MANAMA: Islamic banks are well positioned in many markets to both withstand the effects of a changing global economic outlook but also benefit from rising market share, according to a report.
In some markets, the report predicts that banks will capture market share primarily by having higher capital and liquidity than their conventional peers,” said Sayd Farook, Vice Chairman and CEO of Middle East Global Advisors, presented the key insights from the “Finance Forward Islamic Finance Outlook 2016.”
The report revealed how Islamic banks can act as catalysts for growth in markets like Indonesia, Pakistan and Egypt where private sector credit is starting from a low base. In these markets, Islamic banking has a low share of the total assets and can rapidly grow not just by building share within the existing financial sector, but through the maturation of the financial system.
Middle East Global Advisors, the conveners of the World Islamic Banking Conference (WIBC), launched a comprehensive outlook report on the final day of WIBC 2015.
Dr. Farook emphasised that for 22 years, WIBC has served as a unique platform serving Islamic banking leaders with the most influential global and regional insights to help shape their business strategy for the year ahead.
The uniqueness of the report, he continued, is that it combines meaningful insights from Islamic finance leaders – gathered from an extensive survey of practitioners’ sentiment – with robust analysis of the performance of Islamic financial institutions.
“Islamic banks that pursue these opportunities will be particularly reliant on using technology to reach their customers, especially through mobile devices, which allow them to more efficiently reach a large customer base without the costs associated with expanding their physical branch network,” said Dr. Farook. “Our survey of Islamic banking leaders found that nearly as many (13%) were considering partnerships with telecom companies as were planning expansions of their ATM networks (15%).”
He continued by addressing the challenge of expanding customer base. He shared that banks that are successful in reaching a wider market will not only be rewarded with asset growth, but also from being able to show that Islamic finance is not just the preserve of the well-off urbanites. It can in fact reach people of low or moderate incomes.
“This will progress the industry to fulfill not just the need for Shariah compliance by many consumers, but also wider ethical expectations for an inclusive financial sector,” Dr. Farook concluded.
