Azentio announces 2025 AAOIFI certication for flagship core banking platform

Azentio Software, a technology enabler in the financial space, has received full certification for 2025 from the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) for its flagship Islamic core banking platform iMAL.

This marks the 16th consecutive year that iMAL has achieved AAOIFI certification. 

"We are pleased to conclude the review of the latest version of iMAL for the year 2025," said Omar Mustafa Ansari, Secretary General of AAOIFI. 

"IMAL's proactive approach to compliance with AAOIFI's Shariah and Financial Accounting Standards, including (the) upcoming FAS 44, 45, 46, and 47, demonstrates its commitment to providing the best shari'ah-compliant solution for customers, thereby enhancing the credibility and trust in the Islamic finance industry. Our partnership with Azentio is a vital pillar in advancing the global Islamic finance industry."

Built specifically for Islamic financial institutions, iMAL is trusted by leading banks across the Middle East, Africa, and Asia to support shari'ah-compliant operations from end to end, including customer onboarding, product structuring, accounting, and reporting. 

Azentio's in-house Shari'ah Compliance Team continuously tracks updates to AAOIFI standards and exposure drafts, ensuring iMAL evolves in lockstep with regulatory shifts and emerging market needs. The latest release of iMAL also includes the new Musaqat product, which is tailored for the Islamic finance sector to meet the needs of the irrigation industry. 

Khaled Berjawi, Senior VP Product Management for iMAL at Azentio said: "In a market where trust and compliance are everything, iMAL stands alone. Our continued AAOIFI certification, uninterrupted for 16 years, is more than a regulatory milestone. It reflects our deep commitment to empowering Islamic financial institutions with cutting-edge technology that is rigorously, verifiably shari'ah-compliant. 

"No other platform can make that claim. We are proud to be at the forefront of Islamic fintech, helping our clients deliver modern, compliant services that scale with demand." 

Azentio digitally transforms Boubyan Bank's customer experience

Boubyan Bank, one of the leading Islamic banks in Kuwait and the GCC region has upgraded Azentio iMAL, marking a major milestone in its digitalisation journey to improve operational efficiency and elevate customer experience. The move has helped elevate customer experience across different channels, helping the bank achieve a 42% improvement in response time.

Azentio iMAL is an AAOIFI-certified Islamic banking platform, designed to empower financial institutions with solutions for retail, corporate, and investment banking. With iMAL, banks can deliver ethical, inclusive, and scalable services, while ensuring compliance with shari'ah principles.

The latest upgrade has empowered Boubyan Bank to overcome key operational challenges, delivering substantial efficiency gains that align with the bank's commitment to innovation and customer-centricity. Aarthi Ramesh, Chief Customer Officer at Azentio said: "Our enduring partnership with Boubyan Bank is a testament to our shared vision of innovative and shari'ah-compliant banking. The recent enhancements to the iMAL core banking system underline Azentio's unwavering commitment to developing solutions that address evolving customer needs and enable excellence in service delivery."

Abdulla AlKhuzam, CIO, Boubyan Bank, commented: "With a 42% improvement in response time, the recent upgrade has revolutionised our operations at Boubyan Bank, allowing us to tackle critical challenges and achieve remarkable efficiency improvements. Our customers will also benefit from the new enhancements including a 52.5% reduction in salary posting time, a 15% boost in CPU efficiency, and an over 80% decrease in database blocking and session times. These advancements have greatly enhanced our system performance, enabling us to better serve our customers and further our mission of delivering top-tier Islamic banking services."

Database blocking refers to blocking new change requests while changes are being made to part of the database so as to prevent conflicts.

Vision Bank takes on Finastra's Islamic banking treasury solution

Vision Bank, a shari'ah-compliant, digital bank in KSA has launched the pilot phase of its banking operations after implementing Finastra Kondor and cloud-based managed services provided by DXC Technology. The implementation contributed to Vision Bank recently obtaining no objection from the Saudi Central Bank and launching the pilot phase of its banking operations.

Finastra's best-of-breed treasury trading system allowed the bank, formerly known as the Saudi Digital Bank, to upgrade its capabilities for asset and liability management, liquidity management, trading and investment, foreign exchange, capital adequacy and reserve management. The deployment of the solution on cloud also aligns with the digital bank's broader strategy of creating better user experiences while keeping pace with new demands.

"Our mission is to be a pioneer in the Saudi banking sector, relying on innovation and technology to provide seamless, shari'ah-compliant banking solutions that meet our customers' needs," said Abdul Shakeel Aidaroos, CEO at Vision Bank. 

"To help us achieve this, we needed a robust treasury management system with cloud-based managed services that enable us to grow while mitigating risks. Finastra and DXC ensure that we can comply with current and upcoming regulations, drive business continuity and maximum availability, and scale the rollout of new products as needed. We are also contributing to the goals of the Financial Sector Development Program, one of the programmes of Saudi Vision 2030."

"Vision Bank's growth ambitions and customer-centric ethos align closely to the values we hold at Finastra," said Wissam Khoury, EVP, Treasury & Capital Markets at Finastra. 

"The implementation of Kondor played a significant role in the bank's launch and digital transformation journey, providing the necessary agility to evolve with new demands and take advantage of the opportunities presented by Saudi Arabia's financial services sector. Working alongside DXC, it has been a pleasure to help Vision Bank reach this milestone and we look forward to its ongoing success."

"DXC is proud to have partnered with Finastra and Vision Bank to successfully deliver Kondor as the bank's fully hosted and managed treasury system," said Anthony Hammond, Global Finastra Lead at DXC. 

"This collaboration underscores our commitment to driving innovation in financial technology, providing a secure, scalable and future-ready solution that enhances the bank's treasury operations."

Webull Securities Malaysia launches Islamic banking channel

Webull Securities Malaysia, a Webull subsidiary, has launched of an Islamic banking channel. This new feature offers local investors the flexibility to choose to fund their Webull trading accounts via an Islamic bank or a conventional bank, making Webull Malaysia the first fully online retail brokerage platform in the country to offer such a service.

