IBS Journal November 2017
23
“Considering Mashreq’s historical strength in the innovation and digital space, we are confident that customers will respond positively and we will see strong adoption of Neo.” Neo’s goal, he added, is to provide “seamless, convenient, secured and cost effective banking services.” Customers will be able to open an account in “less than five minutes” by downloading the app from either the Apple App Store or the Google Play Store and scanning their Emirates ID.
In spite of macroeconomic and political challenges, there is an untapped source of new business for digital Islamic banks in the underbanked segments of Islamic countries. Digitisation is helping Islamic banks reach these populations and provide them with products that are more aligned with their ethical codes. Asia is also seeing positive developments such as the formation of the ASEAN Economic Community (AEC), and the Indonesian government’s increased determination to support Islamic banking and finance. Cities across the globe are trying to emerge as hubs for financial technology. The same is true for cities in Islamic countries. Cairo, Abu Dhabi, Dubai and Singapore have all started projects to underpin the development of new technologies in areas like payments and blockchain.
Regulatory boundaries
For all the talk of innovation and a need to create value-added services for clients, there are still several hurdles that banks in Islamic finance sector need to overcome. The highly interpretative nature of Shari’ah means that regulations can differ from bank to bank, let alone country to country. Decentralisation is an issue that crops up in almost any conversation with industry commentators, yet some progress is being made even there. The Central Bank of Bahrain recently announced that it would be launching an external
audit for all Islamic banks in the country. The audits, which will be performed to certify whether the banks are properly following Shari’ah law, could make Bahrain one of the strictest jurisdictions for Islamic banking. The move is expected to propel the Bahraini capital, Manama, back into the Islamic finance limelight.
Traditionally, Islamic banks use in-house scholars to determine whether their offerings obey Shari’ah law properly. Proponents of this system argue that this allows more flexibility and diversity in the sector. Detractors argue that it is vulnerable to conflicts of interest, as some of the scholars are employees of the banks which they scrutinise.
Guidelines on just who would be qualified to secure a seat on the new external audit board are expected to be published later in the year. Banks will also not be required to make the results of their audits public. The new system in Bahrain will in place from 2020 onwards, when banks should submit their reports for 2019. The central bank has floated the idea of annual audits in a consultation paper, but it did not mention in a statement what the final decision would be.
Islamic banking is rushing head-first into a digitised world, pressed onwards by a demanding customer base and a growing need for digital initiatives. With the issuance of sukuk and takaful on the downturn in 2017 and beyond, the creation of new digital channels will surely be a method by which Islamic finance can continue its impressive rise in popularity.
STRAIGHT FROM THE SOURCE
EY World Islamic Banking Competitiveness Report 2016 -
https://go.ey.com/1ZWgbwc
www.ibsintelligence.com
Credit: Igor Ovsyannykov @ Unsplash
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52
