Advertisement

Enlightened Islamic finance


Business Islamica interviewed Noor Islamic Bank on a wide spectrum of issues impacting Islamic finance, including the bank's differentiating strategies propelling it towards enviable heights in the sector. The following were GCEO of Noor Investment Group and CEO of NOOR ISLAMIC BANK, Mr. Hussain Al Qemzi's responses.

1. DOES NOOR ISLAMIC BANK HAVE AN EMIRATIZATION PROGRAM AND WHAT ARE THE IMMEDIATE RESULTS ON CUSTOMER SERVICE, EFFICIENCY AND PROFITABILITY FOR THE BANK?

We have an Emiratisation strategy to develop UAE Nationals in senior bank positions and attract young UAE Nationals to core banking functions. We have established the Management Associate program, which trains UAE national graduates in specialist areas. In addition, all bank positions have an Emiratisation priority, while some positions are locked for UAE nationals. This year the first generation of Noor Islamic Bank's future leaders graduated from the Noor Leadership Excellence and Accelerated Development (Noor Lead) program, a joint program between the bank and Gallup, the world's leading research based management consultancy. The two year program is unique in the Middle East. It was developed specifically for Noor Islamic Bank to equip UAE nationals, employed in senior management roles at the bank, with the knowledge and skills required to meet future business challenges in the UAE financial industry.

2. DOES THE ISLAMIC FINANCE SECTOR LACK EXPERTISE?

The Islamic fi nance sector is growing faster than the supply of talent. Professionals highly qualifi ed in Islamic fi nance are in short supply. This shortage of qualifi ed professionals is slowing product development and preventing the industry from growing at an even faster rate. As an industry we need to come together to collectively discuss how to close this supply-demand gap and how academic and professional programs can deliver specific skill sets, such as legal documentation, financial engineering, shari'a audit, risk management, treasury and liquidity management.

3. WHAT ARE THE REASONS BEHIND NOOR ISLAMIC BANK'S WINNING OF: - WINNER OF THE DEAL OF THE YEAR AWARD (ISLAMIC FINANCE, EUROPE) - BEST NEW BUSINESS PRODUCT (NOOR ISLAMIC BANK) - BEST INSURANCE PRODUCT (NOOR TAKAFUL)

These awards, and the others we have received since Noor's inception in 2008, underscore and recognize our commitment to continuously aim high and provide incomparable banking services to corporates and consumers alike. They also refl ect the exceptional work of the Noor team, which has worked collaboratively to establish an institution that aims to reshape Islamic fi nance for future generations.

4. HOW IS NOOR ISLAMIC BANK DIFFERENTIATING ITSELF FROM ITS COMPETITION?

Advertisement
Noor has positioned itself, right from the start, as a modern banking institution with the fi nest business principles in the industry. We have established ourselves as a market leader in innovative on-line services and products. Our aim is to provide our customers with convenient, holistic, enterprise-wide, digital banking services, from opening a bank account on-line to applying for products and services and managing their account 24 hours day, without the need to visit a bank branch. We are committed to utilising the latest technology to enable us to offer personalised, products and services which meet our customers increasingly sophisticated needs. Online banking is rapidly becoming the preferred method of personal banking and Noor is determined to be at the cutting edge of this shift in demand.

5. WHAT IS NOOR ISLAMIC BANK'S INTEREST IN TUNISIA?

North Africa has the potential to be an attractive growth market for investment, in the wake of the Arab Spring. However, there is still some way to go before the region can be considered politically and economically stable. We are keeping a watching brief on developments, via our Tunis offi ce, and when the time is right and the business is there we will be in a position to participate in the growth of the fi nancial services sector in North Africa. 6. HOW IMPORTANT IS THE SME SECTOR FOR NOOR ISLAMIC BANK? IS NOOR ISLAMIC BANK CONTRIBUTING TO MICROFINANCE EFFORTS AIMED AT SMALL TO MEDIUM TRADERS, AND BUSINESS ENTREPRENEURS?

As the SME segment in the UAE contributes over 70% of the non-oil trade, a focus on this business segment is a priority for us as part of our strategic, sustainable growth, plan. We aim to be the leading Islamic bank offering value added trade and working capital solutions to SMEs. We have a strong suite of transaction banking products and solutions designed to meet the requirements of the SME businesses.