The Webull digital investment platform has over 40 M downloads globally. The dual banking gateway provides a flexible currency exchange and deposit system. For those seeking to fund their trading accounts with shari'ah-compliant funding options, this new feature, together with zero deposit fees, interest-free and a profit-sharing based banking facility, will enhance their overall trading experience, Webull Malaysia said.

Webull Malaysia's new Islamic banking channel aims to cater to local investors who are looking to invest in shari'ah-compliant equities and exchange traded funds (ETFs) across both the Malaysian and US stock markets. It complements an existing shari'ah indicator for US stocks and ETFs.

Kenneth Chan, CEO, Webull Malaysia said: "We are proud to be the first fully online retail brokerage platform in Malaysia to offer local investors the flexibility to fund their trading accounts with an Islamic bank. The introduction of the Islamic banking channel, along with improvements to the shari'ah stock screener, enables investors to fund their trading accounts in a way that best aligns with their investment needs and principles. By offering local investors the option to choose between Islamic and conventional bank funding for their Webull accounts, we aim to deliver inclusive, seamless and accessible trading experiences for all investors.

"We are also committed to enhancing the experience of local investors by offering a fully-localised version of the Webull MY trading app. This feature allows users to translate all content - from portfolio displays to the latest local and international news, as well as the educational materials provided - into Bahasa Melayu, ensuring an accessible and tailored experience for our Malaysian users. We are proud to support the needs of Malaysia's investment community and remain committed to developing innovative products that enhance convenience and accessibility for investors."

With the new Islamic banking channel, local investors can choose to fund their trading account with an Islamic bank in Malaysia. Local investors funding their trading account with an Islamic bank will be part of a profit-sharing based banking facility.

GIES Series will cover digitisation in Islamic banking in November

The Global Islamic Economy Summit Series is hosting a webinar on digitisation in Islamic banks this November.

Digitization of Banking: Lessons Learned from 2020 will be held on 10 November, 2020 at 1 pm, GMT +4. Islamic banks have been affected by this year's pandemic as customers postpone payments under government-instituted loan deferment programmes. However, there are also growth areas such as for digital finance, as well as market demand from capital markets with multilaterals (Islamic Development Bank), sovereigns (Indonesia) and corporate issuers in Malaysia, Indonesia, the UAE and KSA. This webinar will cover key lessons from this year that can increase industry resilience against future crises and pandemics.

The Global Islamic Economy Summit (GIES) is the world’s largest and most inclusive gathering for the Islamic economy. While the annual GIES event has been postponed, the organisers are hosting a virtual series that will be covering a range of the Islamic economy including Islamic finance, halal food and halal lifestyle.

The sessions are designed to:

- Facilitate collaboration in addressing the potential challenges the industry faces in the post-COVID-19 era.

- Explore new ideas and exchange knowledge on ways to optimise the development of key Islamic economy sectors

- Stimulate discussion among all stakeholders as to how to become innovative, interconnected and impactful.

- Encourage Islamic economy businesses to leverage technology to bypass traditional barriers to entry.

Details:

Register

Nearly half of EPF investments are in shari'ah-compliant assets

The Employees Provident Fund (EPF), Malaysia’s premier retirement savings fund, has reported an increase in quarterly investment income to RM11.51 billion for Q217 ended 30 June 2017, a year-on-year increase of 36.36% from RM8.44 billion during the same period last year.

CEO Datuk Shahril Ridza Ridzuan said, “Market conditions have improved from a year ago and all asset classes in our portfolio have recorded healthy year-on-year growth, with equities continuing as the main profit driver for the quarter under review.”

A total of RM820.71 million out of the total investment income of RM11.51 billion was generated for simpanan shari'ah (shari'ah-compliant deposits), while RM10.69 billion was generated for simpanan konvensional (conventional deposits). Simpanan shari'ah derives its income solely from its portion of shari'ah assets while income for simpanan konvensional is generated by its share of both shari'ah and non-shari'ah assets.

The value of EPF investment assets reached RM759.78 billion, a 3.92% or RM28.67 billion increase from RM731.11 billion, as at 31 December 2016. Out of the total investment assets, RM362.50 billion, or 47.71%, were in shari'ah-compliant investments.

IFSB releases Q316 Islamic banking data, announces expansion of dataset

The Islamic Financial Services Board (IFSB) has released its 6th dissemination of country-level data for Q2 to Q316 on financial soundness and growth of the Islamic banking systems from 17 IFSB member jurisdictions.

This 6th dissemination presents a total of 12 quarters of Islamic banking sector data, from Q413 to Q316, from 17 member countries – Afghanistan, Bahrain, Bangladesh, Brunei, Egypt, Indonesia, Iran, Jordan, Kuwait, Malaysia, Nigeria, Oman, Pakistan, Saudi Arabia, Sudan, Turkey, and United Arab Emirates.

The Acting Secretary-General of the IFSB, Zahid ur Rehman Khokher stated that with the approval of the IFSB Council at its recent meeting in April 2017, “the IFSB will extend the coverage of this PSIFIs project to the takāful and Islamic capital market sectors. The IFSB will work closely with its member regulatory and supervisory authorities (RSAs) from these two sectors and multilateral organisations on the selection of the relevant soundness indicators and the preparation of a Compilation Guide for the reference of contributing organisations and users,”

A summary of key PSIFI indicators is given below.

Growth of Islamic banking

Based on the available data, the total assets of the Islamic banking industry grew from US$1,299 billion in Q315 to US$1,441 billion in Q316 (calculated from country-wise aggregated data converted into US dollar terms using end-period exchange rates). Total funding/liabilities increased from US$1,205 billion in Q315 to US$1,318 billion in Q316. Financing by Islamic banks from the jurisdictions participating in the PSIFIs project reached US$939 billion in Q316 from US$826 billion in Q316. The data on “financing by type of shari'ah-compliant contracts” reveals that five major financing contracts used by the Islamic banking industry as of Q316 were: murābaḥah (37.6%), commodity nurābahah/tawwaruq (22.5%), ijārah/ijārah muntahia bittamlīk (13.8%), bayʻ bithaman ajil (11.0%), and salam (5.6%).

