How are digital services shaping the traditional retail and wholesale banking sector?
The customer-centric business model is always vital for the growth and profitability of the banking sector, regardless of the changing contours of delivery modes. The increasing digitalization in banking has improved the pace, scale, scope, and ease of both retail and wholesale banking services over the last few years. At the same time, it has led to increased efficiency and productivity in the banking sector, in turn, reducing the cost of conducting business. The technological innovation driven by ever-evolving customer expectations and the quest for improving business processes has paved the way for increased digitalization in the banking sector globally. Notably, the banking sector in Oman has always been a front-runner in adopting new ideas, technologies, and business models to provide hassle-free banking services to customers. Banks in Oman have implemented cutting-edge technologies, such as internet banking, mobile banking, and so on, and are currently exploring new technologies such as blockchain and AI.
How can the Omani banking sector fully capitalize on the opportunities brought by infrastructure projects, new PPPs, and SMEs?
As part of efficient and prudent financial intermediation, banks always have to look for sound and viable projects for funding. CBO, on its part, ensures that there is adequate liquidity in the system and banks remain robust and resilient to meet the credit requirements of all segments without undermining financial stability. Currently, there is ample scope in the banking sector to provide for higher credit to different segments of the economy. The reduction in the minimum capital adequacy ratio by 1% in 2019 and measures announced recently in the wake of the COVID-19 pandemic, such as 50% reduction in Capital Conservation Buffer (CCB) to 1.25%, increase in lending ratio from 87.5% to 92.5%, and reduction in interest rates on standing facilities would ease credit conditions considerably. Therefore, given the availability of credit, banks should be willing to explore the credit opportunities being offered by infrastructure projects, new PPPs, and SMEs. Recent government policies including the promulgation of key legislations related to foreign investment, PPP, privatization, and bankruptcy, among others, would also create opportunities for banks to extend credit.
How can Oman's banking sector help make the Sultanate a destination for international investors and funds?
A healthy and resilient banking sector is necessary to ensure financial stability and growth, and attract international investors. Oman's banking sector has been displaying robustness and resilience over the years. Omani banks are equipped with state-of-the-art technologies and excellent human capital resources, which enable them to provide banking services that are at par with multinational banks. The banking sector in Oman is well-poised to support the country in attracting international investors and funds.
What are CBO's strategic priorities for 2021, and what will be the main macroeconomic factors driving them?
In its pursuit to support growth and ensure financial stability in the Sultanate, CBO will continue to strive for a healthy and strong banking sector that is able to provide quality banking services to all segments. Furthermore, CBO will respond to the evolving macroeconomic conditions in a proactive manner so that the intended objectives are achieved while ensuring the sector's resilience. For example, in response to the COVID-19 pandemic, CBO announced a slew of measures to ensure adequate liquidity in the system, ease credit conditions, and provide temporary and timely relief to borrowers. CBO is also engaged in improving financial outreach and banking services. A fintech set up has been constituted to study, recommend, and oversee the establishment and development of the CBO's fintech agenda, which will feed into the aspired Oman agenda. CBO has also formed an internal taskforce that is actively working with the concerned institutions to adopt new Industry 4.0 technologies.