IBS Journal January 2017


9


Though Path Solutions took the IBS Intelligence Islamic Sales League Table crown in 2016, behind it ranked both Oracle and Temenos, two firms without an established Islamic background but with expanding interests in the sector. For Kateeb, what is more important in a system – the technology or proper Shari’ah compliance – and can conventional vendors make the jump into the Islamic banking sector? A lot of banks, he answers, look at the profile of the company that is pitching to them and investigate its global reach, its style and its existing customer base. Sometimes the technology can take a backseat to that. However, many of Path Solutions’ current clients had, in the past, tried out conventional systems. The fact that they are now customers of iMAL says enough.


Conventional vendors sometimes don’t understand just how difficult it can be to tailor a solution to the Islamic market. There are many banks that use both a conventional system, like those provided by Temenos and Misys, and then decide to implement a specialised Islamic system on the side. Omani Bank Muscat is such an example, which runs Temenos for its banking operations yet came to Path Solutions when it wanted to open an Islamic-specific operation. There are cases all over Africa too, where such practices occur. Banks that do try to make a conventional system work for Islamic finance end up making the decision to go back to an Islamic-specific solution after a lot of hassle and effort trying to make their initial choice fit.


“Many of these companies have a minimal focus on Islamic technology,” comments Kateeb. “If you look at the market and you look at how much of their business focuses on Islamic finance you can see it doesn’t have the attention of the management.” Some of Path Solutions’ main competitors in the sector are more interested in North American expansion with their conventional systems or create modular systems in Europe than actually looking at the Islamic banking sector. Regional divisions of these competitors will customise their system and spend a lot on marketing to convince Islamic institutions that it can be effective but their efforts won’t pass muster. “I 100% believe that all conventional banking systems are based on the need for interest. Of course interest is illegal in Islamic finance so they are two completely different concepts which need completely different forms of architecture.”


Customising a conventional system to make it fit into an Islamic institution takes far more work and research and development than the higher-ups in conventional banks want to put in because their attention is elsewhere.


A move to the cloud, reckons Kateeb, should be high on the agenda for many banks and vendors in the Middle East. “I expect to see, in the next couple of years, certain components moved to the cloud and maybe we’ll see a major core banking offering moved to the cloud after that.”


There are some banks with younger CIOs who are very aggressive on the matter, looking to get cloud-based systems up and running as soon as possible. There remains, however, a lot of hesitation from central banks, especially over the question of data security. Trust in the new technology is variant, and can change from country to country or even from business to business. The main problem at the moment is the issue of regulations. If regulatory hang-ups are solved there will be a gradual movement towards outsourcing and cloud integration. Piece by piece more and more sections of a banking service may be put on the cloud, until finally the core banking system is hosted there as well. Path Solutions has already built the functionality into its solutions if and when that advancement is made.


Taking a look into 2017, the world is changing very quickly and digital banking has become a major driver for many, if not all, banks. Alongside that comes data analytics, understanding the customer properly and social media integration. This is leading banks to desire an entirely new platform. That need is something Path Solutions is hoping to tap into, having designed iMAL to be “a completely digital solution integrated into the core with omni- channel capabilities”.


Banks have been discussing how to implement these options, which means when Path approaches them they are already on the same page. “In 2017 we will continue upgrading our existing customers to our new platform and continue to focus on digital channels and ensure that clients are taking value from our system,” states Kateeb. “It’s very important to us that we empower our clients and give them the ability to utilise the latest technology.”


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