competitive advantage in Banking

Acknowledgements

This dissertation would have been unsuccessful without the material support from the

college and companies' websites. I am indebted to my supervisor Dr. Divya Rana for her kind

words throughout the preparation of the research. She has been supportive and ready to correct

me on various aspects regarding the paper.

Without a supportive family member and in particular my parents and my kids: Abdul-

Aziz, Ruaa and Ahmad, for their extraordinary helpful, in fact my career goals would have

been hard to realize without them, Additionally I’d like to thank my husband Nemer Al -

Zahrani. I am especially thankful for his financial, social, and psychological support during the

preparation. I would also like to thank here my friends (Reem, Fetoon, Ruaa and Shadha) they

were friends and a mentors, and in the event of doing my investigation, they have been there

for me. It would be unethical not to recognize my fellow colleagues who have been there to

ensure that everything goes well. May they receive my credit as well.

The collection of information and meeting honest and responding interviewees is not

an obvious. I would like to thank all the respondents from NCB, Riyad, and Al Rajhi banks

both management and the employees not forgetting the clients for their valuable information.

It would have been difficult to complete my work without their crucial information. May all be

blessed.

v

ABSTRACT

Digital transformation is more than moving the traditional banking sector into the

digital world. It is an important change that the Saudi Arabia financial institutions are learning

to interact and satisfy the client's needs. The dissertation covers the impacts of digitization of

the Riyad Bank, Al Rajhi bank, and NCB bank. Digitization begins with understanding the

customer's preference, choices, dislikes, likes, and behavior as well as aspirations and needs.

The changes bring a shift in the organization from product centered into customer-centric.

The data collection involved questionnaires, sampling and content analysis. Research

questions and survey to the employees, potential and existing clients as well as management

generated information in the open and closed ended questionnaire. A total of 299 were issued

with the questionnaire, after examination and analysis, the responses had a reliable and direct

response towards the study. Analysis of the financial year's reports was crucial in the last three

years dated 2014, 2015 and 2016. ATMs and point of sale have increased in recent years due

to internet penetration. There are suggestions on the areas of improvement in the banking sector

in the oil-rich country. Improvement of the computers passwords and the customer's security

for their wealth emerges as a loophole that needs to be addressed.

Keywords

ATMs, Banking, Banking Sector, Digital, Digitization, Financial Security, Traditional.

vi

Table of contents

1.0 CHAPTER 1: INTRODUCTION……………………………………….………….……..2

1.1 Objectives………………………………………………………….………………5

1.2 Hypothesis ………………………………………………………….……………..6

1.3 Significance of the study………………………………………….……………….7

2.0 CHAPTER 2: LITERATURE REVIEW…….………………………..…….………….…9

2.1 Customer behavior…………………………………………………….…………..9

2.2 customer satisfaction......................................................................................…...10

2.3 Quality………………………………………………….…..…………….………10

2.4 Satisfaction…………………………………………………………………….....11

2.5 Value……………………………………………….…….…………...………….13

2.6 The SERVQUAL and SETRVRERF models………….……......……….………14

2.6.1 The Riyad Bank………………………………………..……………………….14

2.6.2 The Al-Rajhi Bank……………………………….…………………………….20

2.6.3 The NCB Bank…………………………………………………….…….……..24

2.7 The gaps in the literature…………………………………………………………28

3.0 CHAPTER 3: METHODOLOGY…………...……………………………………….….32

3.1Primary source…....................................................................................................32

3.1.1 Sampling ……………………………………………………………………...33

vii

3.1.2 Questionnaire ……………..…………………………………….……….…….33

3.2 Secondary source...…..……………………………………………………….….34

4.0 CHAPTER 4: RESULTS…………………………………………………………….......37

4.1 Results from questionnaire …………………………………………………….39

4.2 Results from the financial statements ..........................................................…...42

4.2.1 The Riyad Bank……………………………………………………………….42

4.2.2 The Al-Rajhi Bank…………………………………….………………..…….44

4.2.3 The NCB Bank…………………………………………….……………….....49

5.0 CHAPTER 5: RECOMMENDATION AND CONCLUSION…………….…………….53

5.1 Recommendations…………………….……………………………………….....53

5.2 Conclusion………………………………………………..………………………55

References …………………………………….……………………………………………..59

Appendices ………………………………………………………………………………….65

viii

List of Tables

4.1 One – Sample Statistics …………………………………………………………........39

4.2 One – Sample Test ……………………………………………………………………40

ix

List of Figures

4.1 Range of Customer Satisfaction …………………………………………………………41

1

Introduction

“Dreams are extremely

important, you can’t do unless you imagine it”

2

Introduction The paper focus on the effects of digitalization in the banking sector in the Saudi Arabia,

the focus is the comparison of the three top banks. The three top banks are Riyad Bank, Al-

Rajhi bank, and NCB bank. The research has shown that the banks use the current technology

in almost all activities. The world is changing with the innovation taking place. The new

technology has been used in my fields' one of them being in the banking service industry (Khan,

2011).

According to Dangwal, (2010) Riyad Bank is one of ranked investment performing

bank in the Kingdom of Saudi Arabia, it gives financial services to its customers in the country

and outside. Other regions served by the bank are London and Singapore. Riyad Bank was

selected among 190 investments institution of the same kind, having the best performance in

funds and management (Zuhur, 2011). It holds more than 200 branches. It uses the latest

electronic technologies in the banking services to bring quality services to customers. It covers

fields such as homes, hotel, and offices offering them the needed banking (Dangwal, 2010).

Khan, (2016) argues that the Riyad Bank has been improving it services through the

different use of technology as stated here, firstly e-banking solution, RiyadOnline and retail

and corporate customers manages banking affairs 24/7 from any computer with internet

connection. Corporate clients' access accounts online such as current accounts, saving account

and loan accounts. The bank is well known for the use of internet banking, mobile phone

banking services and functional ATMs which are over 2200 working. The new technology has

helped to solve the faulty transitions and increased profitability (Khan, 2016).

The factor that facilitated the Riyad Bank to adopt the new technology was looking for

the solution that was easy and intuitive for use this helped to lower the acceptance threshold.

1

3

VESCO has been able to provide needed technology toward security solution in the financial

market, according to the bank requirements. The bank has also adapted easily to use the system

and also a user-friendly solution (Khan, 2016). The bank uses the SMS and DIGIPASS

authentication; this is to the retail and corporate customers. In this case, the use e- banking uses

the username and the password. It is when making a financial transaction or the changes in the

necessary information in the sector. The bank processes the use of SMS, and the application

is sent to the customers through the mobile phone. All the same, the password is used for the

duration of time (Budd, 2011).

The second bank in discussion and the effects digitalization is a national commercial

bank or the NCB Bank. It is the largest financial institution for the last 60 years in Saudi Arabia.

The bank is well known for its leadership and innovation. Since 1953 the bank has facilitated

the growth and development of modern Saudi Arabia. Currently, the bank holds more than 3.5

million customers. The bank is the most trusted in the Middle East. The bank is wholly Saudi-

owed the bank has employed a percentage of 96% from the same country. In the recent years,

the bank was reported to be a full-fledged financial institution. The bank covers other areas

such as Bahrain, Lebanon, Singapore and South Korea (Khan, 2016).

The bank has tried to use a program of rapid network expansion; this has enabled the

bank to cover large area sounding the county. The bank is known for the diversity programs

which enhance the women and men to gather required skills, knowledge and opportunities to

work in the banking sector to facilitate the economic development of their country (Khan,

2016). In the year 2013, the bank made a history due to better records on the return as profit. It

was enhanced by well strategic plans and good leadership styles (Wungwanitchakorn, 2002).

The evident to this is that the bank was rated with A+ by Standard and poor's and Fitch Ratings

with the highest among other banking sectors in Saudi (Zuhur, 2011). The bank has also

employed current or dynamic technology in its operation such as, adding digital screen this

4

very crucial when passing information to the customers, secondly self-service facilities such as

ATMs which helps the customers to operate their banks for the extended period of time. Also

quick service desks this increases the service to the large group of clients who are in need of

the services. To add to the list is freeing tellers and relationships managers this gives the rating

of how well the customers are served (Brodie & Winklhofer, 2007).

The use of Retail banking group this enhances the link between the individual banking

and the consumer finance business. The main benefit is to improve the collaboration between

the branch and the product. On the other side is the corporate banking group this involves all

types of the institution starting from the smallest to the largest. It is meant to improve the

managements of the representatives. The use of technology has facilitated the strengthening of

the global relationships and customer service (Khan, 2016).

The third bank in the task is Al Rajhi Bank which was founded in 1957, and the bank

is well known for the performance regarding total assets. The bank has more than 9000

associate. The bank has been involved in the activities for over 50 years. In the year 1987, the

bank was established as a Saudi shareholding company. The Al Rajhi Bank has networked its

operations to about 492 branches. The bank has recorded an income of US$1.9 billion. The

bank operates in multiple segments and continues to make diversified income resources and

the growth and development of investment and banking sector (Wungwanitchakorn, 2002).

On the side of technology, the bank has been able to adapt the new techniques to

improve the customer service. It is in free banking which is available for long hours (Khan,

2016). On the side of the bank, there will be able to increase profitability since the new

technology reduces the cost of services. The bank has continued to develop banking programs

and also projects which focus on the latest new electronic services. Furthermore an investment

on the products to offers the innovative banking and invests on e-banking (Brodie &

5

Winklhofer, 2007). The leadership has to be improved through electronic channels that bring

about needs and aspirations. The bank has numerous collaborations with the electronic

government projects.

Al Rajhi Bank put more concentration on three main groups that are retail banking

group, in this case, the bank focus on the segments such as deposits, credits current accounts

and consumer financing. It was reported that the bank was first to give shares through the

mobile phone. It is evident that the bank has one million internet customers (Khan, 2016). The

bank has developed to the extent of having 60000 Smartphone apps which help customers to

get relevant information. On the other had the corporate banking group the main concern is

the financial and investment where three processes are most involved that is the letter of credit,

letter of guarantee and request from the customers. The bank through the effective use of

current skills has the drive which has facilitated to meet its financial needs, customer service

and delivering innovation (Khan, 2011).

