The Emergence and Evolution of E-Banking in Saudi Arabia

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FRONTIERS OF E-BUSINESS RESEARCH 2004

The Emergence and Evolution of e-Banking in Saudi Arabia: The Case of Samba Financial Group Mohammed Ben-Jadeed1; Alfonso Molina2 PhD Student, The University of Edinburgh, M.Ben-Jadeed@sms.ed.ac.uk 2 Professor of Technology Strategy, The University of Edinburgh, A.Molina@ed.ac.uk 1

Abstract The aim of the paper is to look at the emergence and evolution of e-banking in Saudi Arabia, with particular emphasis on the processes of how banks implement e-banking to improve their capabilities as well as to create new value strategies. The paper makes use of a combination of case study approach as research methodology and network approach as theoretical framework. Specific questions addressed are (1) how e-banking has been developed, (2) how banks align their demand and supply-side factors, and (3) what has been the role played by ebanking in shaping the strategic direction of banks. The answers to these questions are grounded on the results of empirical research recently conducted on a major Saudi bank. Keywords e-banking, sociotechnical constituencies, Samba Financial Group, Saudi Arabia Acknowledgements We would like to thank Samba’s interviewees for their positive and open attitude to our research questions. Also we want to thank Samba’s Financial Control & Planning Group for administering the survey, and all other groups and divisions who responded to the survey.

Introduction
The common motivation for banks to implement e-banking is to provide a faster, easier, and more reliable service to clients, to improve the bank’s competitive position and image, and to meet clients’ demands. E-banking may also provide other benefits. For instance, creating new markets, and reducing operational costs, administrative costs and workforce are increasingly important aspects for the banks’ competitiveness, and e-banking may improve these aspects as well. On the other hand, questions have been raised about the banks’ efficiency in utilizing the unique features of e-banking for improving their competitive positions and images. Indeed, there is a growing concern that e-banking is not yielding the anticipated results, creating a gap between the actual returns and the proposed objectives and thereby losing a large amount of investment. This especially concerns the interaction with clients and thereby increased and more rapid access to new markets. This has thrown the spotlight onto the problem of change from one particular delivery channel to another. This is highly important since the implementation of e-banking may have radical implications on a bank’s structures, business processes, products and services and value flows with clients and other parties. In practice, an appropriate mix of delivery channels will be determined by a number of factors on the supply and demand sides of the market. On the supply side, factors such as regulations, 90

FRONTIERS OF E-BUSINESS RESEARCH 2004

technology, and the resultant change in the market structure influence the choice of delivery channels, whilst, on the demand side, client preferences and expectations are of prime importance. This process is the concern of the paper. In this context, the aim of the paper is to look at the emergence and evolution of e-banking in Saudi Arabia, with particular emphasis on the processes of how banks implement e-banking to improve their capabilities as well as to create new value strategies. The paper makes use of a combination of case study approach (Yin 2003) as research methodology and network approach as theoretical framework. The paper addresses three research questions: (1) how has e-banking been developed? (2) how do banks align their demand and supply-side factors? and (3) what has been the role played by e-banking in shaping the strategic direction of banks? The paper is structured as follows. Section 2 defines the term ‘e-banking’ and describes the theoretical framework used in this paper, the sociotechnical...
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