GLOBAL REPORT
Technology trends in Islamic finance
news
branchless banking is key to penetrating this region.”
changes much like its conventional counterpart and this is
expected to carry over into 2014. In 2013, the focus was on
mobility and advanced delivery channels; unlimited access
to banking in terms of time and location.
One of the main trends in 2013 was the geographical growth of
countries came into existence and more conventional banks
started to offer Islamic banking products.” Africa, as a continent,
has seen an uptick in the number of countries that have adopted
Development in Africa
Africa’s population is set to double to two billion in 40 years.
The Muslim population of the continent makes up 50% of that
population meaning that Africa represents a huge opportunity
will also crop up given the size of the continent and the many
different regimes and regulatory frameworks contained within
it. “With this tremendous opportunity comes challenges and
within the continent. To address this challenge, core banking
elaborates, “In many countries in Africa, the mobile infrastructure is
In sub-Saharan Africa, which is the least developed part of the
continent, almost 70% of the population has mobile phones.
Therefore, delivering banking services through mobile and
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continue to function even if the connection between branches
and headquarters are down. This is the way that our unique
iMAL*SAFE technology works; those of our customers
that have branches in harsh geographical locations where
February 2014
GLOBAL REPORT
connections, are still able to run the iMAL core banking
The development of industry standards has played
a key role in the history of technology innovation
sector with African economies such as those in Ghana,
Ethiopia and Mozambique growing faster than any other
region of the world. “Technology needs to play a
key role in fueling and supporting this growth.
Africa is increasing the need for new products;
Islamic banks in Africa need to play an even a
mediator.
and expansion in the usage of technology in
questions that the standardization bodies attempt
to clarify for the industry are the same no matter
which market they originate from, however the
implementation is where technology faces its challenges.
This requires new Sharia-compliant products.
technology providers need to offer their customers’ end-toend functionalities that are Sharia-compliant and include
Technological challenges in the sector
to continue enhancing offerings by incorporating in-demand
advanced functionality, whilst maintaining a practical approach
to upgrading the underlying technology, keeping in step with
the latest technology trends and enabling clients to maximize
one of the trends of last year. “2013 saw many conventional
core banking providers dressing their conventional systems to
appeal to Islamic banks. This strategy has failed in multiple
banks and many banks that already have conventional
core banking systems with Islamic interfaces came to us to
help them with their Islamic business.” Again, just as in the
needed in technologies that focus on advances in analysis
of data through data marts and data warehousing; leading to
a better understanding of the customer, through successful
management, vertical assets and liabilities management.
and are based on the same principles that these international
standards attempt to meet. The complexity comes from many
banks not following these standards literally, as they have their
own Shariah Boards to approve the structure of their business
products, their own contracts, processes and procedures that
modify these standards. This puts tremendous pressure on IT
solution providers to have systems designed and built based on
conventional IT solution providers fail and the need for legitimate
Shariah-based IT solutions are needed.”
The need for new product structures is recognized and
of standardization bodies is to continue to keep abreast of the
running products and have processes and procedures without
shares. “On the other hand, many standards are set by these
standards development and adhering to these standards in our
segment are issues that need to be addressed.”
When asked about how he believes the sector as a whole
by increasingly gaining acceptance, especially in high-growth
emerging markets, as an effective means to building an inclusive
innovative and competitive products, this will be an area of focus
in 2014, alongside new business development. “This year, new
business development is likely to focus in particular on Shariah
compliant investment funds and wealth management. None
currently offer Islamic hedge funds but it is believed that many
are planning to offer them within the next three years.”
The struggle to become a mainstream form of banking is also a
sector’s progress to a mainstream form of banking will be fuelled
by continuous growth. The penetration percentage of Islamic
industry as a whole needs to focus on the most important issue,
protect this uniqueness and not allow for identity replacement.”
The acquisition of new customers and the maintenance of what
continuing to acquire new customers is convincing them that
Islamic banks are different from conventional ones in the soul
and spirit of their business. If the only difference between Islamic
banks and non-Islamic banks is the color of the logo or the brand,
then it will continue to be a challenge to attract customers in the
numbers needed, but if we succeed, many of these challenges
consulting
www.IslamicFinanceConsulting.com
www.IslamicFinanceEvents.com
www.IslamicFinanceNews.com
www.IslamicFinanceTraining.com
www.MIFforum.com
www.MIFmonthly.com
www.MIFtraining.com
www.REDmoneyBooks.com
standardized regulatory framework; more regulatory and tax
and the awareness and prevailing misconceptions of the public,
that need to be met through education. “Copying conventional
banking products will continue to increase misconceptions
and reduce the borderlines between Islamic and conventional
“identity replacement”.
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Powering Islamic Financial Markets
Mohammed Kateeb
Tel: +965-2482-4600
Web: www.path-solutions.com
February 2014