The three largest banks have close relationships in terms performance and customers’

services which have been made possible by the new technology in the banking sector. The

evidence of performance is noted through the financial ratios. Both the banks and the customers

have benefits as results of digitalization (Brodie & Winklhofer, 2007).

1.1 Objectives of the study

This section outlines the objectives of the paper about the effects of digitalization in the banking

sector.

1. To determine the effect of digitalization to the general performance of the banks.

2. To determine the current changes in the technology affecting the banking section.

6

3. To compare the performance of the banks which have adopted the new technology and

the effects to those that are yet, in other words, the similarities and differences?

4. To determine the effects of digitalization to the customer assurance and the reduction

in the cost such as labor.

1.2 Hypothesis

In this case, the hypothesis is a tentative answer to the research problem. The research

question is where the digitalization has an impact on the banking sector both to the customer

and the bank performance. The tentative answer requires being tested using available tools.

The technological development in the banking sector has an effect on the performance of the

bank as well as customers relationships.

5. Some of the technological advancements are mobile banking, e- banking, online

banking and computer networking. The mentioned are part of the improvement in the

banking sector.

6. Their effects could be improving the customer's services and increasing the

profitability of the three banks. The customer improvements could be faster

transactions that are sending the money and making withdrawals. Making

communication and passing valuable information from both sides.

7. Furthermore, the customers can have access to the bank accounts at anytime,

anywhere banking with the use of ATMs which enhance to withdrawal money

anywhere. Also, the bank reducing the costs which are facilitated by the traditional

methods, such costs may include employee cost and the banking costs. How the bank

can reach many clients regarding the geographical area.

8. Lastly facilitating the bank profitability and increasing the security of both the

customers' wealth and banks assets.

7

1.3 Significance of the study

There is little research that has been conducted on the impacts of digitization in the banking

sector in Saudi Arabia. With that effect, the investigation will go all the way to:

• Increase the store of knowledge on digitization in the financial institutions in general

• Serve as a parameter for the future formulation and implementation of policies and

plans for quality bank services

• Assist the three banks-Riyad, NCB, and Al-Rajhi banks to understand the essence and

importance of modernizing their operations and activities

• Lay the foundation for future scholars, learners, and researchers on the effect, trend,

and future of digitization in the banking industry.

8

Review of

Literature

“If you do not know the

history, you don’t know

anything. You are a leaf that doesn’t know it’s

part of the tree”

9

Review of Literature

This chapter explores the literature review. Explicitly, it covers the literature on the

SERVPERF and SERVQUAL models, empirical cases studies, customer behavior, and

customer satisfaction with modernized banking sections in Saudi Arabia.

2.1 Consumer behavior

According to Servon and Kaestner, (2008(, the client behavior is unpredictable since

everyone has his/her unique taste and preference are changing with the changing complexity

and differentiation of the services in the service industry. Their demands for convenience,

sensory and health as well as qualities have become heterogeneous in the recent past. Persons

and individuals differ from one another and their perception on issues is completely different.

Many companies and organizations currently have adopted plan of opening

opportunities for the client to air their grievance. It is supposed that knowing the complaint in

a business give the management an in-depth understanding of the customer’s satisfaction thus

indirectly knowing their needs, requirements and preferences. As indicated by (Zuhur, 2011),

not all customers find it ethical to lodge their complaints in the complaints department. They

will cease their co-operation or step back in their support to the welfare of the bank. According

to the hydrant.co.uk, (2017), the customer’s perception trigger their acceptance of the goods

and services produced. This is attributed to various conditions like psychological, social,

personal, and cultural. Khan, (2011) explained that the consumer purchasing behavior matrix

as professional. The buying behavior is a point of consideration when analyzing the results.

2

10

2.2 Customer satisfaction

Both the clients and financial institutions attach more weight to satisfaction. Desperate

efforts are made by these banks to provide high quality services and products to the people.

According to the customers, they are always ready for best value for their money and stand for

less in the market when it comes to their spending. Once the clients are contented, there is

positivity and with that in mind, the competitors find it hard to overthrow the established

authority. The loyalties from the firm are profits and repurchasing thus sales increment. As

indicated, the economic capriciousness is at the hands of the customers, (Khan, 2011) note that

there are different categories of customers. They are nations, individuals, communities, groups

or organizations. Like other departments, the banking sector is on the rise with intensifying its

effort in attracting the clients through quality services. Without quality, surviving in the 21st

business competition is not easier. The quality, value, and satisfaction are terms that are

prominently employed through the literature review and in the results. It is clear while

understanding the meaning of the same.

2.3 Quality

Defines the term as ‘the extent to which a bunch of inbuilt features meet requirements.’

These inbuilt features include functional, temporal, sensory, behavioral, ergonomic, or physical

while the requirements involves the expectations and needs. hydrant.co.uk, (2017) defines

quality as ‘conformance to requirements or specifications and fitness for the purpose or use

respectively.’ Some concur while others conflict their view. Quality is striving to meet the

expectations and needs of the clients. With that in mind, the yardstick for defining service

quality does not at all include bank policies but the clients’ expectations at the end. (Zuhur,

2011) argues that the relation or interaction between service provider and the customer induce

viewpoints of client’s quality.

11

The attitude of the service provider is serving as the quality indicator for the potential

customer. The physical infrastructures like modern servicing equipment machines and internet

service are heavily considered by clients while gauging the more diversified and modernized

bank for service delivery. The receptive attitudes of the sale representatives and the marketers

may create either positive or negative perception on the customer. At the highest level is the

judicial making process regarding the products is the buyer (Chau, & Lai, 2003). They

recommendations, suggestions, and insights based on the adverts after the consumption of the

product in the past are worth noting and following. On the same note, the customers are either

negatively or positively moved by the service provider. In a summary, on the materials

regarding the quality, the conclusion is that the principles applied are difficult and complicated

to determine the exact cause and influencer. This due to the facts that the services are:

x Intangible

x They are heterogeneous thus implying that performance do vary

x Testing is over a period of time and that it cannot be placed at capsule for measuring

x Production of products and services is inseparable to the consumption.

2.4 Satisfaction

Satisfaction means the extent at which the requirements are meant as stated or implied

or obligatory. According to Brodie & Winklhofer, (2007), satisfaction is a case where the

service provider attends to the norms and expectations of the buyer. In the banking division,

the same view is shared by Brodie & Winklhofer, (2007) in their study of the e-marketing

evolution. They postulated that gratification is where the client cognitively compares the

expected performance with the actual presentation. To some, it entails the post-purchase

behavior and conduct while taking into account the expectations. Summarizing the kinds of

12

literature on meanings of gratification, Cristina, (2008) argues that it happens in the realization

of what is gotten against what anticipated.

hydrant.co.uk, (2017) accentuate that gratification is due to either internal or external

factors. The measure and level of satisfaction is hard to determine and forecast. Radhakrishnan,

(2008) indicates that the customer satisfaction is often dynamic and not static but the stages

keep on changing depending on the vast experience at the hands of the bankers. hydrant.co.uk,

(2017) outlines the difficulties with the defining and understanding the concept as follows:

x It changes, thus not static; new levels of awareness with new experience will interfere

with achieving the potential phases of gratification

x It will lead to complexity and consequences with a myriad of experiences on, at and

after the measuring.

x It happens in social setting which vary and change and is unpredictable to the banking

industry.

x It becomes hard to know the conditions necessary for gratification, especially where

intangible aspects like service industry are at the center.

x The reasons for dissatisfaction, on the other hand, are easier to detect with

exceptionality state of the service.

x Without a grip of the causes of satisfaction, it is dangerous to treat the client and realize

good result. The PR tool if not effective, then the failure of the whole firm is inevitable.

hydrant.co.uk, (2017) contend that gratification is not only related to the regarding and

reliability of the service but also to the experience of the buyer. The customer retention is a

good measure of the fulfillment. The consummation is not a guarantee loyalty to the employees

who move from one bank to another. Saleh & Anderea, (2002) in their magazine note that what

is required for fulfillment is the improvement and loyalty of the seller. According to the Kano

13

model, there are three categories of satisfaction namely; attractive needs, one dimensional, and

‘must-be.’ hydrant.co.uk, (2017) defines ‘must-be’ as a situation where there is not satisfaction

to the client by the service provider. It is important to note that there is no increasing

consummation with the attributes of the product. In the performance or dimensional needs, the

client perceives the service as of a high-quality and thus the fulfillment is higher and the

opposite applies. In the attractive needs, there is increase in consummation with the increase

with the performance and in case of dissatisfaction; the performance is usually at the lower

end. The correlation between the attributes summarizes the customer and their needs for

gratification.

2.5 Value

Value according to many scholars is the significance that is attached to the services in

exchange with the funds paid. In his stand Khan, (2016) indicates that the value is derived the

transactions, interaction, and experience made during the banking duties. He adds that the value

emanates from the perception when it is higher than quality. In summary, the value is defined

in four different ways as follow; value is ‘low price, want satisfaction, quality of the price paid

for and is received for and in exchange given out.’ The value conclusions are based on non-

material and material aspect. The client allocates value to service or product based on the

quality and price expected. The values differ with the consumption process. Khan, (2016)

concludes by saying that value rise with a rise in the quality. The concepts are related in

understanding the impact of banking industry in Saud Arabia.

2.6 The SERVQUAL and the SERVPERF models

In understanding the impact of banking, satisfaction, measuring quality with the

services delivered, the two approaches are used. SERVQUAL is the leading measure of the

quality in the banking and service industry (Lawsky Warns Pioneer Savings Bank Customers

14

of Breach, 2017). The measurements are from the client point of view. The purpose of the

model is to have a reliable and a standard indicator in the service industry. The dimension has

attributes that include responsiveness, competency, courtesy, communication, reliability,

security, access, credibility, understanding clients, and tangibles. In our case, it is advisable to

use the tangibility, credibility, accessibility, reliability, communication, and security. Based on

the selected dimensions, the questionnaire and sampling the clients is more than easier.

