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gained a major extension at existing user, Bank Rakyat. The Malaysian bank was using Infopro’s ICBA for Islamic money markets but entered into a new selection for Islamic commercial and corporate finance operations, an area of focus for expansion for the bank. As in the previous few years, Path led the way in Islamic banking. New deals in 2008 included Al Baraka Bank in Sudan and Algeria, Al Jazeera Islamic Company in Qatar, Al Mal Investment Company in Kuwait, Arab Sudanese Bank in Sudan, Elaf Bank in Bahrain (portfolio management, sukuk trading, direct investments, Islamic treasury, reporting, Swift messaging and CRM), International Investment Bank in Bahrain, Islamic Corporation for Development of the Private Sector and Khalijia Invest, both in Kuwait, Qatar National Bank Al Islami in Qatar, Tadhamon International Islamic Bank in Yemen (against Temenos at the shortlist) and Tadhamon Bank in Syria. An existing user, Kuwait Finance House, also took iMAL for Malaysia. Wealth management has been a growth area, with a parallel interest in systems to support this, bringing in specialist suppliers such as ERI and Sungard with its Apsys system. The increasing oil price saw money flooding into the Middle East from Western economies. In the past, this had gone straight back into Western economies through investments in low yield instruments such as low risk bonds. Now, petrodollars were tending to remain in the Gulf and were fuelling local economies. This was being backed up by investments coming in from Western economies as the Middle Eastern financial markets opened up.
As the investment flowed into the region, and high net-worth individuals started to demand more from their wealth managers, the wealth management systems market began to take off. ‘The big evolution has been that local banks have gone from having a few private clients to lots of them,’ said Daniel Bardini, president of Sungard’s Apsys private banking systems business. As a result, ‘banks are seeing they need to have a separate division to deal with private clients, and realise they cannot service this division with the systems they have in place’. He added: ‘It’s a business driven process rather than a regulation driven one.’ Thorsten Weinrich, chief sales officer at wealth management software provider, Expersoft, agreed: ‘Both new and existing companies are seeing new requirements from their customers. They want to see
more transparency on their investment, more safety, less risk and better reporting. This is driving demand for systems.’ Another trend which started to throw up systems needs was mergers, acquisitions and geographical expansion, particularly in the Middle East. There has often been an Islamic banking aspect to this. The biggest coming together was that of the second and fourth largest banks in UAE (Emirates Bank and National Bank of Dubai – NBD) to form Emirates NBD. Emirates Bank had a fully-fledged Islamic subsidiary, NBD did not. Islamic products became available to customers from both entities as a result of the merger. From a systems perspective, the combined bank set about standardising on Infosys’ Finacle at its heart, with this having previously been selected by Emirates Bank. There has also been a push across borders, with some aggressive expansion plans put into operation. National banking groups have gone regional; regional banks have been moving onto the international stage. While the economic and financial crisis has seen a slowdown, there are still some banks pushing ahead, while others that have seen rapid expansion in the previous few years are consolidating and seeking to put in place strong infrastructures. Temenos cited Islamic banking and the sometimes connected microfinance sectors as areas of growth in 2007. The former made up around seven per cent or so of business in 2006 but this increased to 15 per cent in 2007. There were pure Islamic banking deals (including Al Inma Bank), the others were a mix of Islamic and conventional. The average Islamic licence value was slightly higher than for conventional banking, said business development manager, Mark Gunning. Anecdotally, he said, Islamic banks seemed to be becoming more innovative and aggressive in terms of the types of product and services they were seeking to offer. At the outset, when there was less competition for the banks, Temenos used to lose out to local, lower cost suppliers. The emphasis was on the ability to support a relatively simple Shari’ah product set. Now, in part boosted by the recruitment of experienced bankers from tier one banks, they were seeking to be ‘just as clever and innovative’ as other banks. As with any new area, it has not been straightforward for systems suppliers to add Shari’ah banking support to their existing offerings. It has typically been a phased approach, usually with a first customer
Islamic Report
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