Interview: Bassel Gamal
How have IFS benefitted from the $200bn expenditure for the 2022 FIFA World Cup and other ongoing projects?
BASSEL GAMAL: New investments and the recent focus on innovation and technology have driven Islamic banks to introduce more advanced products, efficient processes and competitive pricing. Islamic banks in Qatar have developed the capacity to structure and finance the major infrastructure projects that are taking place in preparation for the 2022 FIFA World Cup and Qatar National Vision 2030. The share of Islamic assets in the local banking sector accounted for more than a quarter of total banking assets at 26%, or QR349bn ($95.8bn), in September 2017. We expect that will continue at a reasonable pace across the banking sector, with Islamic banks continuing to play a key role in economic development.
What financial technology (fintech) and digital banking developments are taking place in IFS?
GAMAL: With the latest rapid developments in technology, each organisation needs to define its desired digital positioning in the marketplace. Within the global context, companies operating in relatively smaller countries are less equipped to invest large sums of money into research and development initiatives, and therefore in many cases opt for the role of “fast follower” as opposed to “true innovator”. I believe this is the case regarding the lag seen in the region’s investment in fintech and digital banking programmes. This is not to say, however, that we or our competitors are standing still in this space. On the contrary, we are investing in building digital capabilities to improve customer experience, raise operational efficiency and ultimately generate incremental revenues. At QIB we are currently making strategic choices to evolve our business and operating model. As such, we are assessing collaborations with different fintechs to focus on specific areas of the banking value chain. Through leveraging the latest technologies we hope to deliver customer-friendly, frictionless and highly personalised solutions to our banking customers.
To what extent is international growth and expansion of Qatari Islamic institutions restricted by the lack of sector global standardisation?
GAMAL: I wouldn’t say it is the lack of global standardisation, which is the case in many industries, slowing down the international expansion of Islamic banks. Rather, it is that Islamic banks are relatively young compared to their conventional counterparts, and that in the past they have focused on serving narrowly defined markets: individuals and, to a lesser extent, corporates who prefer to address their financial needs in a sharia-compliant way.
While this has since changed, with Islamic banks offering advanced products and services to all banking segments, that late start has impacted plans to expand outside of Qatar. It is very difficult to succeed and maintain a leadership position in the domestic market, let alone expand internationally, especially with so many challenging factors coming into play. The first prerequisite for successful expansion is to have a proven business and operating model, as well as a solid management team to support any international moves. Then, target markets need to be chosen wisely; it should make absolute business sense for a company to set up in a new market. For example, when business lines and trade flows are already established between one’s home country and the potential target market, or even better, when a good number of a bank’s customers have established a presence there. In the case of acquisitions, the cost of entry and the thoroughness of the due diligence process play a huge part in determining whether the expansion will generate or detract value for the shareholders.
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