The SERVPERF model was developed after criticism on the capability of the former in

measuring the satisfaction and quality of the services. Though employing and addressing

various aspects of internet banking, it is insufficient in measuring the totality of the issue.

Studies conducted by scholars like Ravi et al., (2007) while trying to comprehend the profiling

of banks in the wake of modernization; they support the model as a better way in helping people

understand the research. The model includes even psychometric properties in the scale and thus

accurate results. It has however been hampered with inconsistency and there are

recommendations for the same as follow;

x Practitioners must adapt to the condition structure for quality data in different or

specific setting

x Academicians should revisit their objectives to make it valid and reliable thus

multidimensional in scaling and measuring.

2.6.1 The Riyad Bank

In this section the paper focus on the literature review of the three Saudi Arabia banks.

The Riyad Bank literature review, the technology sector has been advanced for the recent years

mostly in the banking sector. This has triggered the several changes in the banking section.

The biggest areas affected by the changing methods are transaction processing and

management information system. The systems have been integrated that is information system

15

with communication technology and innovative technology in the production of services and

products. The general developments in technology have facilitated the world to be a global

village, in particular, the banking sector in Saudi Arabia (Radhakrishnan, 2008). The statistics

in Saudi Arabia has indicated that the high growth rate has been facilitated by evaluation of the

banking sector; rising to 75% increase is expected in the future as the Riyad Bank continues to

invest in the industry to improve the customers' relation (Radhakrishnan, 2008).

According to with the Van, (2001), the construction of cyber cafes which has internet

access have been facilitated by internet banking also known as E-banking this is considered the

latest technological development. The new technology has been used to deliver the banks

products and services. E- Banking has improved over several decades ago. In the growth and

development of technology, the electronic commerce has enhanced the banks to interact freely

with the clients and exchange the relevant information in the process. The new communication

channel has been developed to enable the bank to reach the customers in the different parts of

the county. The e-commerce has played a significant role in the advancement of the business

by changing the way of carrying the business transaction (Brodie & Winklhofer, 2007).

The internet banking has changed the order of the day where the individual must

approach the main bank or the branches, and the customers can now carry the routine such as

withdraw cash, depositing of the money and requesting for the statements online. According to

Khan, (2011), the customer has a chance of obtaining large quantities of services and products.

The mentioned technologies to enhance customer’s satisfactions are direct deposit, computer

banking, and store value cards and debits cards (Servon and Kaestner, 2008).

There are several ways in which the technology has enhanced the customers to make

transactions without having physical present at the bank branches. There is PC banking, online

banking, internet banking, telephone banking or mobile banking. All this are referred to as E-

16

banking (Leow and Bee, 1999). In the recent years, the Riyad bank has centralized its operation

and also arrived at the core solution through the networked computers. Moreover, the bank has

introduced the new delivery services such as networked ATMs, internet banking and

Smartcards products (Filomina, Merciaselva, & Sudheendran, 2009).

The journey of digitization in the e-banking sector became to be in 2014. The first step

included the launching of the Riyadmobile portal to aid the clients who are wishing to access

their accounts through handheld devices like the Tablets, iPhones and Smartphones. The portal

enables the customer’s admission great range of services like billing, IPO subscriptions, and

international transfers (Brodie & Winklhofer, 2007).

Golden and private banking services are part of Riyad banks to provide the best golden

and private services to the clients. There are numerous innovative and new products are

provided through the channel. At the moment, there are about 58 golden service centers with a

total of four private banking hubs exclusively of the female clients. The aim of the service is

to provide an extensive product portfolio that aim at providing the unparalleled services 24/7

hours a day. The convenience and transparency with the banking experience is taking shape.

In the line with the kingdom, the bank is delivering services that are relevant and to the

businesses operating in their vicinity. The bank is aiming to become a financial partner with

the administration and in particular with the relations regarding management. The corporate

portfolio employees are in for the client service delivery. In the recent past, the bank is reaching

the small and medium sized investors to empower the citizens in collaboration with the

economic diversified activities of the Kingdom (Brodie & Winklhofer, 2007).

The corporate finance is divided into project and corporate financing. The branches in

London and Singapore provide the services to the industries and businessmen from Saudi

17

Arabia. The linkages with the financial institutions in areas like insurance, leasing, investment,

and finance as well as trading with the Kingdom (Brodie & Winklhofer, 2007).

Over the years, the bank is more than dedicated to support the project in a strategy to

increase its development projects. For instance, it is behind the world’s famous phosphate

development. The institution is supported by the mosaic in Saudi and became the first bank to

receive the support. The bank has a beta version that allows the customers to apply for

businesses, dubbed ‘Riyad Bank Business.’ The application led to the one-touch offer through

the tablets and smartphones offered by the corporate thus secure and convenient. Across the

country, the bank sponsor conferences and seminars on the issues affecting the financial and

global challenges (Subbiah, & Jeyakumar, 2015).

Islamic banking is providing the holistic Islamic products and services and the financial

transactions to investments and financing solution to both corporate and retail banking. In the

Islamic banking is fully guided and guided through the sharia committee (Khan, 2011). The

journey of digitizing the Islamic banking sector held an educative workshop in 2014 and trained

over 300 employees and additional sixty follow-up visits for the future of the bank. Through

incorporation of online services with Islamic banking, the department strengthened the

financial operations counting approval and review of car financing, funding real estate in the

Arabian sub-continent.

It oversea branches are extensive with a good network including in Singapore and

London. The foreign branches are important in providing the corporate financing and

investment opportunities. Their investment abroad is substantial (Brodie & Winklhofer, 2007).

Risk management is a key pillar to the financial institution especially in the era of globalization.

The risk frameworks and policies are approved by the committee associated on areas of interest

income risk, liquidity risk, and asset quality risk.

18

Ladies banking is part of the bank recent entry into the banking industry. The sections

and branches are spread in different parts of the Kingdom with an aim of reaching more women.

In the 21st century, women and ladies in particular are empowered and have businesses that

require financial support (Brodie & Winklhofer, 2007). The bank has taken the initiative to

establish all ladies divisions thereby increasing the number of clients and the profitability of

the bank. At the moment, there are 75 branches offering the services.

The technological innovation has changed the structure and the nature of banking. This

is healthy in sustaining the competitiveness of the sector. According to with the (Subbiah, &

Jeyakumar, 2015) the core banking has been assimilated in the Riyad banks. The branch

network is noted to be extensive, and it has widespread to the other regions. The realized

benefits of core banking are reduced transaction cost, rapid implementation customer's

satisfaction and the management of increased transactions from time to time. In addition to that

is the better security of both the bank assets and customers wealth (Brodie & Winklhofer,

2007).

The customer feedback has shown that they are happy with the new experience with the

current changes. Core banking is a new trend in the banking sector; it has improved the speed

of transaction and faster communication. According to with Budd, (2011), e- banking is the

first technology to serve the economic time since the users can be able to complete their

transaction on the computer and give computerized to the users of financial statements. The

clients obtain their accounts information with effective operations. The customers can request

and view the own following accounts and related ones, credit and debit cards, funds time

deposit, saving certificates, loans, treasury bond, the latest transaction of the current month and

can view and print all required statements (Budd, 2011).

19

On the other hand one has a chance to make transactions from one account to another,

can transfer credit card and to any charity, the only requirement is the digital signature. On the

same line, the client can request the following change in mailing address, change or complain

to add a related account, to make external transfers and to manage supplementary cards

(Radhakrishnan, 2008).

The consumers have to attract to the current technologies since it is a convenience, it is

an easy way of making transaction and in most cases, and it saves on the cost (Anguelov,

Marianne, and Hogarth, 2004). The Geographical location of either small firms or the large

firm is not a limitation of banking since the e-banking solves all this. The bank allows the

clients to make different global activities when buying and selling of goods and services to

other individuals (Shin, 2008).

The notable effects of digitalization are customer’s satisfaction; retention and

acquisition are considered as key in the Riyad banking sector. The research which was

conducted by a group of economists showed that the cost of admitting a new customer vary by

20% in comparison with the traditional ways of banking. The evolution of electronic banking

started with the introduction of the ATMs, and this sector has made several improvements

catering for telephone banking, direct bill payment and electronic fund transfer and online

banking. This is according with Cristina, (2008).

In the recent years, the Riyad Bank has made several improvements in the existing

technological achievements (Khan, 2011). For example in the e- banking the cash management

service is the new way of looking at the loopholes where the bank makes the unnecessary costs

which may result to lose. On the other side, the customers' wealth is safeguarded through the

new service delivery. Furthermore the broadband transmission, internets access through the

mobile phone and Web TV is also new methods. The Riyad bank can be able to carry out

20

cheque scanning from another banking institution to see that it is valid. With this system, the

customers access their accounts 24 hours for seven days (Brodie & Winklhofer, 2007).

The other new thread is anywhere banking with the widespread banking technology the

customers has a chance to check their bank accounts at any location including the inner of the

remote areas. The strategic positioning of ATMs in the hotels, malls, airports and rail stations

has made withdrawing of cash to be easy where the customers where customers can carry their

normal activities (Ravi et al., 2007). Large numbers of clients, who are attracted to the banking

sector, want to have an eye on their money matters. Viewing their accounts periodically and

also checking the receiving payments (Kolodinsky, Hogarth, & Hilgert, 2004).

The last but not least improvement in the Riyad banking sector is credit cards and debit

cards this allows the customers to spend their money anywhere with the limit given by the bank

managements. Khan, (2011) in this case, when a transaction conducted is balanced in the

internet banking house where the individual account may be increased when money is

increased, or the account reduces when the money is paid out. With the Master Card or Visa

card, you can make travel payments with easy (Dangwal, 2010).

