g
Middle East heartland with wins at Maldives Islamic Bank and Banque Islamique du Sénégal in West Africa. The former was a Shari’ah-compliant start-up institution in the Maldives, formed as a joint venture between the Saudi Arabia-based Islamic Development Bank and the government of the Maldives. This marked the vendor’s first installation in the country. Banque Islamique du Sénégal, owned by Tamweel Africa, was followed by a roll out of iMAL across the West African states of Guinea, Mauritania and Niger under Tamweel Africa umbrella. However, this was the sum total of Path Solutions’ new name signings for 2010, a sharp drop compared to the 13 deals of 2009. This was seemingly attributable to a more general slowdown in its Middle East stronghold (although only seven of its 2009 wins were in this region) as well as mainstream suppliers also developing more credible Islamic versions of their offerings. One loss around this time came at the hands of Oracle FSS in Path Solutions’ backyard of Kuwait at new Islamic bank, Warba Bank. Oracle FSS was also selected by Bank Muamalat Indonesia in 2011. Further African success came in Nigeria with the win of Jaiz Bank Plc., following the June 2011 announcement by the Central Bank of Nigeria that Islamic banking was to be given the go-ahead in the country (it had been a rather stop-start introduction ahead of this). Jaiz Bank Plc. was one of the first to be granted an Islamic banking licence and was due to launch in December of the same year. iMAL was selected to underpin all operations following a visit to Gulf African Bank in Kenya. Recommendations aside, iMAL was also selected on the basis of its ‘robustness, functionality and ease of implementation’, said the bank’s MD and CEO, Mohammed Mustapha Bintube. Cost of the software and related services were also taken into consideration, as was the vendor’s track-record on the international stage. Three other unnamed international vendors were also evaluated during the selection process. The bank was apparently live with iMAL by the end of 2011, with the hope that it would open for business early the following year.
Meanwhile, there appeared to be issues in Malaysia over
recent years as RHB Islamic seemingly moved its Islamic banking back onto the bank’s group system (FIS’s Systematics) in mid-2010 and then, just a year later, it was suggested that its 2009 Malaysian taker, Muamalat, was reconsidering its core banking system. When this suggestion was put to Path Solutions, the supplier stated ‘we have a contractual disagreement with them on the scope of work, but no final decision is made’.
There were a couple of lean years for Path Solutions, in 2010
and 2011, from the perspective of new-name wins. From 13 new-name deals in 2009, it slumped to four in 2010 and three in 2011. In fact, Path Solutions’ lower total in these two years could be attributed less to the general decline in deals available than to an apparent loss of traction. It won nine of 17 Islamic deals in the Middle East in 2008, seven of 15 in 2009, two of 15 in 2010 and two of twelve in 2011. Temenos overhauled its regional competitor in 2010, winning three Islamic deals compared to Path Solutions’ two, and each won two deals in 2011. Path Solutions’ chairman and CEO, Mohammed Kateeb, explained that a combination of the economic distress in Europe and the Arab Spring had ‘created a lot of uncertainty in the region’. While many banks had large cash reserves, some were in acute difficulty. The most recent example was Bahrain- based Arcapita Bank, a Path Solutions client, which owned a portfolio of Western companies and had faced rising borrowing costs since uprisings in the country. ‘The investment banks are struggling, and transparency has been lacking. Issues are still arising, and people don’t know what is going on at these banks and what their exposures are,’ said Kateeb. This accounted for the lack of new deals, said Kateeb, and in the meantime Path Solutions had been focusing on broadening its solution to capture follow-up business with existing customers. Risk management, business intelligence and reporting tools had been redesigned, and new modules written including mobile banking and corporate internet banking.
Meanwhile, Kateeb felt that the average size of new deals had decreased compared to previous years, and this had coincided with suppliers discounting their systems. ‘Some of the deals we elect not to go after as they are not going to be profitable,’ he said. He cited Military Credit Fund, which signed with ICS in November 2011, as an example. This, along with Al Baraka Turk Participation Bank, which also signed with ICS, for its branch in Erbil, Iraq, went for around $200,000, Kateeb claimed. ‘When you sell a core banking system for $200,000, this sets a precedent, and it’s very hard to persuade another bank, even if it is five times the size, to pay $1 million.’ Kateeb also felt that international vendors like Temenos and Oracle had been offering in the region 50 per cent off, although Temenos’ CEO, Guy Dubois, had recently stated on an analyst call that ‘we have been able to defend our pricing’. Nevertheless, Path Solutions had seen an increasing number of discussions, circulation of RFPs and so on, and Kateeb
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