(PDF) Commercial Banks of Oman

Introduction
In the near term, the rapid downturn in economic growth that Oman is supposed to see this year,
owing to the effects of the Covid-19 pandemic and the ensuing volatile oil prices, will weigh
heavily on the banking and financial services market. Although I believe the impoverished field
has a wealth of medium- and long-term potential growth, tailwinds could hinder its near-term
development. The financial sector will see a downturn in financing and a softening of asset growth
in 2020, due to reduced demand for credit. However, demand will once again trend higher in
2021, with potential business stemming demand due to the rising value of Islamic banking and
finance, which the state is promoting. In the meantime, the underdeveloped insurance sector,
which has plenty of space for more expansion, will see this year's support personnel softening
until a steadily higher level once again from 2021. Financing ratios are relatively stable but
concentration of deposit is high. Public-sector deposits have traditionally been a reliable source of
finance, but Fitch estimates that due to the deteriorating financial stability of the government, the
chance of outflow has increased. The partially reduces concentrations in funding.
Comparison
Conventional Role of commercial banking
Oman has indeed recognized the future need and opportunities provided by the financial industry
and the Royal Decree declared in May 2011 paved the way for the implementation of a dual
Financial Structure where traditional and Sharia-compliant goods become applicable to the
citizens of Oman. Two IBs -Bank Nizwa and alizz IB-and CBs window activities have introduced
creative goods to attract Omani buyers, in addition to opening several branches in various parts of
the country.
The traditional commercial banks which were established locally were Bank Muscat (BM), Oman
Arab Bank (OAB), HSBC Bank Oman, Bank Dhofar (BD), Bank Sohar (BS) and Al Ahli Bank (AB)
National Bank of Oman (NBO).There were two locally-incorporated filled-FLedged IBs, namely
Bank Nizwa and Al Izz IB. Six of the seven regionally-incorporated traditional commercial banks
provided IB facilities through separate windows. Annual Assessment of the Central Bank of Oman
(2015). According to Oxford Business Group (2016), the overall assets owned by IBs and
traditional lenders' IB windows in March 2016 increased to OR2.5bn ($6.5bn), relative to OR
1.5bn ($3.9bn) 1 year ago, the CBO records. This raised the market share of the IBs from 5.1% of
the total assets of the financial sector in 2015 to 7.8% by March 2016.
Modern day Role of commercial banking
Bank in Oman are trying to provide consumer groups with more personalized products so as to
grow their market share. The development of the IT market , in particular the creation of the Core
Banking Solution (CBS), has given these sectors enough scope for rapid development by allowing
them to provide better access to customers in various ways, at anytime and anywhere
Banks. Modern banks would use IT successfully in their activities, in the following ways, to boost
their competitive edge.
Increased computing capacity, decreased transaction costs, and allowed many points of
consumer contact at any moment with banking or internet services.
Increase access to network.
Increased agility in setting market model in accordance with the increasing trends of
technology.
Increased device modularity to bring different specialized applications or prototypes
together.

Comparison of conventional and modern day banking
With total assets of about $73 billion in 2015, the Omani banking sector is the smallest in the
GCC, according to Standard & Poor's, more modest in size than the neighboring UAE ($630
billion) and Saudi Arabia ($580 billion). However, the grocery, industry and industrial clients of the
Sultanate are represented by both local and foreign lenders.
At the beginning of 2016, the sector consisted of 16 traditional commercial banks, of which seven
were established locally and nine were subsidiaries of international entities, according to the 2015
annual report of the CBO. They maintained a network of 468 outlets, 1088 ATMs, 259 internet
banking and 13 on-site banking facilities. Given Oman's comparatively small population of about
4.5 m, this architecture offers Oman with such a high - rise commercial capacity than the bigger
markets in the area. According the World Bank, the Sultanate had 16 branches per 100,000
people in 2014, opposed to 9.2 for Saudi Arabia and 11.9 for the UAE.
Analysis
Effects on Banks Consumers
In Oman the crisis had a profound influence on the ability of consumers to lend, with the
continuing consequences of stock market uncertainty pushing investors to items like High Interest
Savings Accounts (HISAs) and term deposits with a large percentage of small firms predicted to
fail / close doors, there had residual reluctance to start new businesses or seek business projects.
Banks in Oman also needed to change the emphasis of their marketing to prioritizing cash flow
guidance before long-term savings and expenditure.
As quarterly short-term results are published, investors and regulators may analyze the financial
and social impacts of Omani banks for their reaction to the crisis and their actions throughout the
crisis.
Retail banks in Oman represented a wider strategic mission and understand how emerging laws
are formed and how customer trust is influenced. Consumers gradually adopted a more
conservative attitude to finance, minimizing credit card usage and decreasing massive
acquisitions of goods (e.g., residences and automobiles), contributing to substantial deleveraging
of households and lowering institutional fee-based profits.
The present day crisis had a profound influence on the customer's ability to invest, with ongoing
impacts of stock market uncertainty pushing consumers to items such as High Interest Savings
Accounts (HISAs) and Term Deposits.
Effects on Banks
All banks in Sultanate of Oman had narrowed their investment programs into pause, start and
begin tranches, with an emphasis on short-term results or even no-regret programs.
Banks in Oman are also experiencing an increase in fraud attempts that push up prices, like
advanced kiting, phishing, and cyber threats, amplified by remote jobs, and increasingly
unconventional procedures. Budgetary investment is being closely scrutinized, with any fresh or
expanded expenditure seeking higher approval thresholds. It is anticipated that shorter, more
realistic preparation periods would proceed with better supervision. Increased digitalization and
customers’ expectations for ‘superior experience’ have led many banks to adopt customer identity
and access management in order to build stronger relationships with their clients. Features helps
to address numerous customer needs, including delivering personalized experiences, intelligent
solutions, protection against cyber fraud and ease of digital interaction.