According to AL-Faraj, Bu-Bshait, & Al-Muhammad (2006) who investigated the

performance of the Saudi commercial bank firm, he used the DEA to analyze the technical

ability of the Saudi banks during the year 2002. He made a comparison with the efficiency of

the world banks scores. The Analysis demonstrated that the Saudi commercial banks compare

equally with the world mean scores. The recommendation at this point was that the Saudi banks

should continue adapting the new technology since the performance was as result of the

technology in the banking sector. This facilitated the competitiveness in the banking sector

(Dangwal, 2010).

21

2.6.2 The Al-Rajhi Bank

The AL-Rajhi Bank has adopted the internet banking, according to (Luis, Carlos &

Miguel, 2008), the extensive technology innovation and telecommunication has facilitated

financial distribution channels in different forms such as ATMs, telephone banking, and PC

banking. The latest innovation is internet banking which is very healthy in the banking sector

(Luis, Carlos & Miguel, 2008).

The commercial uses of the Internet have become a faster growing of the World Wide Web

(WWW), (Hamid, Mustafa, Abdullah, Etl, 2011). The bank has invested heavy in the

development of the internet channels the internet banking has evolved over duration of time

where the bank has used it to offer more opportunities that facilitate the management meeting

the better customer services through interaction, data mining and customization in the internet

banking service (Luis, Carlos & Miguel, 2008).

AL-Rajhi Bank adopted online banking which was introduced in the year 1980s (Luis,

Carlos & Miguel, 2008) this time the customers were provided with an application program

that facilitated individuals operating personal computers. The PC was dialed into the bank

through the modem, telephone line, and the operated programs. The system of internet banking

was faced with a challenge of the insufficient fund and a limited number of users. Later the

online banking caught up where the customers were able to use the system sufficiently through

making transactions over the web. In the year 2001 to 2004, the level reduced but later during

the year internet banking started to progress (Aladwani, 2001).

Al-Rajhi bank is the best bank in the digital marketing in the financial services

according to the internet Awards category in 2012. In the ranking of the Islamic financial

institutions, the Global finance magazine awards the world’s best celebrated institution in the

22

Islamic world. Its website won the best commercial web in the continent, and the only bank in

the country.

Online banking enables the customers to perform banking transactions using a computer

that has internet connections (Aladwani, 2001). On the same note, it enhances the customers to

have access to their accounts and gets the general information from the bank. This has

eliminated the use of letters, faxes, original signature and telephone confirmation. The

customers are free to ask any relevant information and get feedback without necessarily moving

to the bank. Traditional retail banking services are possible to carry out such as opening an

account or transferring the fund from one account to another (Khan, 2011).

To add on the list banking services such electronic online payments through

telecommunication networks (Aladwani, 2001). This provides the local connection to

worldwide that access from any internet connection. The PC banking facilitates the customers

with the financial software package to fill their details online, the members after that can send

the details to the bank through the private network. The bank is using the technology

transformations to expand their customer's relationships. The extent of use of technology

depends on the development level of the bank and the client's acceptance to the changes in the

technology of the banking sector (Aladwani, 2001).

The two main ways that the bank uses to offer the service to its customers are existing

bank with physical offices or the brick- and mortar bank. This gives the customers chance to

excise the one they are comfortable. A computer with the database is set in the bank this

enhances to serve other branches with the same connection from one point. The virtual banks

enable the customers to make the deposits and withdrawals from automatic teller machines

ATMs (AL-Faraj, Bu-Bshait, & Al-Muhammad, 2006).

23

According to Thulani etl., (2009) there three functional types of internet banking, they

are informational, communicative and transactional. Informational in this type the bank has a

marketing information concerning the bank services and products which are found on the stand

–alone server. The second one is communicative this one allows the interaction between the

bank's system and the customers. In this case, the two can exchange the required information

and give the immediate feedbacks to the both parties (Khan, 2011). This makes banking

operations to be easy and saves time. All the same, the system is limited to electronic mail,

accounts inquiry and loan application. The last type is transactional this allows the customers

to make direct transactions with financial implications. In this case, the holders can make

transactions from their bank to their account and also from their accounts to the bank (Dangwal,

2010).The customers through this system can make payments to the third party. Either the

members can be members inside the bank or outside the bank. The payments of bills are also

possible in this system.

Servon and Kaestner (2008), note that the internet banking has to be considered as the

necessary way to reduce the cost, some of the cost is transport cost from one bank to another

during transferring of the fund from one bank to another (Khan, 2011). Secondly is the

accounting cost which is as result of human resource required to carry out the bulk calculation

involving large numbers of the customers to be served. This cost has been minimized by use

of software and programs which enable to balance the financial calculation (Servon and

Kaestner, 2008). The other cost is time value of cost it is evident that the bank was taking the

long process to complete one activity. This time wasted could have been used to achieve other

incomes. With the current technology, the bank saves a lot of time when serving the customers.

This is economic to the bank.

On the same line, the use of technology has created a good relation with the customers.

The relation with the customers helps to increase the numbers within the set limit of time. The

24

profitability of the bank has been facilitated by the significant number of the customers being

served by the bank per day. It has been simple to maintain the clients and at the same time

improve on the shares to the client (Luis, Carlos & Miguel, 2008).

In the competitive banking sector, the use of the current technology is crucial since the

bank can be able to make quality outcomes which help the bank to compete with others

favorably. It is considered as a competitive advantage of any financial entity (Khan, 2016). The

current banking technology helps the clients to carry their own transactions without visiting

the normal banks. This has been made possible through the use of 24/7 system. This is where

the bank systems are in operation for long hours. This gives their customers chance to carry on

with their business transactions at all time without limitation.

The bank has an advantage of checking the transactions made by the customers with a

lot of easiness; this is because the transaction takes place on the computer network which has

access to all clients who are registered. This gives the bank an opportunity to monitor the

problems and searches for solutions which could result in future. The bank also provides a

direct assistance to the clients without direct contact. According to AL-Faraj, Bu-Bshait, & Al-

Muhammad (2006), there are also able to reduce the delays which take place in the certain

season.

2.6.3 The National Commercial Bank (NCB)

This section is concerned about the literature review of the national commercial bank

in Saudi Arabia banking sector. The article focus on the positive and the adverse effects related

with the digitalization of the banking industry (Khan, 2011). According to Saudi Arabia

Monetary Agency (Sama Yearly Statistics, 2017), the commercial bank has evolved and

adapted the new methods of service delivery to the customers in the recent years. The new

25

technology in the banking sector is in use to make good returns to the bank and at the same

time enhance good customer relationships.

The computer networks assimilated by the bank have enabled to connect customers

locally and abroad (Brodie & Winklhofer, 2007). In this case, the bank has computer

monitoring system which is located in the central region; it is networked with other branches

in the same firm. The clients have access to the systems from different regions of operation.

This has made communication easy from the bank management to the customer service.

Customers can be able to enquire the information from the bank and the bank able to give direct

feedback to the clients. On the other side, the back passes relevant information or message to

the customers very easy without any movement (Khan, 2016).

The bank has registered a notable increase in the numbers of backing customers for the

recent years. This has been the case in the regular use of ATMs this helps the customers to

make the transactions throughout the period or what is referred 24/7 system it has enhanced

the customers to make direct trading activities from the bank to his or her own account. The

change in online service rather than teller based. This has increased the number of young

generation to join the banking sector (Servon and Kaestner, 2008).

In addition to this, the bank has absorbed the structuring of banks product that is line

with the law, and this creates the best working environment. In this case, the system restricts

interest- bearing transactions. The firm has been able to give over one thousand ATMs to

different customers over the large geographical area. The bank is on the front line in providing

the clients with on-line, phone and SMS banking capabilities. It is clear that over 70% of all

the transactions are given through the electronic channels (Luis, Carlos, & Miguel, 2008).

According to Tadawul.com.sa, (2017) the free online trading enhances about one million

transactions per single month.

26

The success of the bank will be determined by the ability to attract the youth from Saudi

to enable them to make maximum benefits from the available technological advancements. The

effect of technology, on the other hand, is the reduced numbers of employments which have

resulted from most of the banking activities changed to machines. This has negative effects on

many educated individuals in the country (Aladwani, 2001). If it is looked from another ago

the transactions are done by mostly the employed people of the business men and women. This

means shortly the banking sector will face will the challenge of less income despite an increase

in the use of new technology.

The mobile banking has facilitated better performance in finance, the national

commercial bank in Saudi have recorded a notable progress regarding cross income as result

of welcoming the new methods of offering the services to the customers (Servon and Kaestner,

2008). This has been possible through reduced cost of providing service and products to the

clients within a short duration of time. For the last five years, the bank indicates better results

than the time the new technology was not available. The customers have increased almost to

double as a result of the faster operation in the banking sector.

According to (Alahli Annual Reports, 2017), the bank has realized the following

benefits out of the new technology in ATMS, mobile banking and e-banking as stated below.

Firstly the ATMs give an opportunity for the most financial institutions to increase their

revenues through secured initial cost which were incurred; the technology assisted the bank to

automate the services which were done manually (Khan, 2016). The bank makes some saving

for example the reduced number of cashiers and also the overtime payments which were

claimed by workers. The general cost of operation has reduced since the bank management

can be able to cut down the unwanted number of employees in the financial institution. The

main costs which were reduced are the payments of some salaries to tellers and back office

personnel and the general cost of asset maintenance (Luis, Carlos, & Miguel, 2008).

27

The staff productivity significantly increased through the fact a given area was covered

by the new technology; areas which were covered include giving out cash, taking cash and

preparation of statements. The workers can now concentrate on a zone making it more

productive such as cheque sorting and clearing area. The new technology by use of ATM has

created the customer confidence. This enhances the bank to continue investing in the new

technology such as internet banking, telephone banking, and electronic cheque clearing

(Aladwani, 2001).

The general performance of the bank has been differentiated from the other bank since

its performance is outstanding in comparison with the other banks in the same region. It very

easy to compare the financial results by use of ratios, this was tiresome due to huge calculations

which were there before the introduction of software's that handle big sums (Radhakrishnan,

2008). The congestions in the banks have significantly reduced mostly during the end months

where the customers are doing a lot of transactions. The tiresome works of serving the long

queues, this was reduced by the development of the computers which enhance networking.