We are investing in repositioning our SME business in terms of people and infrastructure to be able to successfully penetrate this market segment. NIB has a partnership with Dubai SME (part of Department of Economic Development) and has been working, since our launch, to support the government's initiative of promoting small and medium enterprises and entrepreneurs in Dubai. We are also one of the few banks that is engaged with the Abu Dhabi DED team focused on developing SME exporters based out of Abu Dhabi.

7. PLEASE TELL US ABOUT ASSET AND WEALTH MANAGEMENT AT NOOR ISLAMIC BANK, AND PLEASE COMMENT ON THE LIMITED AMOUNT OF AUMS IN THE ISLAMIC FINANCE (IF) SECTOR. HOW MUCH IS NOOR ISLAMIC BANK INVOLVED IN CONTRIBUTING TO RESEARCH AND DEVELOPMENT IN THE IF SECTOR? IS CREATIVITY LACKING IN IF?

Our WM strategy has a two pronged approach that focuses simultaneously on People and Products.

With People, our strategic intent is to build a team that stands out in skill-set and is recognized by customers as responsive and highly knowledgeable about their product, the environment and the client's individual profi le so as to create a unique partnership that gets better as time goes by. The combination of responsive service and qualifi ed and certifi ed staff are the basic ingredients.

If you look at the combined AUM's of these issuances, I don't think AUMs in the Islamic Finance Sector is a concern. These structures have been many times oversubscribed, which clearly indicates that the market has a huge appetite for such structures.

Global Asset management across the world has over 79.3 Trillion USD of asset across conventional segment and Islamic AUM's have crossed over 1 trillion USD in a very short span of time. Markets like Indonesia, India and Europe are just starting to see the window of Islamic banking opportunity, and we can only see exponential growth in the segment.

NIB in particular has seen the issuance of in-house structure products in 2012 with has generated huge volumes for us and the appetite and the acceptability is very high. We continue to focus on varied structures and bring to the table the best in class products for the clients we cater for and there is no dearth of products which are being structured by global players on the Islamic platform.

8. HOW DO WE BRIDGE THE GAP BETWEEN CONVENTIONAL AND ISLAMIC FINANCE?

Investment is needed in the area of product innovation to expand the availability of shari'a compliant instruments and as an industry we need to sit together to develop innovative, acceptable products and structures that appeal not just to Muslims but to everyone with banking needs. It is time for a new approach. Islamic banks should compete with conventional banks on quality, effi ciency and suitability, not just on how shari'a compliant they are.

9. WHAT IS YOUR OPINION OF ISLAMIC HEDGE FUNDS, DERIVATIVES, AND OTHER "GRAY AREA" SHARI'AHCOMPLIANT INVESTMENTS AND FINANCE TRADING OPTIONS?

A number of Islamic hedge funds have been launched but concerns over their shari'a compliance has slowed development of these instruments.

However, recently some shari'a scholars have begun to regard investment in hedge funds as being acceptable. In addition the International Islamic Financial Market and the International Swaps and Derivatives Association has issued the ISDA/IIFM Tahawwut (Hedging) Master Agreement to govern privately negotiated Islamic hedging products. Whilst there is a need for innovative Islamic fi nance products, such products must comply with shari'a principles. For me, the key is whether or not the hedge is against risk, as opposed to gambling, which is prohibited in Islamic fi nance.

10. WHAT IS NOOR ISLAMIC BANK'S VISION FOR ISLAMIC FINANCE?

Islamic banks need to revisit their positioning and ask if we want to fully exploit the Islamic banking niche or compete head on with conventional banks? Investment is needed in the area of product innovation to expand the availability of shari'a compliant instruments and as an industry we need to sit together to develop innovative, acceptable products and structures that appeal not just to Muslims but to everyone with banking needs. The time has come for the Islamic finance industry to stop focusing on our differences as reasons for not doing business. It is time for a new approach, one in which we talk about how Islamic finance can contribute to long-term, inclusive, equitable and sustainable economic growth across the globe.

11. WHAT IS THE BIGGEST CHALLENGE FACING ISLAMIC FINANCE'S ADVANCEMENT?

In order to ensure an orderly evolution of Islamic fi nance from a niche segment into the mainstream international fi nancial markets, it is vital to further enhance the industry's capabilities for cross-border activities, which in turn will encourage innovative product development, robust and standardised regulatory frameworks and the long term stability of the industry. What the industry lacks at the moment is the breadth and depth that investors enjoy in the conventional market. An inter-linkage between the key Islamic financial centres would facilitate investor access to a wider range of shari'a-compliant products beyond those available in their domestic market.

© Business Islamica 2012

Trending on Zawya

In the last two days
Advertisement