Trying to achieve anything online in Lebanon can be a frustrating ordeal, so perhaps it’s no surprise that real growth of electronic banking has been late to emerge. According to several Lebanese banks surveyed by Executive, e-banking usage by their customers has increased in the past five years to between 25 and 30 percent, roughly on par with the global average as of April 2012 according to ComScore, a digital measuring and analytics firm. However, it is low compared to North America, which has a 40 percent to 50 percent usage rate.
Across the board, the banks told Executive that they offer basic e-banking services such as checking account balances, transferring between one’s own accounts at the same bank and executing standing orders, meaning online transfers to a person or entity which has been registered as a beneficiary through a onetime personal authorization at the bank branch.
The range of e-banking activities in Lebanon is far short of what one finds today in global online consumer banking. However, banks say they can and want to do much better.
“This is only the tip of the iceberg as far as what we can do and what can be done through this channel,” said a Bank of Beirut and the Arab Countries (BBAC) representative, adding, “E-banking will develop to involve new products and services that were not feasible in traditional banking, [such as] new payment methods, new ways of serving customers, etcetera.”
Anthony Ussher, deputy general manager for e-banking at Credit Libanais, shares the optimism. “E-banking in general, mobile and online, has a bright future because the Lebanese are early adopters,” he says. He points to the 1990s, when Lebanon had one of the highest internet rates and cell phone usages in the Middle East. “Lebanese are interested in nifty new technologies and they like the concept.”
While large banks are spearheading a range of innovative moves in online and mobile banking, it is also notable that mid-sized banks are pressing ahead to be among the Middle East’s earliest adopters of new technologies. For example CreditBank inaugurated this spring a mobile banking solution for Microsoft’s Windows 8 platform.
The innovation list of Bank Audi, Lebanon’s largest lender, includes a near field communications-enabled SIM card mobile payment application and an “eMall” platform which will allow participating merchants to offer their products and services online. Merchants will create their own virtual stores to attract domestic and international consumers. Bank Audi say the platform will be launched shortly.
Blom Bank, taking its own approach to what e-banking has to offer, has incorporated “eCash”, whereby a Blom customer can send money to anyone via online or mobile banking. The recipient doesn’t need to have a bank account or a card and is able to withdraw money at any Blom ATM by entering the eCash code, amount and currency.
But while one can argue that banks should put more resources toward building better, faster and smarter mobile applications, some local banks are clearly not yet enthusiastic about the e-banking proposition, possibly because of several barriers that have been restraining the market.
Part of the problem is that it is harder to attract the middle-age generation to take its financial activities and purchasing power online. According to Banque Libano-Francaise, 55 percent of its customers aged 35 years or younger are using e-banking, up from 30 percent three years ago. However, they add that acceptance and usage growth of e-banking by customers in higher age brackets is significantly lower.
Another challenge to increased usage of consumer e-banking is the lack of a law regarding electronic signatures. A draft law to officialize online signatures has been waiting for parliamentary approval since 2005 and is unlikely to be passed soon.
This is a problem felt by all banks. “There is a dire need to promulgate the e-transaction draft law because it would provide investment opportunities and help transform Lebanon into what we guess our country is best suited for: a knowledge economy,” says Joseph Nasr, assistant general manager and head of distribution network at Byblos Bank.
With the e-signature draft law having been stuck for years in the legislative pipeline, banks have found some practical fixes by relying on global standards and Visa and MasterCard rules and regulations. They are also applying standards accepted by Banque du Liban, Lebanon’s central bank.
Moreover, such problems can be seen as interesting challenges. The age component of online literacy is clearly a transitory issue as the young, e-banking-savvy Lebanese students and job starters of today will mature into middle and old-age e-banking clienteles with the associated purchasing power. At the same time, new, younger users will be eager to use their mobiles for their first banking transactions.
This leaves us with two remaining obstacles, namely the legislative issue and the notoriously insufficient infrastructure for both Internet and mobile communications and data.
Assuming for the moment that these very surmountable hurdles will be conquered by the powers that be, Lebanon is poised and ready to both develop and adopt a plethora of innovative e-banking services. “In three to five years, the sophistication of e-banking in Lebanon will be on par with developed countries,” argues Antoine Lawandos, Blom’s assistant general manager and chief information officer.
