New research undertaken by SunGard, one of the world’s leading software and technology services companies, has identified key requirements to support the growth of the Islamic banking industry. The survey also highlights the most important challenges faced by industry professionals today.
SunGard surveyed 50 banking executives based in the UAE, Saudi Arabia, Qatar and Kuwait. Key findings of the research revealed that, for Islamic banks to establish a place in the global banking market, they will need to improve their business practices in the following ways:
1. Implementing a more effective enterprise risk management framework for Islamic finance
2. Competitive product offerings and customer service to attract more retail banking customers
3. Working with regulators to achieve greater standardization in the Islamic finance industry
The survey also further identified important business challenges facing Islamic banks (participants selected their top three issues):
1. Risk management (41%)
2. Customer service (32%)
3. Competing with other regional players (32%)
4. Lack of standardization (32%)
5. New product development (27%)
6. Legal and reputational risk (14%)
Wissam Khoury, managing director, Middle East and Africa, SunGard Financial Systems, said: “Islamic banking is one of the fastest growing areas in financial services globally. This is evident here in the GCC, with the World Islamic Economic Forum taking place in Dubai next month as well as the growth of and recent acquisition activity by regional Islamic finance providers. Elsewhere, governments in the UK, Hong Kong and South Africa have all issued their first sukuk this year. The opportunities for growth are huge.
“SunGard believes that to capitalize on this, Islamic banks need to establish first class enterprise risk management frameworks. In addition, enhancing their customer experience through multi-channel access and an improved branch with mobile and online banking will allow Islamic banks offer compelling products and services to help attract retail customers. And finally, the industry needs to keep building relationships with and educating regulators. Many central banks have now passed regulations in support of Islamic banking, so it is vital that this opportunity is not lost.”