By Mark Ford

Jordan-based Arab Bank has become the first Middle Eastern bank with a significant presence in the Gulf region to announce that it will outsource its back office processes. Letter of credit (L/C) processing is one of a raft of back office functions to be migrated to a shared services facility in the Dubai Outsource Zone (DOZ).

The remote back office facility will be called the Arab Company for Shared Services (ACSS) and will be the first of its kind to be set up by a Middle East bank. It is scheduled for completion in just over a year's time at a cost of US$21.8 million.

New arrangements

ACCS will service Arab Bank's customers across the region and will employ up to 500 staff. Initially it will process retail and commercial loans, fund transfers and trade finance products.

The bank's current back office processing takes place in separate centralised country-level facilities in the UAE, Bahrain, Qatar and Yemen.

L/C processing

According to senior vice president and area manager for Arab Bank in the UAE, Mohammed Azab, L/Cs will be processed at the new ACSS facility.

Azab, who will be managing director of ACSS, says L/C processing in bulk from one facility would cut costs and require less manpower.

Strategy

Azab gives two principal reasons for Arab Bank's outsourcing strategy. The first he says is processing out of one rather than four or five locations. The second is "standardisation of how we process for the customer," he says.

Arab Bank is Jordan's largest bank and the Middle East's third largest commercial bank with an international network of branches, subsidiaries and affiliates. A recent capital increase made Arab Bank Group the largest banking group by equity in the Arab world.

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