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Islamic banks continue to dominate 60% of Islamic asset under management globally through innovation and technology

1-07-2020

London: Islamic retail banks continue to dominate the total Islamic financial assets where around 60% or US$1.56 trillion are held by Islamic banks and Islamic windows of conventional banks end of 2018, as reported by the Global Islamic Finance Report (GIFR) 2019.

The GIFR 2019 also reported that after four years of decline in growth rate, the global Islamic finance industry has once again picked up to register annual growth in assets of 6.58% during 2018, from US$2.431 trillion at the end of 2017 to US$2.591 trillion at the end of 2018. This was largely driven by the Islamic retail banking sector.

Islamic retail banks are reacting and innovating, and finding new ways to create value for customers. They do not see old-style branch banking and digital banking as opposites: they are trying to find the best of both worlds.  All these have directly pushed many Islamic banks to achieve greater operational efficiency and place greater importance on innovation.

In a rigorous Islamic banking efficiency analysis conducted by Cambridge IFA,  a UK-based financial services think tank, more than 130 Islamic retail banks worldwide were ranked and the strongest Islamic retail banks were identified. “Strongest Islamic retail banks should be considered the safest Islamic banks in terms of doing business with, both by customers on the liabilities side and those seeking financing or doing business with these banks on the assets side,” explained Dr. Sofiza Azmi, CEO of Cambridge IFA. “We believe that efficiency of operations and management should be the key factor in determining the safety level of bank rather than is size,” she commented.

Results of the efficiency study was announced during the 5th Islamic Retail Banking Awards (IRBA) held in Muscat, Oman on November 4, 2019. For the 2nd year in a row, Dubai Islamic Bank (DIB) was named as the Strongest Islamic Retail Bank in the World 2019. DIB was also conferred as the Strongest Islamic Retail Bank in the UAE 2019 for the third consecutive year. Established in 1975, DIB is the largest Islamic bank in the UAE by assets and is the second largest Islamic bank in the world.

Commenting on this recognition, Mr Nasser Al Awadhi, Chief of Consumer Banking said, “Over the last few years, the bank has enjoyed unparalleled success, delivering innovative products and services to our customers and achieving growth beyond expectations.”

Islami Bank Bangladesh Limited (IBBL) was named the Strongest Islamic Retail Bank in Asia 2019, which is not only the pioneer Islamic bank in Bangladesh but have grown from strength to strength to become a leading Islamic bank in Asia.

At the country level, Bank Nizwa was announced as the Strongest Islamic Retail Bank in Oman 2019. As the largest and fastest growing full-fledged Islamic bank in the Sultanate of Oman, Bank Nizwa is leading the sector’s growth and has been the go-to reference for Islamic finance in the Sultanate.

Other Islamic retail banks that were recognised as the strongest Islamic retail bank in their respective countries were:

Innovation is at the heart of any institutions and industries, more so in retail banking.  “key to progression is introducing innovative products and services, leveraging on digital innovations  such as fintech and artificial intelligence while being Shari-a-compliant,” said Professor Humayon Dar, founder Islamic Retail Banking Awards and Director General of Cambridge Institute of Islamic Finance. “In recent years, more and more Islamic retail banks are leading the industry in innovation, delivering products and services are not only game changing but also reflective of the dynamic impact they are making in driving Islamic banking,” he added.

Recognising the importance to transform in light of the changing environment, Islamic retail banks continue to deliver market leading innovative banking solutions developed with the customers’ needs in mind. Those Islamic retail banks that have been nimble and adapted to clients’ needs have come out on top in this year’s list of most innovative Islamic retail bank. These are:

  • Most Innovative Islamic Retail Bank in Saudi Arabia 2019: Alinma Bank
  • Most Innovative Islamic Retail Banking Window in South Africa & Botswana 2019: FNB Islamic Banking
  • Most Innovative Islamic Retail Bank in Bangladesh 2019: Islami Bank Bangladesh Limited
  • Most Innovative Islamic Retail Bank in Europe 2019: KT Bank AG
  • Most Innovative Islamic Retail Bank in Qatar 2019: QIIB
  • Most Innovative Islamic Retail Bank in Indonesia 2019: PT Bank Syariah Mandiri
  • Most Innovative Islamic Retail Bank in Turkey 2019: Kuveyt Turk Participation Bank
  • Most Innovative Islamic Retail Bank in Jordan 2019: Jordan Islamic Bank

These world’s most cutting-edge Islamic retail banks are pioneering unrivalled standards and capabilities. They are banks that are transforming the industry by setting new benchmarks in service delivery, digital innovation, product development, payments, technology, customer experience and more. 

For example, Warba Bank unveiled it its digital Jam3eya feature as part to the bank’s move to enhance its digital structure and to cater for the growing customers’ demand for digital banking services. This trend-setting convenient mobile app as named as Best New Mobile Banking App 2019 at the 5th Islamic Retail Banking Awards. Another bank that has embraced innovation and technology in its operations especially in the payment and savings domain is Noor Bank, which bagged Remittance Product of the Year 2019 and Best Islamic Retail Banking Product (Liabilities Side) 2019 Award for the bank’s Instant Remittance and SkyMiles Account.

Alinma Bank’s noteworthy efforts in leveraging fintech and the pursuance of forward-thinking approach was recognised when the bank was conferred with Best Digital Branch of the Year 2019 award.

“Since 2015, IRBA has been recognising the contributions and successes of Islamic retail banking banks, individuals and other market players globally. They are the industry game changers. Winners of IRBA exemplify how Islamic retail banks have successfully embraced digital innovation, enhanced their operational efficiency and delivered new, improved services for customers,” Professor Humayon Dar said on the occasion.

Dr Sofiza Azmi, who is also Chairman of the Islamic Retail Banking Awards, explained that IRBA honour and promote the efforts of Islamic retail banks for developing new and innovative products and services, while giving them the incentive to enhance their performance for the coming year. “They encourage the active participation of banks by setting the benchmark and allowing them to gauge their standing within the industry,” she said. 

About Cambridge IFA:

Cambridge IFA is a financial services intelligence house that specialises in developing and utilising powerful cutting-edge analytical tools to evaluate business data, assess macroeconomic indicators and understand market trends, leadership positioning and brand development relevant to the development of the financial services industry globally.

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