Key implications for banks and suppliers: Considering the additional operational effort involved in the execution of Islamic products which involve an underlying asset transaction (for a sale and buy back, for example) and the additional compliance requirements that involve a Shariah board, a very critical factor for a succeeding in the Islamic banking business model is its efficiency, in addition to having a very strong customer centric operating model. Having an increase product portfolio is also a key factor to drive cross-sell penetration, given the need to sustain a loyal customer base. Technology, given the above context plays a critical role – be it from the context of customer relationship, product flexibility or operating efficiency.
The advent of Islamic banking and the increasing popularity across geographies also has its key implications to Banking Technology suppliers. Its critical to have your product cater to this segment, and also having the compliance to what is seen as widely accepted Islamic banking product standards, driven by the Accounting and Auditing Organization for Islamic Finance Institutions (AAOIFI). And these are not just limited to the core banking or universal banking solutions, but also include treasury, capital markets, private banking and wealth management, risk management and lending systems. Banks always tend to draw more comfort from experiences of predecessors, and therefore being the early bird not only helps win the first customer, but several that follow in succession as well!
