A 4D APPROACH TO SELECTING THE RIGHT ISLAMIC BANKING SYSTEM


While there are over 75 recognised core banking solution platforms across the world, it is a smaller subset of this number that qualify to provide end to end Islamic banking features. If one considers the selection of a core banking system as a science in itself, it would be only fair to say selecting an Islamic core banking platform is a shade


more complex – both from the standpoint of defining the expectations clearly, and making the right choice of an application that best meets the requirement. How does one go about determining the best fit solution for the bank?


Here is a quick guide with four dimensions of focus: ‘the 4D approach’ to selecting the right Islamic banking system


1. Define your needs: The requirements from an Islamic banking standpoint tend to be specific based on both the region in which it operates, and also the directives as provided by its Shari’ah Board. A well-defined requirement document would need to focus on the Islamic products and processes that are key for the bank. A good business requirement specification (BRS) document, which includes all key requirements would typically have 5000+ features typically listed, which forms the basis for the detailed evaluation. This includes developing and


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managing Islamic asset products, finance scheduling, and also the origination, maintenance and termination of contracts. Similarly, on the liability side, the approach and methodology related to the profit calculation – including the frequency of profit calculation and disbursement, profit calculation approach and provisions such as charity contributions are key to be well defined upfront.


In addition to the needs of Islamic products, a BRS document would also need to address other typical features expected of a solution – CIF, credit operations, branch functionality, GL, channel integration, MIS (management information system) and reporting, among others. In order to make a holistic and balanced evaluation,


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