The risk management was reduced by the new technology that uses the computer

software's that hold a lot of data that is used in the preparation of financial statements. The

human beings are prone to making the mistakes those results to loss of the banks and losing

the customer's confidence. This means the solution was reached through the new skills. The

comparison in terms of cost used to make a single transaction was reduced by 40 cents (The

Wall Street Journal, 2006).

According to Radhakrishnan (2008), the bank having the desirable technology provides

the customers with consistent service this brings about satisfaction to the customers at all time.

This has been made possible through the computers enhancing the 24/7 service to the clients.

The customer can be able to carry their activities without delay from the bank. The customer

28

does not search for alternatives which could have reduced the income of the bank. The program

used in this case is automatic programs which enhance individuals to have self-services at any

time irrespective of geographic area (Kolodinsky, Hogarth & Hilgert, 2004).

Furthermore its increase the customer perception control this has been giving the

customers benefits using the SSTs (Khan, 2016). The customers are concerned with

convenience mostly when dealing with the bank's accounts. The location of the ATMs in

strategic points is considered healthy, such areas such as shopping mall and filling stations.

The customers do not have to carry solid money. Saving money and time is another greatest

benefit since the money can be used in other activities and time also can be used to make other

contributions. The customer can combine the activities without necessarily moving from one

bank to another at the same time (Radhakrishnan, 2008).

2.7 Gap in the literature

It is clear from the pieces of literature that a number of case analysis and studies have

been carried out on digitization of banking sector both in and outside the country in the recent

past. However, very few of the journals and articles compare the three banks. According to

Khan, (2011), examined the customer’s satisfaction and quality perspective in relation to the

e-banking and online banking in the country. The technical/functional quality is better in

predicting the customer’s satisfaction, impacts, and increasing of the clients than the

SERVQUAL based model. Kaleem & Ahmad (2008) compares the view on the result with the

incorporation of the internet in the banking industry. There are differences in the satisfaction,

reputation, and revenue collection in the wake of digitization era in the three banks. The

reliability and tangibles were the most outstanding features that clients attach more focus on.

As it can be revealed from the close synthesis of the materials, none of the direct comparison

can be located on the libraries.

29

Though a few authors such as ((Filomina, Merciaselva, & Sudheendran, 2009), and

Cristina, (2008) which concentrate on the technological service based services in these banks,

e-marketing and banking options in the banks, and upcoming technology in the industry. In

precision, the focus has been on the customer’s sex, level of education, age, and occupation in

their data entry. At the same time, the variables are regarded despite the geographical locations.

Cristina, (2008) looked at the students in colleges and universities possessing the

accounts. There are many colleges and university students with accounts and see the future of

banking as the same as technology. They are satisfied with the emergence of the recent online

portal and electronic businesses are part of the digital generation that would embrace. While

the young people wanted to be treated well, the independence with cash availability remains a

concern.

Khan, (2011) also researched on the perception of the ethnic and racial group on the

matters on the Internet use while banking. The result indicated that although no statistical

disparities in the overall satisfactions, the largest groups including the Muslim, Hindus and

Christians showed the differences in quality dimensions. Muslims, for instance, are receptive

to the Islamic banking as well as the ladies banking that are some of the product that are offered

by the banks. The research by (hydrant.co.uk, 2017), the customer satisfaction and continued

support is influenced primary by the education, internet, and good customer relations.

It is nevertheless clear from the customer satisfaction piece of literature that viewpoints

are due to a variety of factors. For example, (hydrant.co.uk, 2017), the client consumption

behavior is predisposed by characteristics like lifestyles, life-cycle, economic situation, self-

concept, and personality (Filomina, Merciaselva, & Sudheendran, 2009), on the other hand,

advance the matter into the image, satisfaction, value, evidence of service, service encounters,

30

and client’s perception in relation to quality service delivery. Both the internal and external

conditions are influencing the satisfaction in the region.

There is no doubt that in the comparison of the banks in the kingdom is vacuums that

need to be researched more extensively and thoroughly. Hence, the primary objective of this

investigation is to examine the impacts of digitization and the customer satisfaction by

customers in Riyad Bank, NCB Bank, and Al-Rajhi Bank. Having looked at the areas of

interest, it is clear that the structure of the banks requires close analysis to understand the

consequences thereby comparing the same (Rose & Hudgins, 2005).

31

Materials and

Methods

“Everyone has a will to win but very few have the will to prepare for win”

32

Research Methodology

This part examines the methods used in the collection and analysis of data concerning the

effects of digitalization in the banking sector in Saudi Arabia. The methods will help to analyze

the collected data to indicate the effect of technology in the banking sector clearly. The research

methodologies are as follows;

3.1 Primary sources

3.1.1 Sampling

The application of sampling method in the part of research methodology, the sampling

method was used to assist the research to filter some of the materials which were collected. For

example in content analysis samples of different period containing different information was

sampled so that the right one to be selected. In the same way sampling was applied in the

questionnaire to separate them in different group of different area (Central, Eastern and

Western). The educated from the less educated and in the same way the one which had relevant

information from the other side. The method used in the research study in the three performing

banks in the Saudi Arabia is sampling. The three banks, in this case, is Riyad, AL-Rajhi and

NCB bank. The main focus of the research was to check the effect of digitalization in the

banking sector toward the customer benefits and banks profitability.

The sample size taken from different area in Saudi Arabia such as Central, Eastern and

Western. The groups which were selected were the customers both existing and potential, the

employees and members of managements. Sampling is a technique where a subset is used to

represent the whole population. A sample is a group which is selected to represent the entire

group under research.

3

33

The methods which was used were simple random sampling. In simple random sampling,

the customers were given equal chance to be selected to offer the required data concerning the

effects of the new technology in the banking sector. The sample was able to provide the reliable

information on how the new methods have facilitated the customer service and also has

improved the profitability of the three top banks.

Since the groups were well represented the changes in banking sector toward the

customers and the banks were realized. The sampling methods which was used and the groups

which were selected facilitated adequate information that is necessary to carry out sufficient

research on the effects of the bank technologies and the customer's service. The customers,

employee and management staffs enabled the data to make conclusions and recommendations.

3.1.2 Questionnaire

The questionnaire, the main idea of using the method is to verify the effectiveness of the

new technology in the banks such as Riyad, national commercial bank NCB, and AL-Rajhi

bank. The focus is the application of the technology to improve the customer relationship and

improvement of performance in the bank. In order to collect the data for the banking sector in

this study, the questionnaire is used. The questionnaire was distributed to different groups

through online survey such as employees, existing customers, potential customers and the

management of the bank.

A group one and hundred and fiftyy individuals from the three different groups were

given the questionnaire. The 299 client’s information was used to arrive at the results. The

design of the questionnaire had straight forward questions to extract the exact and reliable data

from the people. The sample of the questionnaire is attached in the appendices. The

questionnaires were sent through their mobile and smartphones. The questions were multiple

choices as well as open-ended questions. With the adoption of technology and the widespread

34

internet services within the kingdom, WIFI is provided free thus the client were in a position

to return their filled document on time. As online and e-commerce is on the rise, they were sent

in form of soft copy word document for easier answering and presenting for analysis. The

mobile device ratio according to the communication commission of Saudi Arabia indicates that

most of the citizens regardless of their ages have a mobile device that can access the Internet

at any time.

3.2 Secondary sources

Content analysis

The last method which was used in the collection of useful data is content analysis

concerning the effects of digitalization in the Saudi Arabian banking sector. This involves the

journals, reports and the books which are written about the digitalization and its implications

in the banking industry. The analysis included the main three leading banks that are NCB bank,

Riyad Bank, and AL-Rajhi banks.

The research selected the materials from different institutions including the financial

performance of the three banks. The year of operation was selected from the time the banks

adopted the new technologies in the sector. The analysts were selected from the learning

institution. The secondary data provided information such as when the bank accepted the new

technology and the current plan the banks have to make more assimilation to the new

innovative.

Moreover, the sources provided benefits that the banks have realized after adopting the

new methods of providing the products and the services to their customers, the customer's

acceptance of the new technology. Also the benefits the customers are enjoying after using the

new methods in their daily operations. It also considered the real technological advancements

35

in the banking sector such as e-banking, online banking, mobile banking, current

communication trends and the use of the master card and visa card. The secondary data were

able to provide adequate data when analyzed can give relevant and resalable information to

make the results and recommendations in the banking sector.

The two methods were found to be the most suitable in the carrying out the research.

Their application resulted to reliable information that can be compared with other methodology

to make the desirable end results. The measuring tools toward the three methods give the best

results of the methods.

36

Results

&

Discussion “Do not believe in anything

because it is presented so, it is

said to you, unless and until

you yourself explore the truth”

37

Results & Discussion

From the synthesis and analysis of the data, the effects of digitization in the Saudi

banking sector are increasing the number of clients, making transactions faster and convenient,

increasing the security of the account owners, streamlining the operations, increasing

advertisements and promotional campaigns, increased number of divisions, departments and

products since the inception of the technology. Moreover, the reporting, sharing of information

between departments is easier, cheaper and faster. At the same time, the online baking,

sponsoring, promotion and advertising have increased the financial base as evident from the

financial records. In understanding the results of the research, it is important to examine the

core values of the banks. Over the five decades, the banks have been customer-centered

adhering to the core values as highlighted in their vision. In delivering the innovative economic

solution they enhance quality of life and the core values include:

Passion- it is the strong assurance to the anticipated client and addresses their needs

beyond one’s expectations. In the banking sector, Riyad, Al-Rajhi and the NCB have sections

of Islamic banking, corporate banking, ladies banking, and the online portal that are ensuring

the banking wherever you are anytime.