Capital adequacy

Capital adequacy provides an important indication of the health and financial soundness of the banking industry in a jurisdiction. As of the Q316, the weighted-average capital adequacy ratio and weighted-average Tier 1 capital ratio from available data of full-fledged Islamic banks of 13 jurisdictions were 17.5% and 16.3% respectively, significantly higher than the regulatory requirements, while these ratios were 12.6% and 10.1% at the same period of the previous year (Q315) respectively.

Asset Quality

On asset quality indicators, gross non-performing financing ratio (gross non-performing financing to total financing) showed a slight improvement with a decrease from 5.9% in Q315 to 5.3% in Q316. However, a deterioration is apparent in the net non-performing financing to capital ratio which increased sharply from 16.1% in Q315 to 25.6% in Q316.

Earnings

Islamic banks and Islamic windows in the PSIFIs member countries generally maintained comparable rates of return on assets (ROA) and return on equity (ROE) during the periods under report. Overall, the ROA and ROE were 1.45% and 11.94% in Q316 as compared to 1.36% and 13.86% in Q315 respectively.

Liquidity

On the liquidity indicators, the liquid assets ratio (liquid assets to total assets) and liquid assets to short-term liabilities ratio decreased over the period from 39.6% and 15.1% in Q315 to 35.6% and 13.9% in Q316 respectively. Five PSIFIs member countries reported the newly introduced Liquidity Coverage Ratio (LCR), which all exceeded the 100% benchmark.

Size of Islamic banking market

The number of full-fledged Islamic banks and Islamic windows of conventional banks in 17 countries stood at 170 and 83 in Q316 as compared to 169 and 85 in Q315 respectively. At the end of Q316, a total of 380,040 staff members were working in 29,733 branches of full-fledged Islamic banks, an increase of 243 branches but a decrease of 8,381 staff over the year from Q315.

Three new country contributors have also been added to the IFSB’s Prudential and Structural Islamic Financial Indicators (PSIFIs) project, including the Central Bank of Lebanon (Banque du Liban) and Palestine Monetary Authority. This brings the total number of contributors to the PSIFIs project to 20 jurisdictions.

The Task Force of PSIFIs project includes representatives from all 17 participating regulatory and supervisory authorities that work as coordinators for regular submission of data of the respective countries and work with the IFSB during the due processes of data collection, compilation, revision, and approval. Three international organisations – the International Monetary Fund (IMF), Islamic Development Bank (IDB) and the Asian Development Bank (ADB) are also members of the Task Force.

The first set of PSIFIs data was released on 27 April 2015 covering the period of December 2013. The second, third, fourth, and fifth sets of data released on 24 November 2015, 14 March 2016, 1 July 2016 and 28 November 2016 respectively.

Interested?

View the PSIFIs Database (full set of data with metadata) on the PSIFIs portal at the IFSB website 

IFSB PSIFIs project to be extended

The growth of Islamic finance has led to its emergence as a systemically important sector in an increasing number of economies in the Arab speaking countries, as well as in Asia, said Jaseem Ahmed, Secretary-General, Speech by the Secretary-General of the Islamic Financial Services Board (IFSB) at the AMF-IFSB-IMF Conference on Soundness Indicators for Conventional and Islamic Finance.

Jaseem noted that the International Monetary Fund (IMF) had recently approved the preparation of proposals for operationalising policy support to Islamic finance jurisdictions.
The Executive Board of the IMF held its first formal discussion on Islamic banking (IB) on February 3, and adopted a set of proposals on the role that the fund should play in this area. These proposals, and the case for adopting them, are contained in the staff paper Ensuring Financial Stability in Countries with Islamic Banking and the accompanying country case studies paper.

According to the IMF, IB is present in more than 60 countries and has become systemically important in 14 jurisdictions. "IB involves operations, balance sheet structures, and risks that differ from their conventional banking counterparts. Accordingly, there is a need for putting in place an environment that promotes IB financial stability and sound development, including legal, prudential, financial safety nets, anti-money laundering and countering the financing of terrorism (AML/CFT), and liquidity management frameworks," the IMF said in a statement.

As the number and complexity of IB-related issues arising during IMF country surveillance and the demand for policy advice and capacity development in this area have increased, the IMF's Directors have called for stronger efforts to establish a policy framework and environment that promote financial stability and sound development of Islamic banking, particularly for countries in which Islamic banking has become systemically important.

IMF Directors expressed support for staff's proposed approaches to developing and providing policy advice on Islamic banking-related issues in the context of Fund surveillance, programme design, and capacity development activities. They also called for staff's continued support to the work of the relevant international standard setters and other international bodies to help address current gaps in the international regulatory framework for Islamic banking. 

Directors saw merit in considering a proposal to formally recognise the Core Principles for Islamic Finance Regulation for Banking, prepared by the IFSB as a standard under the Fund/Bank Standards and Codes Initiative. Directors also called for full implementation and consistent application of the standards, and for strengthening supervisory capacity with respect to Islamic banking.

Directors emphasised the importance of having in place robust Islamic banking-specific resolution regimes and other financial safety nets for countries in which Islamic banking operates. Noting the slow progress achieved in these areas, they underscored the importance of additional work in collaboration with relevant international bodies on the design of legal regimes and institutional arrangements for effective Islamic banking resolution, deposit insurance schemes and AML/CFT, as well as adapting the conventional lender-of-last-resort framework to cover Islamic banking.

Directors agreed that the availability of high-quality liquid assets for Islamic banking is important for effective liquidity management and financial stability, and for the sustainable development of the Islamic banking industry. In this context, they called for increased efforts to deepen the government sukuk markets. Directors also noted the importance of having in place relevant central banking liquidity facilities and instruments.

