“Saudi Arabia has very low ATM per capita” says Abana

Interview with Abdullah M. Ben Jebreen, CEO of Abana

The IMF came up with a report that in five years Saudi Arabia will face considerable challenges. They said that foreign financial assets fell over the last seven consecutive months to $654 billion at the end of August. Then, Saudi Arabia raised 55 billion riyals from debt insurance this year, and the IMF expects debt-to-GDP ratio to grow to 17% next year, so there is a lot of spending but not enough income. The IMF is quite negative about the outlook for the economy. In your opinion, do you feel that such predictions are over-exaggerated?

The report is over exaggerated, however due to the international economic situation the Saudi economy is weaker. As the global economy slows down, emerging economies such as China and even developed economies such as the EU experience temporary weakness. Saudi Arabia is not immune to the global trends and is part of economic cycles. Saudi Arabia has all of the basics to absorb the shocks of reduced oil prices and decreased demand for oil. Saudi Arabia has other untapped resources available such as mineral resources, tourism and other things.

Saudi Arabia has been investing in its human resources for a long time; we have over 207,000 students that are sent abroad for education, who are the most important resource for the future economy. They will create the basis for a different economy.

What is the general innovation and technology business environment like in the Kingdom?

The Kingdom has been taking steps toward innovation. Knowledge economy is in the national strategy. The benchmark countries for Saudi Arabia are Japan and Korea. The government has undertaken several steps to begin the transformation.

For example, the creation of King Abdullah University (KAUST), one of the leading universities in the world, focusing on science innovations, is one such step. Other initiatives include Riyadh Techno Valley at King Saud University. Public companies like SABIC and ARAMCO have many research centers and are investing a lot in innovation of petrochemicals.

For medium-large size enterprises such as Abana, we innovate some solutions for our clients: we have in-house developments, so we know how important this is for all levels (government and private sector).

Is it easier to do business in Saudi Arabia?

The government is keen to ease doing business in Saudi Arabia. With establishing SAGIA and allowing for 100% ownership, the government initiated steps towards this goal. There were obstacles before, but nowadays it is very easy to open a business. Recently, when King Salman visited the United States, he welcomed an open market for the retail sectors.

How do you feel about the Tenth development plan?

The 10th development plan seems better than the previous plans. First, the Ministry of Economy and Planning is now responsible for development, whereas before it was the Ministry of Finance, and the new minister is establishing KPIs for the plans with each ministry. There is a periodic review for the KPI for each ministry.

What is the state of the ATM network in Saudi Arabia? What are some key statistical figures?

Compared to advanced countries like Korea and Japan, Saudi Arabia has very low ATMs per capita. Based on the talks with SAMA and the banks, there is a plan to increase the levels of ATMs, liberate some of the regulations on the ATMs, and allow ATMs in banks to be directly connected to SAMA.

What is the level of sophistication of the network and how can it be improved?

SAMA recently announced MADA (the backbone for connectivity of payment systems, including point of sales, ATMs, and online transactions), which looks very promising. This initiative will resolve many problems, besides improving the network. There are three major telecom operators, which will also help bring the network up-to-date, on par with Europe and the States. Saudi Arabia has one of the best telecom infrastructure in the region.

Can a cashless society render ATMs obsolete?

Cash is king. Even in Europe and Asia chip cards, electronic wallets and many other cashless means have been adopted by the market, however, these societies still use cash. The use of cash in Saudi Arabia is high. Over time, with the adoption of smart phones, internet banking and prepaid cards, the need for cash will decrease.

Within the next ten years the use of cash will still be high, otherwise, SAMA will not have this huge plan to increase the ATM network.

What could be the time frame when Saudi will reach a cashless society?

We will reach a good balance between using cash and other electronic means.

From 2009, Saudi was granted 12 patents by the United States, which has increased significantly to 294 patents in 2014. It’s still very low compared to very competitive economies. When the government is spending a quarter of the budget on education, is Saudi Arabia making any headway in innovation and education?

Absolutely – as I mentioned previously, more than 200,000 students are being exposed to different curriculums around the world that will enhance the innovation and knowledge in the Kingdom. The economy builds on knowledge.

What are you planning on rolling out this year? What plans do you have for the future?

Abana has just finished the growth strategy for 2016-2022. The strategy is based on a few pillars. First, we are adopting new technologies and enhancing our operations and services for our clients, and we have our in-house innovation center.

Aside from the strategic plan, Abana is a dynamic company ready to react and change with the market.

Do you feel that there are significant growth opportunities within your sector?

Absolutely – with the economical cycle going down, the cost goes down as well. People adjust costs, and prices will go down. In the end, its how much money you make and your margin or net profit, not the cost or price.

Would you like to stay in your core business or shift toward applications and innovations?

As an operations and service company, Abana will focus on these core areas. We are looking at investing in other strategic partnerships to enhance our business.

ABANA is your brainchild – what makes you beat your competition? If Saudi Arabia opens up more, then perhaps there will be some international competitors. What are your main competencies?

Abana is a customer-driven company, not product-driven; we enhanced the quality of our services as the region suffers from bad quality services; we are early adopters of technology; and we add value because we are a locally-made company.