Transparency and integrity- this is the openness and standards of personal and corporate

ethics. As we are speaking, due to the interaction with the kingdom, financing abroad

ideologies, and investments, the Board of Management, shareholders and top executives are

working with high moral standards to ensure smooth operations both in traditional banking and

digital platform. They are aware that at the moment, the internet penetration and increasing

financial assistance providers, transparency and integrity plays a key role in the survival of the

4

38

enterprise. According to the annual reports, the financial statements indicate growth in

revenues, branches, products, and 24/7 banking.

Solution oriented- it is helping the audiences and customers achieve their goals. As

mentioned earlier, the banks have embarked on financing large projects both locally and

internationally. Riyad bank, for instance is on record to finance the world large phosphate

project in history. The collaboration with the kingdom as mentioned by the respondents

indicates that citizens rely on the banks for solutions on matters relating to mortgages, loans,

and insurances services.

Modesty- is the humility and deed in thought in what we do. Deeply concerned with the

welfare of the citizen and the foreigners, the banks are offering services to the people regardless

of their economic status, religious affiliation, and political and social status.

Innovativeness- it is nurturing and fostering imagination thus creativity for betterment

of the citizens. Online portal, e-banking, ATMs, Visa, MasterCard’s, and Mobile Business

including the point of sales operate in various parts of the nation. With the digitization, the

electronic platform ensures the people get the services wit h a single click anytime. It is not

possible to set up branches in every villages and urban centers but with the electronic

dashboard, the client accesses their accounts, withdraw and deposit at the designated point of

sales across the kingdom. Addition, the Islamic banking goes with the Muslim faithful thus

serving the people.

Meritocracy- is differentiating, reinforcing, and defining excellence in customers. It is

on record that within the banks, there is division of products and services according to their

purpose. Islamic banking is meant for the Muslim faithful, Ladies banking is for the women,

and online banking for the younger digital generation.

39

Care for the society- this is contributing to the welfare of the society and for the

betterment of the future generation. The banks are offering scholarships, seminars, and

workshops both traditionally and digitally. With the technology hybrid, the audiences are many

and a potential client looking for advices and assistance is easier than done.

4.1 Results from questionnaire

We want to measure the effects of digitalization in Saudi banking sector and analyze

data using SPSS software program. Our population will be people who living in Saudi Arabia

and our sample consists of 299 persons from Saudi living in different area.

Now, we are going to do one sample t test for the variable, customer satisfaction (in

terms of percentage). By this we are testing the statistical difference between the sample mean

in the case of customer satisfaction and the known or hypothesized value of the mean (50%) in

the population. We have to test, H0: µ = 50% Vs µ ≠ 50%.

We can make an initial interpretation of the data using the one sample statistics table,

which presents relevant descriptive statistics:

Table 4.1

One – Sample Statistics:

Give the rang of customers

satisfaction in termof percentage

N Mean Std.Deviation Std.Error Mean

299 74.331% 16.11267% 0.93182%

The above table shows the sample size, mean S.D aand standard error of the mean. Source:

research paper.

40

The standard error shows the inability of the t test to perform correctly. Here, it is

0.93%. Using the standard deviation, we can say that, the mean depression score (74.3311±

16.11267) was lower than the population ‘normal’ depression score of 50.

Table 4.2

One – Sample Test:

Give the rang of

customers satisfaction

in termof percentage

t

df

Sig- (2

tailed)

Mean

Differences

95% confidence of the

Differences

Lower Upper

26.111 298 .000 24.33110% 22.4973% 26.1649%

The above table shows the sample t-test value, meanDifferences, and 95% confidence of the

Differences. Source: research paper.

The test statistic value is t = 26.111with 298 d.f. In the above table, moving from left-

to-right, we are presented with the observed t-value (t), the degrees of freedom (df), and the

statistical significance (p-value) (sig.2 tailed) of the one-sample t-test.

We know that if the p value is less than the significance level α, then we can reject the

null hypothesis. Otherwise, we can accept our null hypothesis.

We have t (299) = 26.11 with 298 df and p value = 0.000

Here, our obtained p value < 0.05 (it is p = 0.00). Therefore, it can be concluded that

the population means are statistically significantly different. If p > 0.05, the difference between

the sample-estimated population mean and the comparison population mean would not be

statistically significantly different. We conducting the one sample t test in the assumption that,

41

all the samples exactly like the population. The t test in SPSS provides the confidence interval

also. The 95% confidence interval of the difference is (22.49, 26.16).

From the first table (descriptive statistics table) we can see that the sample mean is

74.33%. After conducting the one sample t test, we can see that the mean difference is

24.3311%. Here, the test value is 50%. So, we can conclude that the sample mean is same as

that of population mean with a difference of 24.3311%. Here, the “sig. (2-tailed)” value

is”.000”, this actually means that p < 0.0005. It does not mean that the significance level is

actually zero.

Figure4.1:

Exhibit 1 showing normal Histogram for range of customer satisfaction in terms of percentage

42

4.2 Results from the financial statements

4.2.1 The Al-Rajhi Bank

According to the financial records including annual reports and cash flows, it is

impactful in the last three years. The sales, customers, revenues, and equity have increased

significantly. From a close analysis of profitability, liquidity, and performance, the ratios are

evident from the tables in the appendices. Though not calculated, the steady increase in the

capital from previous years summarizes the case. This part of the paper focuses on the results

of digitalization to the banking sector. This is the first part that discusses the results of

digitalization of AL-Rajhi bank. The reports have arrived after the analysis of questionnaire

and content analysis. The bank has been able to adopt the new technology in the banking sector.

Some of the technologies which are available are electronic banking which enhances the

customer to make the transactions to take place at all time. The uses of ATMs which enhance

clients to make the withdrawal of the money anywhere, the machines were well supplied in all

regions. The ratios summarize the growth of the banks in the recent past after the introduction

of internet banking.

This part represents the financial performance of the bank as results of technological

advancements. The bank is recorded as the leading as the international banking group. The

total amount of assets of SAR 267 billion which is equivalent of US71.2billion, the bank has

an overall of the capital of 15 billion which is the same as US$ 4 billion. The bank has a

capacity of employing a total of 9000 workers. In the year 1987 was recorded as the Saudi

shareholding company. The return was gotten as result of increased service to customers.

In addition to financial performance, the bank has been able to spread to different

regions of the country and outside the country. Through networking system the bank has

established some ATMs; in the year 2013, the bank was able to open a total of 3505 ATMs.

43

The well-distributed ATMs facilitated serving the customers from different areas without

necessarily moving from one bank to another. The ATMs save the time and money through

reduced transaction cost and strategies. Furthermore, the bank has at least 492 branches this is

effective to the customer's services. In case the customers have to complain that requires

consolation from the head of the organization then the clients are easily served.

The statistics show that the bank is one of the leading and has made progress since it

recorded a net income of SAR 7378 million which can be converted to be US$ 1.9 billion; this

was extracted in the year 2011. On the same note, the bank recorded SAR 7890 million. This

is a clear indication that there was a notable improvement in the finances. The bank has

enlarged it operations through developing of the new programs. The leadership style has

changed over a period of time since the bank adopted the new production technologies. The

coordination and management have become easy since the systems are centralized.

The new methods of solving the major challenges in the banks have changed since the

human errors have been eliminated by the use of computers which are not prone to making

mistakes. The numbers of workers have reduced with increased number of customers since one

employee can serve ten customers at the almost same time. The new technology has enhanced

the customers to access the shares through the mobile phone, and this was an achievement since

the other banks were not able at that time. Currently, the bank has over one million internet

banking users. The development of 600000 apps has enhanced the customers to work their

calculations concerning money easily.

The AL- Rajhi bank has resulted in a new product that is updated stock; the interested

customers can access the information about the stock and make the transactions through a

screen which has the connection with the Electronic securities information system. It acts like

44

the stock exchange market where customers can buy and sell their shares freely in local Saudi

share.

The interpretation is that the company has been improving from one financial year to

another. This shows positive increments as result of the good application of the technology in

the banking sector.

4.2.2 The Riyad Bank

The second bank in discusses Riyad banks in the competitive environment where the

bank operate there was the need to adopt the new technology to make a healthy competition

and make maximum profits as well as improving the customer's satisfaction. The bank

management realized that the traditional methods of offering services to members were

resulting in minimal development and profitability.

The online portal has been lauded as the most effective way of banking wherever one

is at due to the simplicity, intuitive interface, and design of the dashboard. The security features

are well impacted to secure the accounts and their balances. The appropriation of earnings

follow an applicable and relevant regulation under the policies in sharing the dividends as

indicated below. A total of the 25% of the net profit acts as the statutory reserve. The fee is

scrapped or paid up once the transfers are completed. The distribution of the specified

percentages is equitable done among the stakeholders with each get their ratios as per the

shareholding and the recommendations made by the Board of Directors. The strategic direction

of the annual and interim dividends and the proposal is per the recommendations.

On the other had he also noted that the departments were depending on each other to

get the clients records? This made it more difficult this too was challenging to have access to

systems, and this increased the degree of risk in the organization. The Riyad Bank management

45

was able to recognize the benefits which would be gained by moving from the manual –based

system to computer-based system, which facilitated staffs to effectively manage the content,

save time, money and enable effective customer services.

Taking control of over million documents was a result of advancement in the

technology. Together with the IBM, the bank was able to adopt a program that was able to

store the large data which was received from the customers' records. This was possible through

the centralized electronic devices. Currently, the Riyad Bank has an ability to store over two

million files through electronic devices such as the computer. The bank receives more than

50000 new images on daily service. The files are as results of customers opening new accounts

and access to loans. With the current improvement in the technology in the banking sector, the

bank has developed the system that works in the same way through the use of networked

systems.

The second result is accelerating access to information, in the past; it took a long time

for the customers to access to the needed information since the bank required a chance to make

the information necessary. It is possible with the current adjustment in technology the access

of the client information within no time. This follows the networked computer services where

registered customers with the password can open the common website to post or get intended

information.

The third result of digitalization in Riyad banking sector is the efficient content

management. Some few years back the bank was faced with the problem of sorting out

documents to send to the responsible department. The new technology makes it easy to sort the

documents automatically this reduces the time and tiresome job. This time is used in improving

the quality of products and services offered.