Directors agreed that the emergence in recent years of hybrid financial products in Islamic banking, which replicate the relevant aspects of conventional finance, may have brought some benefits, but also raise financial stability concerns. Such concerns include the emergence of new complex risks, the applicability of existing prudential regimes, governance and consumer protection concerns, and reputational risk. Directors encouraged additional work, by staff and other relevant international bodies and standard setters, to better understand the nature of these activities and how they can be effectively regulated.

"A key aspect of the proposals is that they will recommend the recognition of the IFSB’s Core Principles for Islamic Finance Regulation of the Banking Sector (IFSB-17), under the IMF/WB Standards and Codes Review, Jaseem said. "The IFSB welcomes these developments, which point towards an international recognition of Islamic finance that is commensurate with its importance and significance to large communities of human beings in the world today, and to financial and economic stability internationally."

Islamic finance has a system of ethics, is grounded on the real economy and on risk sharing, and avoids harmful activities, Jaseem noted, but also has risks such as those resulting from uneven development of Islamic financial markets and financial instruments.

"The external vulnerability is faced by us all: namely, that the performance of the Islamic financial system cannot be isolated from developments in conventional finance and in the global economy. We are vulnerable to external economic, financial and monetary shocks and these seem to be bigger or more volatile than ever. These vulnerabilities remain with us, they are real and they bring large risks with them which must be identified, made transparent, and managed at both the micro and macro levels," he said.

To determine if the industry can withstand turbulence arising from both internal and external sources of risk, a well-developed global database with reliable time series data is required for macroprudential oversight. The Financial Soundness Indicators (FSIs) from the IMF and adapted by the IFSB are just such a tool. FSIs are macroprudential indicators of the condition of the entire system that supplement the traditional microprudential measures used by bank supervisors. In 2004, the IFSB launched a global database of Prudential and Structural Islamic Financial Indicators (PSIFIs), which are the measures of the aggregate strength or vulnerabilities of the Islamic financial system.

The PSIFIs consist of 19 core and eight additional core indicators, compared to the IMF’s FSIs 12 core and eight additional core indicators. PSIFIs data are similar to the FSIs, aggregated banking sector data of an individual country. As almost all of the core indicators on asset quality, earnings, leverage, liquidity and sensitivity to market risks are similar to FSIs, the indicators permit a comparison with the IMF’s FSIs for a country’s entire financial system.

These PSIFIs would also facilitate comparisons between conventional banks and institutions offering Islamic financial services as part of a peer group exercise on the effectiveness of the application of the IFSB capital adequacy formula.

In phase I, the IFSB Secretariat established a Task Force for the project and undertook the preparation of a Compilation Guide which was adopted by the IFSB Council in March 2007. The IMF, Asian Development Bank (ADB) and the Islamic Development Bank (IDB) supported the PSIFIs from the beginning, and are important members of this and subsequent Task Forces.

This was followed in Phase II by a pilot study of the compilation of data through which the IFSB developed a standardised reporting template in which four member countries – namely Indonesia, Malaysia, Pakistan and Sudan – participated.

In 2014, the IFSB launched the third phase of the PSIFIs project with the aim of achieving, by 2016, the first dissemination of data, as well as a further revision of the Compilation Guide, particularly to align it with the developments of Basel III. After the successful launch of PSIFIs data on 27 April 2015, the IFSB has been regularly disseminating macro-level data collected from 17 IFSB member countries. The database is accessible to the public.

"Overall, the PSIFIs member countries collectively hold more than 85% of global Islamic banking assets. Amongst these countries are eight economies which are also members of the Arab Monetary Fund (AMF), and in which the Islamic finance sector is of systemic importance – in that it accounts for more than 15% of total banking sector assets," said Jaseem.

He also disclosed that a fourth phase of the PSIFIs project, to further extend the coverage of the database to additional countries that have a stake in the Islamic banking sector, has been approved.
Jaseem added that the Bank of England has recently confirmed that it will join the PSIFIs project.

"Today, the PSIFIs database comprise a set of well-developed and tested Islamic finance statistics reflecting sharī`ah-compliant accounting practices and regulatory standards that serve the purpose of better oversight by regulatory and supervisory authorities and the global surveillance community, as well as the analytical needs of the IFSB which are shared with our international stakeholders through the IFSB’s Annual Islamic Financial Services Industry Financial Stability Report," he said.

"The national and international members of the IFSB PSIFIs Task Forces have contributed enormously to the development and the streamlining of the reporting formats, and to the coming on line of this project. It will be important to continue this collaboration, and to develop both formal and informal networks of experts and knowledge centres, as we jointly attempt to better understand and control both domestic and cross-border sources of risks emanating from interconnected financial and economic systems," Jaseem said.

"Our goal should be further collaboration among international and national organisations so as to better measure these interconnected elements which can support better contingency planning and timely policy response by the authorities."

WIBC 2016 will focus on economic uncertainty

The 23rd World Islamic Banking Conference (WIBC) will focus on the theme of Economic Uncertainties: Vigilance & Growth this year. The event guides the global Islamic finance and banking industry, and aims to enable Islamic finance to converge, strengthen and develop into an ecosystem whilst equipping leaders with insights to navigate the global financial system.

Key features for WIBC 2016 include the CEO Power debate, involving powerhouses from the top Islamic financial institutions engaged in key strategic issues facing the industry; a governors’ power table; streams focused on banking leadership opportunities and asset management best practices; thought leadership from strategy consultants; and panel sessions focused on small and medium sized enterprises (SMEs) and entrepreneurship, the impact of innovation in financial technology (fintech); among other topics.

A key focus at WIBC 2016 is identifying ways in which Islamic finance can connect with the broader ethical finance industry and benefit from collaboration with other ethical finance sectors to support their common growth prospects – ESG (environmental, social and governance), SRI (socially responsible investment) and faith-based investing – as well as looking at community banking and microfinance to promote financial inclusion.

