The UAE Central Bank recently launched a new account identifier called the International Bank Account Number (IBAN) to reduce errors in local and international money transfers. However, many banking customers remain clueless as to what the fuss is all about.
IBAN is a unique 23-digit long, internationally recognised code assigned to each bank account. It's nothing more than an extended version of the conventional bank account and is primarily used in payment transactions in over 50 countries in the world, including all European Union states and Arab countries like Kuwait, Saudi Arabia and Tunisia.
The use of IBAN takes effect in the UAE today, which means banks now accept and process payment instructions using the new code, but it's not mandatory yet because the Central Bank has granted a three-month grace period, to allow more time for everyone to successfully transition to the new system.
Banks in the country have already provided their account holders with their IBANs. However, when Gulf News asked some customers about it, many did not know what it was for. Two out of three said they had not received their IBAN yet.
"Is that a new Apple product?" Christopher, a software engineer, asked when the subject was brought up.
Lenny T., who works as an account executive for a public relations agency in Dubai, was equally clueless.
"I'm sorry, because when it comes to finance, I'm a little bit naïve. Is IBAN related to buying bonds?" she asked.
Another bank customer said the new account identifier is very long and it can only complicate payment transactions.
"Imagine I have to write down 23 digits, there's a lot of chance that I enter a wrong number. How can that eliminate errors?" the customer wondered.
Concerns have also been raised whether UAE residents will encounter problems in outbound and inward money remittances involving countries that have yet to implement the IBAN. While IBAN is recognised internationally, some countries like India, Philippines, Canada and the United States are not using the system yet.
According to the UAE Central Bank, the new system which was originally developed by the European Committee for Banking Standards, will ensure efficient and speedy payment transactions.
"Since banks check the accuracy of the IBAN at the point of initiating a payment, they can only make the payments which carry the correct IBAN," the bank said on its website.
"IBANs contain validation which easily allows banks to verify whether an account number is correct before any payment is processed. The IBAN therefore makes the process of sending and receiving payments more secure and less prone to delays caused by incorrect account numbers being supplied in error," said Richard Musty, managing director at Lloyds TSB in the Middle East. Musty explained that with the IBAN, the location of the bank account can be identified without the full name or address of the bank being disclosed.
"The UAE Central Bank is driving the introduction of IBAN to the UAE, and I am fully supportive of their decision as it offers benefits to both banks and their customers," he said.
The Central Bank earlier instructed banks in the UAE to generate and distribute the IBANs to all their customers. Some UAE residents initially encountered problems in getting the new codes, but many confirmed they have received their IBANs without much of a hassle.
"I had no problem with my bank. When I called them about my IBAN a few weeks ago, they told me they would send it to me soon. I just got it in the mail," said Maricris, who has an account with Noor Islamic Bank.
Emirates NBD, National Bank of Abu Dhabi (NBAD), Standard Chartered Bank, Mashreq, HSBC, Lloyds TSB, Noor Islamic Bank and Barclays have advised their customers about the IBAN either through personalised letters, SMS, customer statement of accounts, online campaigns or messages via electronic banking. In addition, banks have enabled their networks and call centres to assist all customers with the introduction of IBAN.
Standard Chartered, HSBC, Lloyds TSB, Noor Islamic Bank, the National Bank of Abu Dhabi and Barclays have set up an online utility on their websites to enable customers to retrieve the IBAN themselves.
Emirates NBD and Noor Islamic said all their newly-issued chequebooks contain the IBAN, in addition to account number.
HSBC, for its part, has trained its relationship managers and branch staff to inform customers about IBAN pro-actively.