46

Also reducing risk and saving money, Riyad Bank has been able to reduce some of the

costs. This is done by lowering the expenses; some of them are a significant number of

employees and the initial cost of carrying transactions from one account. This cost reduced the

gross profits of the bank. The digital operations eliminated the risk which was caused by

manual process and several processes through the use of the programs and software found in

computers. The information which is reported is accurate and timely. With the new system,

the cost of operations is reduced this boosts the profitability of the bank.

Moreover, the better performance of the bank and customers satisfaction is reached.

The primary target of adopting the new technology was to improve the bank performance

regarding profitability and growth. With the current technological changes, the bank has been

able to extend its branches to a different part of the country and outside the country. With the

increased number of clients, the bank can have access to enough capital for its operation. It is

evident that the gross profit of the bank has increased over the last five years since the

introduction of the new technology.

On the other hand, the customer's services and satisfaction have arrived as result of the

new technology. Customers can now access their account at any time for 24 hours for seven

days. The faster movement of information from the bank allows the clients to make the quick

decision in their trading activities. On the same note, the customer can transfer their money to

different accounts with minimal charges. The increased transactions with satisfied customers

increase the earning to the bank.

In general Riyad Bank has kept the records since the introduction of the new banking

technology or what is referred to as digitalization. It is the largest financial institution in the

Saudi Arabia and the Middle East. It is known for its strong retail and corporate banking

franchise. The records show that the bank operates more than 300 branches in the country and

47

outside the country. The bank has been working together with Saudi business machine which

provides high-class technological solutions to the institution. For the development of new

services and products, it has been in front line to make the contribution. Some of the products

and services are Master card which enhances the customers to buy and sells goods without

having the solid money. The Visa card has been used to make travels from one geographical

area to another. Lastly, the standardized system enhances the customers to receive the

information at the same time.

In the business technology governance in the mission the department is strengthening,

monitoring and controlling the business technology of the bank. The information security is

necessary to implement and control the likelihood in the emergence of new threats. With the

digital devices and online banking taking place, there are initiatives to mitigate the security

risks facing the clients and the safes. In 2014, the firm launched a variety of marketing and

promotional programs meant to increase the corporate and retail banking. There are a variety

of marketing and communication channels with smart multimedia platforms.

The information sharing and promotion creates awareness to the selected clients and

address the specific targeted audience and products. Some of the campaign resulted to an

increased bank attendance by 64%. There is the blending of the traditional mode of advertising

the banks with the new technology of social networking and media channels has expanded the

reaching of the people and increasing the fan base. It is helping strengthen the bank

competitiveness within the country and abroad. The marketing of the banks in Saudi Arabia is

rated second in the category in keeping the women welfare and empowerment of the Saudi

women.

By the end of 2014, the marketing roles of the bank have intensified to affect the

complementing and supporting the system of digital and intelligent marketing. The bank

48

response to the evolving needs and the changing landscape in the banking industry is more

placed in the 21st century. Based on the bank statements and data, the bank trained employees

on the communication department to keep the flow of information steadily. Within few months,

the bank was able to accomplish concrete and rapid accomplishments and charities in the

platform like Facebook and Twitter. There are marketing screens all through for campaign thus

reaching many potential clients. In the selected branches, the effective communication with the

financial institution added another channel in the list.

‘Sharing marketing information’ is supporting all the business division through

providing vital information and data necessary for decision making. According to studies and

research, the indicators confirmed the customer’s expectations exceeding the banking

transactions. It is easier to search for the information; people spend less time and allow them

time to do their transactions effectively for a longer period of time. There is added value of

safety, peace of mind, and excellence in the branding department in different phases. In the

first phase, the development and modernization of the branding project are undergoing with

the influence of the internet. The publishing and applications reflect to the position as client-

centered facility.

The online and communication department is enhancing and supporting the imagery of

the bank, its services, and products. The dissemination and preparation of the media and press

materials in relation to the programs highlight the corporate, retail, and ladies banking to attract

the distinct media presence for a variety of ways. Strategically, the objectives of the quality

department are exceeding expectations and satisfaction of the populace. It is evident that the

advanced techniques have led to the improvement, quality, and continuous growth of the social

responsibility.

49

4.2.3 The National Commercial Bank (NCB)

This last part focus on results of the National commercial bank due to technological

advancement, the bank growth and development has been contributed by technological use in

the banking sector. Through the data which was collected and analyzed give clear information

about the financial performance of the bank. The NCB having adopted several changes such

as electronic banking that enhance the customers to carry their transactions online, make

payment online and can access their account often. The use of ATMs gives the customer a

chance to make payments and receive payments. They are able to carry their business for 24

hours for seven days.

The following are the results of digitalization from content analysis. As a result of

growth and development, the NCB is one of the largest financial institutions in Saudi Arabia

region. The bank holds an explicit license from the Kingdom government. The bank got a

degree on 20 Rabi Thani 1373H that is on 26TH December 1953. The Government realized

the bank potential in 1999 and got the majority of shares through the Public Investment Fund.

According to table1 on the appendices, the statistics show that the bank has a direct

ownership of 90.71% of the capital. It is considered the largest bank in the Arab world. The

bank was able to pay out a capital of SAR 20,000 million which is equivalent to US$ 5,333

million. The total assets at the end of the year 2016 indicated SAR 441 million which are the

same as US$118 million. After reduction of all expense, the net profit as at 2016 reported a

value of SAR 9317 million translating to US$ 2485 million. The shareholder's Equity totaled

to SAR 58738 million which are same to US$ 15663 million at the end of 2016. The fiscal year

2016 shows that the return on average shareholders’ equity was 17, 78%. Lastly earning per

share amounted to SAR 4.66 which is equivalent to US$ 1.24.

50

The statistics from the books of accounting of the bank showed that for the five

consecutive years the bank has been indicating improvements regarding net profit, assets and

the net profit. The research was able to give the reason behind this, which improved customer

services with the bank were able to promote a large group of individuals. The increased

numbers of customers that the bank served to their satisfaction was able to raise the financial

performance. In addition, the bank was able to reduce some of the operating costs that give the

bank an opportunity to increase the profit.

Through the technological advancement the bank was able to enlarge its operations as

follows: At the end of the year 2016, the bank was operating about 374 branches in the whole

country giving adequate and timely services to all members. The data showed that the clients

exceed 5 million that numbers arrived after an increase which was attributed to smooth

electronic services. In addition to this 94% of Saudi citizens were employed this translated to

8035 in the year 2016. Furthermore, the bank had a total of 3189 ATMs which were well

distributed through the kingdom.

On the same note with the newly developed channels such as e- banking, mobile

banking, and e-commerce about 94% of transactions were carried out successfully. The NCB

was the first one to receive the international certificate on business continuity management

which enables the bank to extend its operation to other areas. The customer’s satisfaction is

show with the positive trend with the profitability ratios as indicated on the appendices.

In Corporate Responsibility, the Bank is recognized by maintaining the good

leadership. Also to enhance the bank to cover a large geographical area and to work well with

the partnership the bank was successful in launching the new programs. This was able to create

job opportunities to so many citizens and also enable to access loan and other financial support.

51

The Questionnaire gave a significance results from the individual response, and firstly

there is a positive importance relationship between competitiveness and the introduction of

ATMs. This means that the use of the ATMs machines assisted the bank in making healthy

competition with other recognized banks in the world. The machines give the customer an easy

time to withdrawal their money from their bank accounts at all-time anywhere. This resulted

in the customers being happy and increased in number.

On the other side, there is a clear relationship between competition and online banking.

Online banking allows the clients to make transactions in their make account and can also

receive the information at the intended time, this able to bring change in the competitive

banking sector and so many customers were attracted to the new services.

Moreover, there is a close relationship between marketing and delivering bank

marketing services. To gain a large number of customers the bank needed to market its products

and services to the general public through advertising. This was made possible through online

exchange of information. So many potential customers were able to gain the information and

also made a clarification on the available platforms. This increased the customers to the bank

satisfaction.

To add on the same note the competition and mobile banking have close relationship.

The mobile banking allows carrying out their business account anywhere at any time. The

current improvements in the banking sector are the use of a master card and visa card. The

master card all the customer can buy and sell goods, this enhance the clients to receive and

make payments without using the solid cash. The Visa card gives the clients time to travel from

one geographical region to another. This is some of the improvement in the banking sector.

52

Recommendations

And

Conclusion

“The end justifies the means”

53

Conclusion & Recommendations

5.1 Recommendations

This part of the paper focuses on the recommendations to the three banks that are Riyad

Bank, Al Rajhi bank, and the national commercial bank. The first proposal focus on Riyad

Bank in Saudi Arabia, the first recommendation is based on the security of the bank operations

and the customer's wealth. The bank should be aware that the customers value their money so

much; therefore the security of their money should be a consideration. Due to the problem of

electronic fraud and hacking the bank should come up with new methods of ensuring the

security and giving the guarantee to the members. The recommendation is that the bank should

create passwords to the registered members only. This password will enhance the customers to

access the online banking services and remain to be their security. The bank should ensure that

they change the passwords after some time this is to eliminate any person who could have come

across the personal details of the customers. The bank should adopt new programs that ensure

that the problem of hacking is halfway solved; this can be done by employing expertise to make

sure that they note any small change in the working systems of the bank.

The recommendations to Al Rajhi bank, due to the widespread of the bank operations

and the large numbers of the customers they serve, the bank should be concerned with the

updating and be installing the new applications to solve some of the common challenges. Firstly

the bank should ensure that the computer windows and office application are updated, and the

latest software updates are bought from authorized sellers. Secondly, for fast online browsing,

the bank should ensure that the latest browser is up to date. It is necessarily for the bank to

install the Antivirus application and make sure it is up to date. It helps to keep a large number

of files from the customers secure and all information uniform. The bank should conduct a

5

54

regular scan to both the documents and computer applications this is to eliminate the Internet

threats and viruses that cause the file to block. It keeps the computers clean and documents

secure. Lastly, the firewall is healthy together with certified applications that enhance access

to the internet. The customer satisfaction level will be reached once they discover that the

technology is on Paramount benefits to them. It can be achieved over the short duration of time

by the bank managements.