Confirmed keynote speakers include:

• Dr Ahmed Abdulkarim Alkholifey, Governor, Saudi Arabian Monetary Agency
• HE Alexander Torshin, State Secretary – Deputy Governor, Central Bank of Russia
• HE Rasheed Mohammed Al Maraj, Governor, Central Bank of Bahrain

The WIBC Leaderboard, a peer-to-peer assessment benchmark based on robust quantitiaive metrics, aims to promote greater transparency within the Islamic banking industry and feeds into the WIBC Awards. The Leaderboard provides industry participants with visual rankings of Islamic banks as compared to their peers at the global, regional and national levels, based on the following financial and governance metrics, using data collated from the ICD Thomson Reuters Islamic Finance Development Indicator and Bankscope:

• Financial stability: Total capital and tier 1 capital ratios, loan-loss reserves (LLR) to gross loans ratio, loan-loss reserves (LLR) to non-performing loans (NPL) ratio, non-performing loans (NPL) to gross loans
• Financial performance: return on average assets (ROAA), return on average equity (ROAE), cost-to-income ratio (CIR), assets growth
• Governance and social responsibility: Financial disclosure index, CSR disclosure

In 2015, WIBC hosted 1,300 delegates and 70 speakers from 50 countries, and witnessed the launch of eight intelligence reports by Thomson Reuters, EY, the National Bank of Kazakhstan, Toronto Financial Services Alliance, Middle East Global Advisors, and the Bank of Khartoum among others.

The team behind WIBC, Middle East Global Advisors, are also the conveners of the Global Ethical Finance Forum, in strategic partnership with the Scottish Government, and the co-organisers of the Responsible Finance Summit, in strategic partnership with Bank Negara Malaysia.

Interested?

The WIBC will be held from 5 to 7 December 2016 at the ART Rotana Hotel, Amwaj Islands, Kingdom of Bahrain. Register

Contribute more event listings to the Suroor Asia events page

Hashtags: #WIBC2016, #23edition, #Islamicfinance

DCIBF and DIEDC release report on Islamic banking

Source: Hamdan Bin Mohammed Smart University. The second annual report on the Islamic economy was released on the sidelines of the 3rd Global Islamic Economic Summit in Dubai, UAE. Several GCC countries, including UAE, make it to top 20 most efficient Islamic banks.

• Kuwait and KSA banks lead 131 global institutions
• Malaysia the only country outside GCC to make it to top 20

The Dubai Center for Islamic Banking and Finance (DCIBF), a joint initiative of Hamdan Bin Mohammed Smart University (HBMSU) and the Dubai Islamic Economy Development Centre, formally released its second annual report on the Islamic economy during the opening day of the third Global Islamic Economy Summit (GIES) in Dubai, the region’s premier forum on the Islamic economy.

The statistics-backed report, Islamic Banking: Growth, Efficiency and Stability, focuses on the efficiency of 131 Islamic banks operating globally and other various key facets of Islamic banking. Islamic banking and finance have been gaining momentum on a global scale, and have been offering profitable opportunities for institutions and individual investors of all sizes. They now represent an important system offering viable innovative alternative models for investment and growth to the conventional financial system, which is under significant strain owing to the recent financial crisis.

Out of the total Islamic institutions studied, DCIBF’s report reveals that an Islamic bank from Kuwait is the world’s most efficient. The Kuwait Finance House (KFH) received the highest efficiency score among all banks mentioned in the report, followed by Al Inma Bank from Saudi Arabia, which obtained the top score in terms of the most cost-efficient Islamic bank in the world. The top 20 most efficient Islamic banks come from seven countries, including the UAE, Qatar, Malaysia, and Bahrain in addition to Kuwait and Saudi Arabia. Outside the GCC region, only Malaysia made it to the top 20 list.

DCIBF plays a pivotal role in the preparation and development of in-depth studies covering developed global Islamic banking sector efficiency—used as a reference and base for the Islamic Retail Banking Awards, which held its inaugural edition in 2015. The research conducted by the Center has also led the DCIBF to being awarded with the Islamic Banking R & D Award in 2015, which was given in recognition of the efforts made to assess the performance of Islamic retail banks.

In business, efficiency refers to how much needs to be spent in order to maximise output. According to the report, as financial markets become more integrated and decentralised, it has become imperative to measure the efficiency of banking institutions. More than 400 Islamic banks and financial institutions are now operating in over 60 countries from different regions, including Europe, the Americas, South Asia, the Far East, Africa, and Australia. The report points out that the growth and competitiveness of Islamic banking are being driven by numerous factors such as size, brand, ability to enter new markets, microfinance, combating poverty, strategic alliances, and the development of Islamic finance as an integral part of the global halal economy.

Dr Mansoor Al Awar, HBMSU Chancellor, said: “The efficiency analysis of Islamic banks used in this report is the first of its kind in that it is specifically designed for Islamic banks and that it has direct relevance to the global Islamic financial services industry. The innovative, pragmatic methodology utilised for the report combines the best academic methods with some basic tools that other practitioners can benefit from. The report is full of substantial statistics and reliable references to back its findings and recommendations. We are confident that the results will positively impact the entire global Islamic economy in such a way that more essential reforms will be implemented to further improve their competitiveness in the global stage.”

Dubai is well placed to promote rigorous research in Islamic banking and finance. The Dubai Government has seen a real potential for expanding its economic base and wants Islamic economics to play a significant part in the wider economic system. Dr Al Awar added that the report is part of DCIBF’s commitment to the initiative launched by HH Sheikh Mohammed bin Rashid Al Maktoum, UAE VP and PM, and Ruler of Dubai, to make Dubai the capital of Islamic economy.

"It also represents another significant contribution to the realisation of (the) Dubai Strategic Plan’s goal of promoting knowledge-driven and sustainable economic development in the emirate by providing rigorous scientific research that addresses key issues in Islamic economy and finance. Rest assured that as it gleans more experience and has more resources to capitalise on, the centre will continue to conduct and facilitate research, and will advance the concepts and the applications of research in Islamic banking and finance,” he said.

