1. Syria & Modern Banking in Light of Arab & International Practices Role of the Banking Sector in Developing Private Businesses Poul Gadegaard 2 nd - 3 rd July 2005 SYRIAN-EUROPEAN BUSINESS CENTRE

2. Syrian-European Business Centre SEBC is a Private Sector Development Programme financed by the European Commission and implemented in collaboration with the Ministry of Economy & Foreign Trade Ministry of Industry and the Federation of Syrian Chambers of Commerce

3. Euro-Mediterranean Partnership Euro-Mediterranean Partnership Political & Security Economic & Financial Social & Cultural SEBC

4. The 12 Mediterranean partners: Algeria Cyprus Egypt Israel Jordan Lebanon Malta Morocco Syria Tunisia Turkey Palestinian Authority European Union: Belgium Denmark Germany Greece Spain France Ireland Italy Luxembourg Netherlands Austria Portugal Finland Sweden United Kingdom SYRIAN-EUROPEAN BUSINESS CENTRE New EU countries from 2004: Cyprus, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovak Republic, and Slovenia

5. To Enhance Economic Growth by providing support to the Development of the Syrian Private sector And facilitate the transition to an international competitive business environment conducive to the development of local businesses SEBC MISSION The Development of the Syrian SMEs are therefore our main concern SEBC

6. SMEs and Economic Development in Emerging Markets Estimated SME Contribution to GDP Estimated SME Contribution to Employment SMEs are of Key importance to any World Economies Source: IFC

7. Syrian Business Environment in Transition Closed Market Economy Market Driven Economy Open Market Economy Demand for Banking Services Advanced SEBC

8. Syrian Banking Environment in Transition Banking in Transition to OPEN MARKET ECONOMY CLOSED & CONTROLLED ENVIRONMENT FACILITATING & SUPPORTIVE ENVIRONMENT FUNCTIONAL ORIENTATION MARKET ORIENTATION SEBC

9. Role of Syrian Financial Institutions I In many respects, retail financial institutions provide a level of service today that is far superior to that delivered ten years ago. However, the present standing of the Syrian banking sector today is still not enough to enhance the private sector international competitiveness. The Banking sector has a major National responsibility to actively participate in the development of the private sector – and it is in their own interest too. SEBC

10. International companies (Syrian Competitors) can conduct transactions or manage their accounts 24 hours a day seven days a week. They can access cash, in any local currency, anywhere around the world and they have generally come to expect immediate, reliable service performance regardless of channel. Syrian Competitors are also seeking to differentiate themselves through exceptional financial service in order to attract customers and to secure growth. This is what Syrian companies are up against when focusing on export to the international markets Role of Syrian Financial Institutions II SEBC

11. Effective Mechanism for Improving Core Performance: Institutions must consistently meet customers’ basic expectations. For this they need an effective mechanism for improving core service performance. Carefully Reinforced Service Culture: Institutions must align their service culture with their strategy in order to consistently meet or exceed customer expectations. SEBC To facilitate the Syrian Private Sector Development and to secure a vibrant business environment Financial Institutions must approach service not as a functional problem to be solved, but as a competitive strategy involving the following essential components: Role of Syrian Financial Institutions III

12. Strategically Integrated Service Proposition: Institutions must align their offers with their strategy in order to consistently meet or exceed customer expectations. Continuous Method for Service Innovation: To stay ahead of consumer expectations and to challenge Syrian companies’ competitors, financial institutions need to have a method in place for developing, testing, and deploying new service innovations, to stay ahead of international competitors. Actively Marketing Service Products: To inform their customers of new products but also educate, train, explain and clarify core service products. Role of Syrian Financial Institutions IV SEBC

13. Banks tends to focus on short-term profit and growth rather than focus on customer growth, whereby gaining growth through a medium to long-term strategy and benefit from the growth of their customers Financial institutions are still too focused on single product sales instead of focusing on broader and more comprehensive customer solutions Role of Financial Institutions SEBC Coursing lack of loyalty and trust

14. …Loyalty and Trust In Australia 67% of customers have the opinion that banks are more concerned with lifting profits than providing services ---oOo--- 60% of customers prefer to deal with one bank only but in Europe 80% have relation to more than one bank and 49% have relation to 3 or more banks SEBC

15. Business Held by Primary Provider Percentage of Customer’s Business, by Product, 2004 20% 50% 90% 80% 50% 10% SEBC

16. Strategic Partnerships between Financial Institutions and Small & Medium Enterprises is the way to growth and development for both parties Thank you for your attention Salam alecom