Moreover, the competition in the financial institutions across the oil-rich nation is

healthy but the products provided and the commitment in the online banking and streamlining

of the operations like their neighbors is a point to consider. The inclusivity of the ladies sections

in the banking is a noble decision but there is more that is needed to encourage them to seek

financial assistance through the dashboards.

The recommendation to the national commercial bank of Saudi Arabia, the first

recommendations is on mobile banking the bank should come up with a new strategy of

ensuring the customers uses only one mobile phone number. The number should be registered

at the bank. It enhances to eliminate the people who may try to use their mobile numbers to

carry their banking transactions from one account to another. The bank should also make a

close supervision to the quality of the online services, investment policies and the internal

rating system. It can be achieved through conduction field research to the customers to make

the necessarily changes to customer satisfaction. Due to a large number of the clients and

branches opened by the bank in case of risk or significant loss the bank may slow down. To

cater for this, the bank should ensure all insurance parties are catered for. It includes the third

motor liability for insurance. To improve the quality of services to the customers the bank

should also ensure the computers used has high storage capacity, this will enable the bank to

keep the extensive data from the client transactions and increased numbers within a short

period.

55

5.2 Conclusion

The paper has been divided into different parts to deliver the quality research to the

study question. The article has discussed the effect of digitalization in the banking sector. Like

in other parts of the world, Saudi Arabia boasts of large financial institutions like corporate

firms, banks, insurance companies, and multinational companies. Some of the banks which

were selected were Riyad Bank, AL- Rajhi bank and the national commercial bank of Saudi

Arabia. In the introduction part of the paper, several technological advancements have been

explained. Some of them are electronic banking, mobile banking, ATMs, Master card and Visa

card.

Riyad Bank has launched Riyad Online, Riyad Mobile, and Riyad Business mobile that

are electronic interactive platform that enable the audiences to seek assistance and advice and

services in the end. In addition, the bank has Islamic and ladies banking sections that are

brainchild of the last two years. With the increasing use of online banking in the recent, it has

become secure and convenient. It is the current technological developments which have

resulted in the change in the banking sector. In the literature review, the paper has examined

other researchers view on the same line with the effects of digitalization of banking sector.

Different authors in the different period were used to bring the desirable result of the study.

Also, the paper has outlined the tentative answers to the effects of the technological

changes in the banking sector. A brief explanation of objectives of the study is clear in the

paper. Furthermore, the paper has used the two primary methods of recording the information

that is a content analysis which involves the use of the secondary source of information, some

of the material utilized in this case is the financial statements, journals and published reports

in the same area. On the other side, the questionnaire has been used to collect the relevant

information to the study of different groups such as the customers, potential clients and the

56

managements of the banks. The financial information from the two methods is used to make

the results, recommendations, and the conclusions.

Moreover the paper focus on the result of the finding, in this part the research showed

that there several effects of the use of technology in the banking sector. Some of the effects

which were discovered are the increased number of the customers over the current years is a

result technological advancement. The bank has been able to serve a large number of customers

from the new programs and digital networks. On the same note, the bank has been able to open

many branches across the country. The number of branches has enhanced faster services to the

customers.

The increased number of ATMs machines in most populated areas has helped to solve

the long lines of customers in the banks during service hours. With the ATMs, the customers

can be able to withdrawal money at any time anywhere. It has helped the customers to carry

their business activities for 24 hours in 7 days. The online banking has facilitated the customers

to have close monitoring of their accounts. The clients can check the payments of goods and

services and as well receive the payments from other accounts. It is considered an improvement

in the banking sector. To compare the financial performance of the three banks the statistics

show that the bank has increased the capital, the total assets, reduced the total liabilities,

increases the total shareholder's equity and there is general increase in the income to the three

banks. The technology has resulted in the better performance in the banking sector as well as

customer satisfaction.

In summary, there have been increases in the number of products, brands, branches,

faster transactions that are convenient and secure. The number of clients since the inception of

the technology has increased while the communication and sharing of the information with the

department is easier and instant. Over the last two years, the financial records have improved

57

due to the online banking that allows members access their accounts anytime. The traditional

paper work is greatly reduced and accuracy in the reporting is evident. With the trend, the three

banks are going to dominate the Gulf region in terms of insurance, mortgaging, loaning, and

offering other financial support.

58

Literature

Cited

“When you achieve the goal, let’s remember the

former’s role”

59

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64

Appendices

“We all have ability, The difference is how we

use it”

65

Appendices

Appendix - 1

The table below shows the financial performance of Al Rajhi Bank how a period of three

years.

Items(SAR million) 2016 2015 2014

Total capital 24540 22899 21300

Total assets 405 316 308

Total expenses 261 217 203

Total profits 11201 10330 9990

Shareholders’

equity

51095 46339 41896

Average

shareholders’

equity

20.65% 19.20% 18.34%

Earnings per share 6,45 5.94 4.99

*Source Annual report 2016

There is an improvement in performance from one year to another as result of improved

technology.

66

Appendix - 2

Al-Rajhi Bank profitability ratios

Ratio 2016 2015 2014

Current ratio 405/261= 1.55 316/217= 1.46 308/203= 1.51

Return on equity 24,540/51,095*100=

48%

22,899/46,339*100=

49.4%

21,300/41,896*100=

50.84%

Return on

investment

11,201/405,000*100=

2.76%

10,330/316,000*100=

2.69%

9,990/308,000*100=

2.57%

Net profit

margin

11,462/24,540= 0.47 10,547/22,899= 0.46 10,193/21300= 0.46

Average

shareholder

turnover

20.65% 19.20% 18.34%

Earnings per

share

6.45 5.94 4.99

*Source Annual report 2016

There is an improvement in performance from one year to another as result of improved

technology.

67

Appendix - 3

The table below shows Riyad bank financial performance for three years:

Items (SAR million) 2016 2015 2014

Total capital 23490 22899 22600

Total assets 245 230 216

Total expenses 217 219 209

Total profits 10340 9997 8444

Shareholders’

equity

37756 36774 36004

Average

shareholders’

equity

18.57% 17.56% 16.89%

Earnings per share 5.74 5.33 4.03

*Source Annual report 2016

There is an improvement in performance from one year to another as result of improved

technology.

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Appendix - 4

Riyad Bank profitability ratios

Ratio 2016 2015 2014

Current ratio 245/217= 1.13 230/219= 1.05 216/209= 1.03

Return on equity 23,490/37,756*100=

62.21%

22,899/36774*100=

62.22%

22,600/36,004*100=

62.77%

Return on

investment

10,340/245,000*100=

4.22%

9,997/230,000*100=

4.00%

8,444/216,000*100=

3.91%

Net profit

margin

11,462/24,540= 0.47 10,547/22,899= 0.46 10,193/21,300= 0.46

Average

shareholder

turnover

18.57% 17.56% 16.89%

Earnings per

share

5.74 5.33 4.03

*Source Annual report 2016

There is an improvement in performance from one year to another as result of improved

technology.

69

Appendix - 5

The table below shows the financial performance of National commercial bank in three years:

Items (SAR

millions)

2016 2015 2014

Total capital 20000 19453 18452

Total assets 440 404 318

Total expenses 230 225 217

Total profits 9817 8945 6720

Shareholders’

equity

58738 55017 49048

Average

shareholders

turnover

17.78% 15.34% 12.78%

Earnings per share 4.62 4.03 3.67

*Source Annual report 2016

There is an improvement in performance from one year to another as result of improved

technology.

70

Appendix - 6

National Commercial Bank profitability ratios

Ratio 2016 2015 2014

Current ratio 440/230= 1.91 404/225= 1.79 318/217= 1.47

Return on equity 20,000/58,738*100=

34.05%

19,453/55,017*100=

35.4%

18,452/49,048*100=

37.62%

Return on

investment

9,817/440,000*100=

2.31%

8,945/404,000*100=

2.21%

6,720/318,000*100=

2.11%

Net profit margin 20,000/29,817= 0.67 19,453/28,398= 0.66 18452/25,172= 0.73

Average

shareholder

turnover

17.78% 15.34% 12.78%

Earnings per

share

4.62 4.03 3.67

*Source Annual report 2016

There is an improvement in performance from one year to another as result of improved

technology.

71

Appendix - 7

MEASURE THE EFFECTS OF DIGITALIZATION IN SAUDI BANKING SECTOR

SHEET NUMBER:

AGE:__________________ LOCATION:______________________________

OCCUPATION: _______________________________

LEVEL OF EDUCATION:

a. Elementary

b. High school

c. Graduate

d. Higher education

1. Are you familiar with the technology used in banking sector?

a) YES b) NO c) To some extend

2. How do prefer to perform your finical transaction:

A) Visiting bank branch b) using banking technology

3. Mark the most used technologies below:

a) Mobile banking

b) Online banking

c) ATMs

4. How do you measure the bank performance affected by the new technology, mark

one.

72

a) It has positively improved b) The results are the same

c) It have negative results

5. How do you measure the security level of digital transactions?

a) High b) Moderate c) low

6. If the performance is affected in which way? Mark at least two.

a) The financial performance is better b) The customer services have increase

c) The economy has grown d) All the above.

7. Is there a relationship between digitalization and banking?

a) YES b) NO

8. Give the range of customers’ satisfaction in terms of percentage.

a) 25% b) 50% c) 75% d) 100%

9. Do you agree with electronic changes in the banking sector?

a) Strongly Agree b) Agree c) Neutral d) Disagree e) Strongly Disagree

10. It is considered easy to use electronic channels

a) Strongly Agree b) Agree c) Neutral d) Disagree e) Strongly Disagree

11). Do you thing digitalization the services will be competitive between Saudi banks?

a) Yes b) No c) To some extend

12). Do you thing the digitalization will speed up your banking services?

a) Yes b) No c) To some extend