Besides the global ranking, the report, which comprises four chapters, also studied the current state of the global Islamic financial services industry which was valued at US$2 trillion at the start of 2015. Although it is expected that Islamic banking will continue to grow globally, the report warns that it may face challenges especially in countries that heavily rely on oil and other commodity prices. In this regard, diversification of the industry and further expansion is essential for its sustainable growth, the report states.

The report suggests that while the industry remains on a growth trajectory, concentration of Islamic banking assets in few markets, mainly the GCC and the wider MENA region, may pose a threat to the stability of Islamic banking. A detailed literature review on Islamic banks was also done to look into Islamic banks’ developments as well as their profitability over the past few decades. The study addresses pressing challenges facing the Islamic banking and finance sector at a time when many factors have tremendous impact on the industry such as oil price fluctuations.

The research team was led by Project Director Professor Nabil Baydoun, with Professor Humayon Dar and Rizwan Malik serving as Chief Editor and Research Assistant, respectively.

Hashtag: #GIES2016

BankIslami Pakistan goes live with the PCS Java version 14

Path Solutions, a provider of Islamic banking software solutions, has successfully upgraded the iMAL*ProfitCalculationSystem at BankIslami Pakistan to Java version 14. BankIslami was the first bank to receive an Islamic banking license under the Islamic Banking Policy of 2003 from the State Bank of Pakistan. It has a network of 317 branches in 93 cities offering a full range of shari'ah-compliant financial products.

Syed Ata Hussain, Head of Information System, BankIslami said, "Armed with a solid implementation methodology and supported by a team of skilled and passionate consultants, Path Solutions was able to fulfill its commitment, and we were able to run the first successful PCS in Java version 14 in Pakistan. 

"We consider this implementation as a major milestone, as the course of the project involved exhaustive upgrade, internal testing phases, multiple user acceptance testing (UAT) cycles and three full scale application testing exercises to ensure uninterrupted business operations following the upgrade. Once again, Path Solutions was up to the challenge and we upgraded successfully owing to the tireless efforts of all teams involved.” 

The PCS upgrade is pivotal for BankIslami, which merged last year with KASB Bank and migrated more than 100 KASB branches to the iMAL Islamic Banking & Investment System. BankIslami needed several modifications to the software to broaden its operations spectrum in compliance with Central Bank regulations. 

The latest iMAL*ProfitCalculationSystem module is a Web-based application and can be implemented either on the Oracle or Sybase relational database management system. It supports all major browsers and may be deployed on any JEE Web/Application Server Apache Tomcat, Oracle WebLogic and similar platforms. The module's features include built-in control procedures and compliance with Islamic shari'ah, limits monitoring and exposure control, as well as credit risk measurement and evaluation.

According to Path Solutions, over 100 Islamic financial institutions are using its iMAL system.

ADIB revamps Internet banking

Abu Dhabi Islamic Bank (ADIB) has launched a new version of its Internet banking platform to create a more convenient customer experience. The new service has been redesigned based on customer feedback.

The aim is to make it easier for current and new customers to digitally access products and services while catering to the needs of the growing number of customers utilising digital banking services. ADIB has seen a rapid growth in customers using digital channels lead by mobile devices. Users of ADIB's digital banking channels more than doubled in the last 12 months while smartphone transactions increased by 73% in the first half of the year.

The main feature of the new service is a more intuitive user experience. ADIB customers will now benefit from a user-friendly digital banking service, which will let them meet more of their banking needs online and execute faster transactions. The website's look and feel is aligned with other channels such as ATMs and mobile app thus providing customers with the same experience across all digital touch points. The new digital platform is compatible with tablets, smartphones and desktops, providing customers with the ability to interact with the bank using their preferred device as well as the ability ot manage all of their personal profiles from one single sign-on.

Philip King, Head of Retail Banking, ADIB said: "Our research and dialogue with users through social media shows that consumers seek digital banking services that are easy and simple to use with features that fit the 'multiscreen' lifestyle as they access their bank using different devices. For this reason, we introduced a new design approach that revolutionises online banking and makes it very easy to use for everyone. This is part of ADIB's digital innovation programme which will include launches of several major new customer offerings over the next 12 months."

The dual language banking platform can be accessed via a single sign-on service that combines security with ease of use, and includes safety features such as a card management tool that will allow customers to block cards that have been lost or stolen. The upgrade is seamless: customers can access the website from different devices without the need to install new software, and current users of ADIB online banking services can use their existing access name and password to sign in.

Interested?

The new service is accessible via ADIB's homepage

Bright spot in Islamic banking recruitment for Malaysia

Recruitment in Malaysia is likely to remain cautious in the first half of 2016 due to pressures from the weak ringgit as well as falling crude oil prices. Across sectors, hiring is only anticipated either for replacement positions or within critical business units, Robert Walters said.

Despite the slowdown in recruitment, Islamic banking recruitment is growing, noted the company. With Malaysia being the biggest player in the global Islamic banking industry, relevant professionals will see opportunities, particularly in Islamic asset management.

Sally Raj, Managing Director of Robert Walters Malaysia, comments: "In times of market uncertainty, companies need to see the long-term value of investing in their employees. Staff retention is now more crucial than ever as Malaysian professionals are highly motivated by training and development initiatives as well as leadership opportunities. Despite this general slowdown, growth is still forecast within IT, corporate governance and Islamic banking, all of which are driving recruitment of top-tier skilled specialists."

Robert Walters focuses on placing high-calibre professionals into permanent, contract and temporary positions at all levels of seniority. The Malaysia business recruits across the accountancy and finance, banking, business support, compliance, financial services, HR, legal, IT, sales, supply chain, marketing, procurement and supply chain fields.

Meethaq introduces Internet banking

Meethaq, the pioneer of Islamic banking in Oman from Bank Muscat, has launched Internet banking services for retail and corporate customers. The 24x7 service is available in English. 

Meethaq retail customers can make local fund transfers, access account balances, pay bills and manage standing instructions with Internet banking among other services. Corporate clients can also create workflows for validating access and authorisations. Corporate clients can further check the status of letters of credit, letters of guarantee and bills for collection.

