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08 January 2020
ISLAMIC FINANCE

The next generation of customers

Ibrahim Al Mheiri, CEO, Mashreq Al Islami speaks to Banker Middle East about the Islamic window’s priorities in 2019.

Ibrahim Al Mheiri, CEO, Mashreq Al Islami speaks to Banker Middle East about the Islamic window’s priorities in 2019.

by William Mullally

What has been the main focus of Mashreq Al Islami in 2019 and why?

When our Chairman Abdul-Aziz Al Ghurair decided to offer Islamic banking services sometime back, his vision was not just another ‘me-too’ Islamic player in the Islamic banking space of the UAE.

The vision was to roll out cutting-edge Islamic banking products and services, enabled with advanced technology, without compromising on any Shari’ah-compliance principles. Historically, Islamic banks have been considered lacking in providing quality services and innovative technological solutions for day to day banking needs.

Mashreq Al Islami has carved a niche for offering smart technology-led Shari’ah-compliant solutions, and we developed our entire suite of Islamic products leveraging the tech platform of our parent, which is already a very established name in the retail banking space in the region.

When I joined Mashreq group last year, the leadership had decided to roll out a dedicated Emirati segment to cater to and provide wholesome banking solutions for Emirati individual customers.

Our focus has been to roll out a robust banking product suite for UAE Nationals this year, aiming at making Mashreq Al Islami a banking partner of choice for all their lifestyle and banking needs.

We have endeavored around manufacturing and deploying financing, deposits and credit card solutions targeted to UAE Nationals, as being the resident population of the country, their banking needs differ from the expatriate population. While this is an evolving journey, we have achieved quite a lot in 2019 to lay the grounds for successful growth in the years to come.

What have been the key initiatives you've put in place in 2019?

We have executed the following initiatives for Mashreq Al Islami in the year 2019, in line with our strategy, which has widened the product offering to the UAE nationals across all key banking needs:

  • Relaunching of Nationals Loans for long tenure with competitive propositioning, abiding by the strict regulations issued by Central Bank to ensure responsible lending.
  • Rolling out an expanded residential home financing proposition for UAE Nationals, allowing them to buy/ refinance their properties in non-freehold areas/granted land. These areas form the largest chunk of UAE Nationals’ home ownership, hence opening Mashreq Al Islami’s financing options to these lands for nationals has been a key initiative endorsed by our leadership.
  • Launching and rolling out financing to properties against rentals for residential and commercial properties. As you know rental income via residential and commercial properties is a major pool of income in the UAE especially for the National population.
  • Launching a high-end premium Islamic Solitaire Credit Card offering probably the best Gold privileges, 850+ airport lounges across the globe, complimentary valet parking at the Dubai International Airport, and all the top malls across Abu Dhabi and Dubai, up to 20 per cent discount on luxury fine dining, exclusive 30 per cent discounts on luxury yacht charter, unlimited complimentary visits to Fitness First, Marhaba meet & greet services, numerous lifestyle shopping benefits globally, exclusive premium offers from MasterCard, offering the best of travel inconvenience & travel medical insurance. This product from Mashreq Al Islami is one of the strongest Islamic banking card propositions available today in the market.

What digital initiatives in particular do you have planned for the future & how else have you tailored your offerings for the next generation?

The extensive interest in more bespoke and computerised/consumer-led services has led Mashreq to reimagine our branch formats totally, which are truly the first of their kind in the UAE.

The latest branch model at Mashreq is composed of digital innovation with the offerings of a traditional branch to allow customers all-in-one and quick interaction.

This new concept offers a whole suite of functionalities including an integrated self-service area with kiosks, ATMs, cash and cheque deposit machines, slim lines, bulk cash deposit and recycler and interactive teller machines (ITM) and video conferencing services to allow customers to reach out to the bank beyond regular banking hours.

To support customers’ needs at the new branches, Mashreq has also introduced the concept of a Universal Banker—a highly trained officer who will be available to assist customers for transactions, through digital devices. In the words of our Head of Retail Banking Group, “Mashreq has been making strategic investments that has revolutionized our operations and transformed us into a smart, connected and agile bank that is ready for the future.”

Customers will have far greater convenience and more touchpoints. In addition, dedicated advisors will be readily available to offer support and the human element that no technology can replace.

From our perspective, the digitisation of the bank’s services will fundamentally transform the business while creating a room for our staff to focus on improving the customer experience through greater efficiency, quality, and speed, as the customer expects of today.

As consumers’ habits change, we observe a remarkable shift in the expectations and banking habits of our customers. Our automated transactions today across all the branches are as high as 97 percent. Going forward, our distribution strategy will be growing the number of touch points across the UAE—by increasing the number of ATMs, ITMs, CCDMs, and cash dispensing machines and other digital touch points. As part of this strategy, we have already introduced two smart branches in Mercato and Festival City, and more such branches will be introduced in the near future.

Ibrahim Al Mheiri, CEO, Mashreq Al Islami

What are the main challenges Mashreq Al Islami is facing?

