Sharjah Islamic Bank Strengthens Financial Ties Between UAE and Jordan

UAE-Jordan Financial Bridge: Sharjah Islamic Bank Partners with Al-Alawneh Exchange in Cross-Border First

Sharjah Islamic Bank has signed a groundbreaking strategic partnership with Jordan's Al-Alawneh Exchange Company, marking the first direct agreement between a UAE Islamic bank and a Jordanian exchange house. The deal aims to streamline money transfers between the two countries while reducing costs and processing times, potentially setting a template for broader GCC-Levant financial integration.

Breaking New Ground in Regional Finance

The agreement, signed by Hakam Abu Za'rour, CEO of Operations at Sharjah Islamic Bank, and Ayman Alawneh, CEO of Al-Alawneh Exchange, represents more than a bilateral business deal. It signals a shift toward direct financial partnerships that bypass traditional correspondent banking networks, which have become increasingly expensive and cumbersome in recent years.

Under the partnership, Al-Alawneh Exchange will operate a UAE dirham account directly with Sharjah Islamic Bank, enabling immediate settlement of both commercial and personal remittances. This direct clearing mechanism eliminates intermediary banks that typically add 2-4% in fees and 1-3 days in processing time.

Strategic Implications for Cross-Border Payments

Addressing the Correspondent Banking Crisis

This partnership comes as traditional correspondent banking relationships have declined sharply across the Middle East due to regulatory compliance costs and risk management concerns. Major international banks have reduced their correspondent networks by nearly 20% since 2011, according to World Bank data, forcing regional institutions to seek alternative arrangements.

The UAE-Jordan corridor processes an estimated $2.5 billion annually in remittances and trade finance, making it a significant testing ground for direct banking relationships that could be replicated across other GCC-Levant pairs.

Competitive Positioning

Sharjah Islamic Bank's move positions it ahead of larger UAE competitors in capturing cross-border Islamic banking flows. While Emirates NBD and First Abu Dhabi Bank dominate conventional banking corridors, the Islamic finance segment—particularly for Jordan's substantial Muslim population—remains underserved by direct partnerships.

Jordan's remittance market, worth approximately $4.4 billion annually, has traditionally relied on money transfer operators like Western Union and MoneyGram, which charge fees ranging from 5-8% for smaller transactions. Direct bank-to-exchange partnerships could reduce these costs to 1-2%.

Broader Regional Context

GCC Financial Integration Push

The partnership aligns with broader UAE initiatives to strengthen financial ties with Levantine markets as part of economic diversification strategies. Similar to Singapore's role as a financial hub for Southeast Asia, the UAE is positioning itself as the primary financial gateway between the Gulf and Eastern Mediterranean economies.

This approach mirrors successful models in other regions, such as Hong Kong's role in facilitating mainland China transactions or Luxembourg's function in European cross-border banking. However, the Islamic finance component adds a unique dimension that could prove particularly attractive to Jordan's conservative banking sector.

Regulatory Alignment

The presence of Jordan Central Bank representatives at the signing ceremony suggests regulatory support for such direct partnerships, which require careful coordination on anti-money laundering and know-your-customer procedures. Both countries have strengthened their financial compliance frameworks in recent years, making such partnerships more feasible from a regulatory perspective.

Market Impact and Future Outlook

For investors and financial institutions, this partnership represents a potential template for regional expansion without the capital intensity of establishing physical branches. Exchange houses like Al-Alawneh, with over 50 locations across Jordan, offer established distribution networks that banks can leverage for market penetration.

The success of this model could accelerate similar partnerships across the region, particularly between UAE institutions and exchange houses in Lebanon, Syria, and Iraq, where large expatriate communities in the Gulf generate substantial remittance flows. If transaction volumes increase by the projected 25-30% that direct partnerships typically generate, other regional banks will likely follow suit within 12-18 months.

This partnership also positions both institutions to capitalize on Jordan's emerging role as a logistics hub for regional reconstruction efforts, where efficient cross-border payments will be essential for trade finance and project funding.