Sulaiman Al Harthy, Deputy Chief Executive Officer – Islamic Banking, said: “Meethaq is proud to launch the Internet banking service featuring the latest technology as part of the bank’s strategy to empower customers to perform frequent transactions with convenience and security. Complementing the government's efforts in creating a digital society, the enhanced online banking service emphasises Meethaq commitment in providing secure electronic services which spell convenience to customers, thereby consolidating its position as the preferred Islamic banking service provider in the Sultanate.

“Meethaq is committed to invest on state-of-the-art technologies to further increase efficiency and improve customer service. With emphasis on competitive channels and new products to cater to various sectors, Meethaq aims to take the lead in technology-driven products and services, including electronic payment and web-based services, in tune with the banking requirements of Oman’s young and tech-savvy generation.”

Meethaq Internet banking ensures all transactions are secured with multiple validations.To access internet banking, Meethaq customers require their user ID and password using an on-screen keyboard; a captcha on the logon screen, as well as one-time password (OTPs) through SMS and a physical token. 

Meethaq offers a full suite of Islamic banking products and services, including savings and current accounts, home and auto finance, credit cards and mobile banking. 

Interested?

Retail customers can register online, without the need to fill forms or visit a branch. 

Global Islamic banking activities to continue apace in 2016

• Global Islamic banking assets expected to reach US$1 trillion in 2015
• By 2020, the global Islamic banking industry profit pool is expected to reach US$30.3 billion
• Islamic retail and commercial banking assets continue to grow at 16% in 2014 and 2015
• Islamic banking assets in six key markets set to exceed US$801 billion in 2015
• Gulf Co-operation Council (GCC) countries added US$91 billion in shari’ah compliant assets in 2015
• Approximately 80% of international banking assets are based in Qatar, Indonesia, Kingdom of Saudi Arabia (KSA), Malaysia, UAE and Turkey (denoted as QISMUT)

The World Islamic Banking Competitiveness Report 2016*, which aims to inspire and inform the business strategies of Islamic banks through specific, actionable insights, has been published by EY. According to the consultancy, global Islamic banking assets are expected to reach US$1 trillion in 2015, with the profit pool for the global Islamic banking industry reaching US$30.3 billion by 2020.

Source: EY. 

Islamic banking continues to be upbeat, as assets are growing at 16% in 2015. EY said that GCC countries added US$91 billion in shari'ah compliant assets in 2015, with the lion's share (80%) coming from the QISMUT region - comprising the countries of Qatar, Indonesia, KSA, Malaysia, UAE and Turkey. The nine core markets — Bahrain, Qatar, Indonesia, Saudi Arabia, Malaysia, UAE, Turkey, Kuwait and Pakistan together account for 93% of industry assets,
estimated to exceed US$920 billion in 2015, notes Abdulaziz Al Sowailim, Chairman and CEO of EY MENA.

Al Sowailim listed several broad trends which will drive growth and change for the Islamic banking sector, including:

• Large Muslim populations in 10 of the 25 rapid-growth markets (RGMs) currently reshaping the world economy 
• The coming together of ASEAN Economic Community (AEC) in 2015 
• Falling oil prices, jobs-for-nationals and economic diversification in the GCC
• The launch of the China-led Asian Infrastructure Investment Bank (AIIB)
• China’s Belt & Road Initiative

“Leading Islamic banks have done well to mainstream with a competitive, sizeable business in their home markets. The combined profit pool of Islamic banks across QISMUT was estimated at US$10.8 billion in 2014, which is a notable milestone. However, the return on shareholder equity could be significantly enhanced, by at least 15% to 20%, and this need becomes more pressing in the context of the prevailing macro-economic environment," said Ashar Nazim, Partner, Global Islamic Banking Center, EY.

“The external operating environment is certainly getting tougher, given the prevailing oil price and the resulting impact on banking system liquidity and infrastructure spend. Islamic banks are in a better position to weather this storm due to the simpler nature of their balance sheets, basic products and localised operations. However, they do not appear to be ready for the digital changes that are impacting the way customers engage with banks. A fundamental review of their operating models at this stage will be critical to the success of Islamic banking across the Organization of Islamic Cooperation markets,” added Muzammil Kasbati, Director, Global Islamic Banking Center, EY.

Interested?

Download the report (PDF)

View more infographics (updated to 2014) and dive into country reports

View the Suroor Asia blog post on the 2014-2015 report

*Global Islamic banking assets are estimated based on publicly available data from 15 participation banking (Islamic banking) markets. The research and insights are primarily based on the EY Participation Banking Universe (EY Universe), which is proprietary, based on samples and is not meant to be fully exhaustive. The EY Universe analysis covers 69 participation banks and 45 conventional banks across participation banking markets. Insights are also based on interviews with banking executives and industry observers, to identify key trends, risks and priorities. Limited disclosures on participation banking windows, subsidiary operation and offshore businesses was a limiting factor.

State of Islamic banking in Oman

Islamic banking currently accounts for 6.5% of the Omani banking sector by assets at the end of September 2015, according to HE Hamoud bin Sangour Al Zadjali, Executive President of the Central Bank of Oman. Speaking at Bank Nizwa's 2nd Islamic Banking Forum in Muscat, Al Zadjali noted that the banking sector recorded a growth of 16.4% in the total assets to reach OMR 29.6 billion. 

Dr Jamil El Jaroudi, CEO of Bank Nizwa said, “Globally, the assets intermediated by the Islamic Banking industry have reached an estimated US$2 trillion. This growth is expected to accelerate further global expansion in response to increasing demand for shari’ah-compliant financial products and services. 

"It is based on this backdrop that Bank Nizwa has organised this event for the second year running, to shed light on some of the most pressing challenges in the current economic spectrum, explore opportunities and inspire new ideas that will benefit this thriving industry.” 