The global Islamic finance industry has expanded and will continue to expand at a slower pace in 2020 due to geopolitical and economic challenges faced by core markets, according to S&P Global Ratings. Mashreq Al Islami is not immune to the regional environment.

One of the main challenges is sustaining growth, as the Islamic finance industry has been growing at a double-digit growth rate for over the last decade. Due to the geopolitical and oil prices risk, the market is expected to remain constrained in the near future.

The overall reduction in the consumer demand for financing, the potential liquidity drain in case any regional situation takes a turn, would essentially mean rising costs of doing business, and lesser attractive pricing propositions for the consumers.

How are you overcoming those challenges?

Potential accelerators could be Shari’ah product innovation, a more inclusive approach, a clear and demarcating focus on services, digital applications to reach out to the consumers, as well as fintech disruption.

We are fortunate to have one of the most dynamic scholars associated with Mashreq Al Islami who has supported us all the way, and since they sit on most of the globally recognised banks’ boards as well, Shari’ah innovation on existing products, new products’ features and  services is one way to float through.

Islamic banks lag behind when it comes to instantly launching products by twisting the existing parameters to offer clients innovative lending and deposit solutions. For conventional banks, since they are not bound by strict Shari’ah regulations, this is not a concern, and at the outset many product solutions seem incomprehensible from an Islamic way forward.

Ease and speed of transactions hold true for payment services and money transfers. We are planning to work with industry leaders to provide a seamless solution to our consumers on this.

Usage of blockchain technology is one avenue which is largely untapped and unexplored in this market, any leverage on this technology would give a great first movers advantage to the players.

Our parent entity Mashreq Group has entered into a strategic alliance with DIFC-based norbloc, the leading Know Your Customer (KYC) and client onboarding fintech regionally headquartered in DIFC. Their strategic alliance to launch the region’s first production-ready blockchain KYC data sharing consortium to support businesses and corporates in Dubai. Mashreq Al Islami would be leveraging on this infrastructure going forward.

The advent of fintechs globally, in line with Dubai’s vision for a Smart City, and Mashreq Al Islami’s innovative streak make it all relevant to explore and offer digitally smarter solutions bring the consumers and financial institutions together. Our state-ofthe-art SnApp mobile banking solutions are providing us great lever to onboard higher number of customers.

How has Mashreq Al Islami performed in 2019?

Well, overall, the year went exceptionally well! We have spent considerable amount of time in developing the products and proposition around key banking needs of UAE National customers, alongside we have launched a state-of-the-art Premier Islamic Credit Card.

We have created specific teams for products, sales, and providing services to these customers. In terms of our commitments to the stakeholders, the business managed to hit most of its financial targets, be it the volume grown or the balance sheet growth.

The financing products, deposit products, as well as the fee-based income products have maintained a decent trajectory throughout the year. We are setting up the Islamic franchise for Mashreq to take off to greater heights in the years to come, ensuring heavier participation from the UAE National customer base, for that, a core and solid platform is essential, which we are laying successfully.

Do you think the Islamic finance industry is ready for the digital future as a whole?

Well, it’s not a matter of whether the Islamic finance industry is ready for the digital future or not. The change is here and it is going to further digitise the future.

Global and regional banking players are seeing a rapid transformation in the way that business is done, which is led by emerging digital technologies. Some of the things which were not thinkable earlier are now totally possible. If the Islamic finance industry wants to be relevant; this initiative has to be implemented by them to help improve overall profitability and efficiency in service.

Islamic banks will have to change the core technology structure and modernise it. Heavily digital Islamic banks are expected to dominate transformation in the next decade. With the use of artificial intelligence and big data, Islamic players would be able to compete and offer the end-to-end fulfilling experience to the consumers.

At Mashreq, our leadership is playing a key role by being supportive of and encouraging fintech companies to augment their business models, which would aid eventually deploying new solutions and technologies in this geography. The bank is currently working with several fintechs that deliver customised solutions to existing problems. In turn, Mashreq is providing them the real-world banking cases, which helps and allows them to industrialise and gain scale.

What should the industry be focused on in 2020?

Improved governance that is applied on regulatory technology could provide us with more robust tools to attain compliance with regulations and Shari’ah requirements. It will also lessen the reputation risk related to a potential breach of Shari’ah requirements, and hence would allow more time at the hands of Shari’ah innovators to help take the industry forward.

Breaking the shackles of an Islamic finance industry that is just focused on providing Shari’ah-compliant solutions, which may be complicated and time dragging for the consumers is a priority, and there is need to move to focusing on delivering fast-paced valued based services.

Today’s consumers and rise of millennial workforce are looking to have quick solutions to their financial needs, and any financial institution that takes that initiative will capture the new market as well as the customers who are willing to switch their banks.

The segment of the population that will remain content with merely the certified Shari’ah-compliant products will stagnate and gradually diminish.


RELATED STORIES: S&P Global Ratings Shari’ah-compliant millennials digital banking Mashreq Al Islami

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