was taken to run on IBM (Xeon) servers to cover the bank’s Shari’ah-compliant investment and trade finance operations, treasury, profit calculation, customer service management, financial template reports and Swift. Cihan was Path’s first customer in Iraq.


In total in 2009, of the 25 new name core banking systems deals in the year with an Islamic banking aspect, Path was by some distance the most active seller, with 13 new clients. Notably, for the first time, the supplier’s geographical expansion was reflected in the fact that just seven of the deals were from its home region. It had two wins in the UAE, and one each in Iraq and Yemen, as mentioned, and Kuwait. And slightly further away from its traditional Gulf stomping ground, it also drew two deals from Lebanon (a broad bank, Al Mustathmer, that had been set up in 2007, plus one off-the- record deal). For the latter country, it was interesting to note that domestic vendor, BML, failed to pull in any Islamic deals in 2009 for its ICBS solution, thus yielding ground to Path. For Path, North Africa was on its radar, with a win in 2009 in


Libya (a 76-branch player, Wahda Bank, that was part-owned by Arab Bank), and the two in Sudan. To put Path’s performance into context, another Malaysian supplier, Infopro, had only two wins in 2009 for ICBA, neither of which were for the Islamic version, and its compatriot, Silverlake, failed to get off the ground at all with its SIBS core system.


Union, the first


The deals outside the Middle East included Amwal Credit Shari’ah-compliant co-operative financial


institution in Hong Kong. It received regulatory approval from the local authorities in May 2009 and ‘immediately started identifying suitable software providers’, said Lord Edwin Hitti, president of Amwal. Due diligence was then undertaken ‘with particular focus on our immediate as well as future requirements’. Oracle FSS was among the international vendors considered by the credit union. A significant part of the overall assessment consisted of an analysis of the acceptability of the offerings by potential shareholders/ depositors of Amwal. Oracle FSS, which made it to the final selection process with the Islamic version of its Flexcube suite, lost out ‘due to its inflexibility vis-à-vis payment terms and the fact that the system is perceived to be converted from a conventional banking software package rather than developed as an Islamic banking system from the ground up,’ explained Hitti. iMAL’s AAOIFI certification ‘reassures that Amwal is Shari’ah- compliant to the core’. The credit union also favoured the modular structure of the system and its scalability. Hitti named ‘technical competence’ as iMAL’s other strong point. Amwal also felt that Path’s experience in dealing with start-ups would help to guide it ‘through the various pitfalls it will undoubtedly encounter’. Hitti described iMAL as ‘not the cheapest system on the market’, but emphasised that the vendor ‘has shown great flexibility in adapting payment


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terms to the credit union’s financial situation’. The go-live was expected in six months. The system was taken to cover the core functionality of Amwal, across retail operations, deposits and lending, treasury operations and asset management modules. ‘The seamless integration of front office, customer facing needs and relevant back office support is assured to make us the envy of the credit union and banking sectors in Hong Kong,’ stated Hitti. The success saw a significant increase in headcount during 2009 and a spate of new offices. For the future, during the year, Path began preparations for what it hoped would be an opening up of the French market for Islamic finance. Path tied up with Hiram Finance, a Paris-based consultancy firm. Hiram Finance, which worked with a number of conventional banking system suppliers, such as Sophis and Calypso, signed to offer iMAL to start-ups and conventional institutions converting to Islamic business practices. Hiram hoped to provide advice on the financial side of the business, while Path would offer its IT expertise and implementation services. The focus was on France plus the rest of Europe as well as North Africa (Algeria, Tunisia and Morocco).


The negotiations between the two companies lasted about six months, said Jean Kanaan, head of sales at Hiram Finance. Although there were local vendors that offered Islamic banking systems, such as Delta Informatique and SAB (both publicised their Islamic offerings in 2008), Kanaan believed that the emerging Islamic market in France needed to be driven by companies with extensive expertise in this field and the ability to offer global solutions, in terms of software and consulting. He felt that Path met such requirements perfectly. ‘Path and Hiram Finance have common origins, from


Lebanon, and therefore, have a similar culture,’ said Kanaan. Although there was no exclusivity in the partnership, Hiram was ‘not going to spend time looking around’ for other Islamic banking system vendors. He said that there was already an interest from the French market, but ‘everybody is waiting for the regulation to be adopted first’. The country’s regulatory authorities had been looking into introducing Islamic finance for over a year and a half, but without any concrete results. There were a number of hurdles, with the latest set-back coming from the Constitutional Council of France, which declared the government’s recent authorisation of sukuk issuance to be illegal. However, Kanaan believed that once the problem was resolved, France had very good potential for the industry.


Meanwhile, the move to the Java version of iMAL was taking a lot longer than planned. As mentioned, there had been claims of a pilot back in 2007. However, by June 2009, the development was supposedly at a similar stage, with Moukadam claiming all modules were close to being completed, within a project involving a dedicated team of 35 staff over a couple of years. Once more there was the promise


Universal Banking Systems Market Report | www.ibsintelligence.com


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