Question

Perform SWOT analysis for Saudi banking industry explaining strengths, weakness, opportunities and threats.

Answer 1

SWOT Analysis of the Saudi Banking Industry

Table of Contents

1) INTRODUCTION

1.1) Banking industry of Saudi

2) STRENGTHS

2.1) One of The Oldest Surviving Industries
2.2)The Pillar of Financial Stability Of Saudi
2.3)Long-Term Funding

2.4)Easy to take bank account in Saudi Arabia for foreigners

3) WEAKNESS

3.1)High dependence on oil, exposure to oil price fluctuation.
3.2)Lack of Rural Coverage

4 )OPPORTUNITIES

4.1)Technological Advancements
4.2)Social Evolution
4.3)Rural Expansion Opportunities

5)THRAETS

5.1)Global Economic Instability
5.2)Lack of Proper Cyber Security

1) INTRODUCTION

1.1 Banking industry of Saudi

Saudi Arabia has the second largest banking industry in the GCC region by total assets and accounts for roughly 29% of the GCC's total banking assets. Credit to manufacturing, commerce and construction sectors have been trending downwards despite accounting for roughly 34% of the banking sector's total credit.

2)STRENGTHS

2.1 One of The Oldest Surviving Industries

In Saudi With the advent of new technology, whole industries are often wiped out. The banking industry, however, has not been so susceptible. It has stood the test of time and helped the human race for a very long period. As life has evolved, banking has morphed and modified itself to meet the recent needs. From inculcating the habit of savings to helping people with financial instruments, banks today play a vital and indispensable role in society.

2.2 The Pillar of Financial Stability of Saudi

In Saudi the banking industry takes a vital role in ensuring the economic prosperity and financial stability of a nation. Banks contribute to the economy by fostering growth. They help the masses manage their wealth and become meaningful contributors to the national as well as the international economy.

2.3)Long-Term Funding

A recent but growing trend which started in 2004 and is becoming increasingly popular for Saudi
banks is to raise long-term funds in the international markets. These take the form of syndicated loans,
Eurobonds and notes. In the past two years, almost half a dozen substantial transactions of this type
have been carried out, and others are in progress. This trend will have an increasing impact on banks’
activities in future years and will enable them to grow their operations.

2.4)Easy to take bank account in Saudi Arabia for foreigners

It is very easy to open a bank account in Saudi Arabia, as long as you have all the needed documents. In general, you have to produce the following: A letter from your employer stating your name, iqama (residence permit) and your salary. ... Iqama (Residence Permit)

3)WEAKNESS

3.1)High dependence on oil, exposure to oil price fluctuation

Not only the banking sector Total funds of Saudi is High dependence on oil, exposure to oil The price and manufacturing of oil effect the banking industry of Saudi. The oil attacks are capable to destroy the banking industry of Saudi

3.2)Lack of Rural Coverage

It has been observed that in most of the banking industry of Saudi focuses mostly on the urban areas, while rural regions are left neglected. This is a significant weakness in the banking industry of Saudi

4 )OPPORTUNITIES

4.1)Technological Advancements

The Saudi banking industry has always been dependent on technology. This is evident in the slew of digital services being offered by banks today. However, instead of resting on their laurels, banks should continue to adopt the latest technological innovations. They should concentrate on bringing out newer products and services in order to attract future generations.

4.2)Social Evolution

Human society is evolving both economically and culturally. In this dynamic landscape, the needs and demands of customers with rising income levels are bound to change. Banks need to adapt to this changing society. By providing better services the industry can solidify its place in the future.

4.3)Rural Expansion Opportunities

The limited presence in rural areas is one of the weak points of the banking industry. But it can actually convert this weakness into an opportunity. By expanding into villages and offering their services to the rural population, banks can expand their customer base considerably

5)THRAETS

5.1)Global Economic Instability

Currently, the world is going through tough economic times. Trade wars, protectionist policies, and global downturns have all had an effect on the international banking system. Unless the world economic conditions improve, banks can be facing a dire future.

5.2)Lack of Proper Cyber Security

The modern banking industry is entirely dependent on the cyber-world. Everything is stored digitally whether it be data storage, monetary transactions or personal information. This makes the banking industry a prime target for hackers who seek to gain financially by exploiting weaknesses in the digital infrastructure of the banks. Unless the banks take proper cybersecurity measures to protect their data, they can face a serious threat from cyberspace.