John Iossifidis, CEO of Noor Bank speaks exclusively to Islamic Business & Finance about his plan to turn Noor into the best contemporary Shari’ah-compliant institution in the world.
What have been your key objectives for growth since coming on board last year?
I was provided with the honour of leading Noor a little over 12 months ago, joining the bank in June 2017. The initial focus was three-fold: first, we needed to quickly understand where the Bank was situated in terms of its operations and performance and chart out its future.
Second was to build a foundation for the future which included rationalising the cost base and attracting a new leadership team. With the latter, 12 out of 17 leadership positions changed, all of which were in place by November.
The third was to establish the Bank’s future direction which involved developing a new strategy and revising the ‘Purpose, Vision, Mission and Values’ of the organisation. In this regard, we engaged more than one-third of the bank’s employees to ensure broad-based acceptance.
Our new vision is to be recognised as the world’s best contemporary Shari'ah-compliant bank. To achieve this, we are empowering our employees to provide outstanding experiences to our customers. By delivering exceptional service coupled with ethical banking based on innovative Shari'ah-compliant products, we believe we can have a unique and significant niche in the market.
Tell me about your recently launched Sukuk. What is the strategy behind your Sukuk issuance?
Noor Bank issued a $500 million Sukuk in April 2018 that was listed on NASDAQ Dubai. The Sukuk was issued to support our financing objectives in line with our three-year strategy. The five-year financial instrument was oversubscribed 2.1 times after a successful international roadshow. We received bids from a diverse group of 50 investors—one-third of them from outside the Middle East region. We are advised that this is the largest international participation for any Middle East financial institution that has issued so far in 2018.
You’ve recently reached an agreement with QFPay. How important are international collaborations such as this one to Noor Bank's future?
We collaborated with UB QFPay as our technical partner to facilitate the transactions of Chinese tourists via Alipay. With a steady growth in the numbers of Chinese tourists visiting the UAE, we saw an opportunity in allowing them to pay through Alipay whilst on holiday. We gained their trust with this innovative solution that offered an easier and more convenient shopping.
What other key partnerships has Noor Bank made in the last year, and how do those fit its strategy? We have partnered with Mawaheb from Beautiful People, an art studio for people of determination, to redesign our credit and debit cards to offer our customers enhanced solutions that were innovative and rewarding. We also entered a partnership with Emaar for our aforementioned UB QFPay collaboration to enable Chinese tourists to pay through Alipay during their visit to the UAE. This allows them to enjoy a range of hospitality and entertainment benefits at Emaar’s prime tourist attractions, such as The Dubai Mall. There are other significant partnerships which will be announced in the second half of 2018.
What is Noor's plan in terms of wealth management in the Islamic finance space?
In May 2018, we launched our wealth management solution, Noor Wealth. This new value proposition significantly boosts our efforts to achieve our vision of becoming the world’s best contemporary Shari'ah-compliant bank. Noor Wealth provides an exclusive and comprehensive client-servicing model that manages the clients’ personal and business financial requirements. The scheme gives our high-net- worth customers access to an unrivalled range of investment tools, bespoke wealth management solutions, international banking and home financing products, as well as exclusive lifestyle benefits.
In line with our mission to provide our clients with outstanding customer experiences, experience abroad. Noor Wealth allocates dedicated and specially trained relationship managers to each client to help build their investment portfolios based on their wealth management goals.
Noor Wealth is about growing and sustaining one’s wealth in the long term. It embodies elements of trust, safety and longevity. Our product suite for our high-net-worth clients is now comparable with not only Islamic but also conventional players in the market. Noor Bank is among the 10 largest distributors of mutual funds in the GCC region as per Allfunds AUM.
Why is Noor Bank prioritising SMEs, and what is your plan in that regard?
SMEs are the backbone of the UAE economy, as they contribute significantly towards employment, economic activity and fiscal growth. Further, SMEs contribute more than 60 per cent of the UAE’s GDP. It is a segment which cannot be ignored. In a bid to engage not only with existing but also prospective customers, we launched the Noor Business Council, our newly created thought leadership platform.
The Council brings our most important stakeholders and our customers from the ranks of entrepreneurs, business managers and decision makers of big and small corporates together with industry experts and senior officials as well as our own corporate and business banking team members to discuss key topics of mutual interest and to address pressing concerns. Our aim is to understand and service SME clients as a one-stop-shop; to be the bank that understands this segment best.
How has the bank performed so far in 2018?
We have seen good top line growth despite a substantial reshaping of our balance sheet arising from our three-year strategy. This coupled with cost discipline and lower trending impairment has resulted in double digit growth in operating profit. We are on track in terms of our plans and we are continuing to invest in technology and employees to provide an end to end convenient experience to our customers.
