philosophy of Arab banks: 3
4 – Internet banking penetration: 4.
5 – Increasing need for mergers between Arab banks: 5.
6 – Establishing advanced control systems to be more effective: 6.

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