Dubai Islamic Bank introduces Emirati Family Banking

Dubai Islamic Bank (DIB), the largest Islamic bank in the UAE, has announced the launch of Emirati Family Banking services. Designed to allow individuals to bring multiple family members under a joint plan, the Emirati Family Banking service is available to both new and existing customers.

One of the primary benefits is that the accounts of all members will be upgraded to the same level as that of the highest designated account holder in the family. As a result, family members may enjoy a whole range of new privileges and benefits by qualifying for an upgraded account.

Mohammed Al Nahdi, Deputy Chief Executive Officer at DIB said: “There is a real need for this solution that is unmatched by the market in order to allow Emirati families to bank together. Also, DIB recognises the substantial contribution that these families make in terms of building a prosperous economic environment that spurs further growth. As such, the bank is determined to have them rewarded for their banking experience with DIB through a host of unique benefits. Moving forward, we will continue to extend our financial counsel and support to allow Emirati customers to enjoy our high level of product and service excellence.”

Sanjay Malhotra, Chief of Consumer Banking at DIB, said: “As one of the most innovative banks in the market today, we are constantly looking for ways to deliver significant value for our customers. One of the areas where we have seen growing demand is for a multifaceted service offering that allows families to bank together as a combined relationship. With this in mind, we believe that we have created a relationship-based solution that not only meets, but exceeds, customers’ expectations by delivering a range of unique privileges for them.”

DIB has one of the largest retail bases in the UAE with over 1.5 million customers and 90 branches across the country.

Bank Nizwa earns Best Performing Islamic Bank in Oman award at WIBC

In recognition of its role in spearheading the growth of Oman's Islamic finance industry, Bank Nizwa has won Best Performing Islamic Bank in Oman award at the 2015 World Islamic Banking Conference (WIBC) held in Bahrain. 

Bank Nizwa excelled in financial stability, financial performance, as well as governance and social responsibility, all part of the WIBC Leaderboard, an assessment tool specifically designed to gauge and list best performing banks.

Dr Jamil El Jaroudi, CEO of Bank Nizwa, said, "This win is another respected achievement for Bank Nizwa that demonstrates the determined efforts of the entire team to innovate and drive our growth, as well as that of Islamic finance in Oman.

"We will continue to elevate our performance and offer a competitive range of products and services that meet the evolving requirements of our expanding customer base."

The WIBC is the world's largest gathering of international Islamic banking and finance leaders. 

Interested?

View the full list of WIBC winners

Technavio says Islamic financing to grow at a CAGR of 19% through to 2019

Islamic banking and financial vendors are increasingly seeking diversification into foreign investments on account of strong growth prospects and higher investment returns. Technavio’s research predicts that the global Islamic financing market to record a CAGR of close to 19% during the 2015 to 2019 period.

The market is expected to witness an increase in the demand for shari'ah-compliant assets in Asian markets, including Malaysia, and Indonesia. Islamic banks located in Iran and GCC are also expanding operations in countries like Singapore to deploy Islamic funds strategically to corporates in the different regions across the globe, through Islamic bank financing, and sukuk issuances. Similarly, other countries offering strong political support with various tax incentives for institutional investors will attract significant investments through Islamic banking in the years to come.

Islamic banks will produce more customised products and services for the clients over the forecast period. Governments of different developing economies are also focusing on the regulatory intervention that help the key market players to expand their customer base. In countries like the UAE, the Islamic banking industry is estimated to grow at more than twice the rate of conventional banking which would considerably spur the growth of the Islamic banking assets over the next fore years.

The report predicts that global Islamic financing in Asia will be worth over US$985 billion by 2019, with the growth of Islamic financing in countries like Bangladesh, Indonesia, Malaysia, and Pakistan.

The asset-backed nature of Islamic financing is ideal for large-scale infrastructure such as highway networks and ports. An estimated US$800 billion worth of infrastructure financing will be needed each year in Asia over the next decade. During the forecast period, places such as Hong Kong, mainland China, and Thailand will also witness a growing Islamic finance segment.

Low market penetration of Islamic products in most of the emerging markets has created an attractive growth opportunity for the top market players. Market expansion strategies are crucial to the enhancement of Islamic products and services. To capitalise on the market opportunity, Frost & Sullivan says the leading players are expected to focus more on devising and developing effective marketing channels by affiliating with various distribution channels as per the forecast.

Key banks mentioned in the report include Al Rajhi Bank, Abu Dhabi Islamic Bank, Al Baraka Banking Group, Dubai Islamic Bank, and Emirates NBD.

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Request a sample

Read the Suroor Asia blog post on the outlook for the global takaful market, published by the Dubai Islamic Economy Development Centre (DIEDC), and ACRIE, a subsidiary of aafaq Islamic Finance.

Sharjah Islamic Bank selects Infosys' Finacle e-banking and mobile banking solutions to enhance customer experience

Infosys, a consulting, technology and outsourcing provider, has announced that Sharjah Islamic Bank (SIB), a major shari'ah-compliant bank in the Middle East, has selected its Finacle e-banking and mobile banking solutions to enhance customer service and deliver new channel banking experiences.

With Finacle, SIB will be able to offer its customers a wide range of features for secure account management and aggregation, fund transfer, payment, and financial management.

Sharjah Islamic Bank selected Finacle for its product flexibility, ability to offer a unified platform to serve all customer segments, and for its extensive experience in the Middle East. 

Jassem Al Baloushi, Head, Retail Banking, SIB said, "Sharjah Islamic Bank is committed to providing the highest level of customer satisfaction. We have undertaken a major transformation programme across functions to deliver new-age banking solutions to our customers. We have selected Infosys Finacle's digital banking solutions to overhaul our channel capabilities. This will help us deliver a superior online and mobile banking experience to our customers."

Michael Reh, Senior Vice President and Global Head of Finacle, Infosys added: "As Islamic banking matures, ensuring superior customer experience and omni-channel access will be critical for growth. Infosys Finacle's digital-channel functionality will put in place a robust platform at Sharjah Islamic Bank that will enable a world-class banking experience for customers."