What have been the other key achievements of Noor Bank thus far this year?
We celebrated our 10th anniversary in January 2018. Today, Noor Bank is among the top 10 banks in the UAE in terms of asset size, based on our performance in 2017. We are proud of that achievement. As mentioned previously, we launched several initiatives, such as the Noor Business Council, Noor Wealth, relaunched Noor Home, Noor Art, and collaborated with QFPay to deliver easier and more efficient payment processes for our customers.
We also expanded our distribution by opening a new branch in Bur Dubai to offer our customers retail and business solutions and are progressively refurbishing all our branches. As part of our three-year strategy we committed to spending AED 500 million on upgrading our platforms and digitising all our processes. The first major initiative clients will see is our new mobile banking app which was launched in June, with our internet banking site expected in mid-July.
I urge you to give them a try – they are a significant leap in our capabilities with much more to come in subsequent releases. The reality is that through the smart use of technology, we aim to be at the heart of our clients’ financial eco-system. These are certainly exciting times!
What are your plans for the rest of the year, and into the next?
The new strategy is truly transformational. Our vision, mission and values are underpinned by a clearly defined purpose—to make a difference for the better—to guide us in implementing our strategic priorities: Empowering our employees Enabling sustainable growth through strong and proactive control functions Becoming simpler and more efficient through the use of technology and analytics, in order to deliver outstanding customer experiences In charting out our vision operationally, we reflected on where we were and the business we were managing in 2017.
We had a corporate bank that was heavily dependent on the government and real estate sector. Therefore, we need to diversify by industry as well as geographically. We also have a well-regarded Investment Banking and Treasury business where we wish to maintain market leadership. Conversely, we had a retail bank that was trying to service all sectors in the market. Given our distribution, our ownership and heritage, the focus is shifting towards affluent clients with an emphasis on UAE nationals. We also target SME clients and aspire to provide transaction banking services as well as business services important to them.
From a retail banking perspective, this is important because when SME clients invest in their business, the next item they invest in is their home and finally when they have created some wealth, they need to invest it; it is a virtuous circle.
Finally, as mentioned previously, we plan to spend AED 500 million to upgrade our technology and analytics capabilities. Our aim is to be digital to the core. That doesn’t however mean the end of human interaction. It is our view that even if we do more things electronically, when it comes to big decisions, such as buying a home or investing wealth, people will still prefer the human touch, at least in the foreseeable future. Blending the best technology, simpler and better processes and the power of people will be the key to delivering outstanding customer experiences!
What are your thoughts on the future of Islamic finance in the region? What should other institutions be prioritising?
The first and foremost priority is improving awareness of Islamic banking which has undoubtedly seen exponential growth but is still small in terms of market share when compared to its conventional counterparts globally.
Islamic finance has a variety of benefits. For example, its appeal is quite broad whereas conventional finance does not find favour particularly with faith-based customers. Since the global financial crisis of 2008, concerns about conventional banking have led to an increased appetite for ethical banking practises, and Islamic finance offers that alternative.
The main differentiating factor of Islamic finance versus conventional finance is the absence of interest, hidden charges or variable rates. Risks are shared, with profit rates agreed beforehand, and investments are backed by assets. There is greater transparency as well as contractual certainty. Furthermore, standardisation at the industry level is needed to ensure that banks build and maintain customer trust in Islamic finance solutions, because trust is at the heart of our business.
Steps have been taken globally to standardise reporting. Earlier this year the International Monetary Fund (IMF) approved a plan to incorporate Islamic finance standards, under guidance issued by the Malaysia-based Islamic Financial Services Board (IFSB), into its financial sector assessments of select countries starting from 1 January 2019 to improve regulation in the sector. By adopting these principles, the IMF is recognising that Islamic banks require specific regulations tailored to our sector.
What is your personal leadership style?
I firmly believe that the best way to serve customers is through empowering, engaging and enabling our employees to be the best they can be. This means providing them with the training, the authority to make decisions and the right tools to meet client needs in the first instance. Employees are at the forefront of the company, they are the personification of our brand! Success therefore requires broad based engagement and involvement of all staff in determining and delivering our future. At a personal level, I believe in teamwork, have high energy, am passionate and committed to doing the right thing; to make a difference for the better.
What are the challenges Noor Bank faces?
With more than 50 banks, UAE’s banking sector is very competitive. Internally we are repositioning the bank strategically and changing its culture. The challenge is therefore changing the culture and maintaining business momentum at the same time. Perhaps the best analogy I can give, is to think of the organisation as a car competing in a race. What we are trying to do is change a Volkswagen into a Porsche whilst driving at 200 km/h with a desire to go even faster!