Keeping your banking options open

In these less risk-averse times following the worst economic crisis for a generation could Islamic banking go global? We hear from expert Haitham Abdou.

Why are leading financial institutions increasingly looking to open an Islamic 'window'?
Haitham Abdou. The global economic crisis that rose in mid of 2007 has taken many shifts in 2009. Among the global uncertainty, the outlook for the Islamic banking in the Middle East and emerging markets remains relatively bright. Most of the emerging markets in Asia, Africa, Europe, Latin America and the Islamic countries sustained relatively high GDP. During last year most of the financial institutions adopted cost cutting, capital investment reduction and headcounts strategy to survive the worst economic shock in years. However the Islamic banks were expanding into the African, Asian Europe emerging markets. The leading financial institutions realised the investment potential in the Islamic banking and specifically within the emerging and Islamic countries as one possible option to get over the current economical situation and to retain level of growth rate and expansion.

With banks sometimes interpreting Shariah compliance rules differently, what challenges does this mean for ITS when creating a robust IT platform?
HA. The Islamic banking philosophy based on Shariah compliance, which guarantees purity of transactions and it builds reliance on the Islamic banking. Shariah scholars put a lot of efforts to standardise the Islamic banking practices that is followed by several financial institutions worldwide. AAOFI and IFSB are adding great efforts towards the standardisation of the Islamic banking products and accounting. ITS has realised the model of defining Islamic banking products and work flow and the importance of harnessing the technology to provide the Islamic financial institutions with a tool that enables the banker to define and innovate Islamic products in timely manner to meet the Shariah board and the market needs.

ITS innovated the first Islamic Product Engine – backed up by its long and extensive experience in Islamic banking sector. The ITS Islamic Banking Solution (IBS) is a revolutionary application that is fully flexible, easy to use, adaptable and user configurable to allow organisations who use it to innovate and focus on creating new products and services and market them in record breaking time. The concepts of short 'Time to Market' and 'Low Cost of Ownership' were some of the main concepts that went into the main design of IBS. Organisations who decide to use IBS will have the edge of swift adaptation in this dynamic industry. ITS Islamic Banking Solution has been developed to comply with various Shariah rules and Ijtihad, taking into consideration countries specifics and central banks rules.

How are your services catering to the banks in the Middle East and where in the world do you see has having potential for your business?
HA. ITS adopted a global expansion strategy several years ago. Presently, ITS offers services in more than 35 countries worldwide. ITS offers a high level of technology, that can run on various platforms, support most major server operating systems, and use multiple and modern relational databases. Furthermore, ITS have built on service-oriented architecture (SOA), which is a set of loosely coupled modular services to support both business and IT requirements. ITS is differentiated through its client services, which include training and support services, as well as improved the offering and diversified to consulting services, facility management, remote infrastructure management, and project management. 

Do you see the growth of Islamic banking slowing down in thee future, both in the Middle East and globally? If not, why?
HA. The Islamic banking market has grown over the average growth rate of the countries implemented the Islamic banking over the last decade and will continue to increase. The emerging countries in Asia, Europe, Africa and Latin America and the Muslim countries are the main markets. However, the untapped markets like North America and also in non-Muslim countries are potential markets, where this new way of banking appears safer than the conventional system.

Haitham Abdou is Group director of Marketing at ITS. He has over 15 years of IT experience in the Banking and Finance Industry. Abdou also has Expertise in IT Strategies for financial institutions, based on the latest service-oriented architectures, as well as in architecting technology to meet the requirements of Islamic financial institutions.