Internet banking key to reach customers

Chief Research Officer at Middle East Global Advisors, Blake Goud, highlighted the importance of mobile and internet banking to reach more customers, as he spoke ahead of the presentation of “Finance Forward Islamic Finance Outlook Report 2016” at World Islamic Banking Conference on December 2.

“Bankers told us that internet and mobile banking (40 per cent and 38pc respectively) were the priorities in reaching their customer, higher than the share who said they used branches (25pc) and ATMs (15pc),” he said.

The report, which gives insights on the outlook of the global Islamic financial industry, shows two key trends: the development of ethical business models and that of digital banking.

“Shariah compliance is necessary but not sufficient for consumers demanding ethical financial services. This implies that corporate social responsibility is not enough—consumers want their financial institutions to integrate an ethical approach into their core business mode,” he added.

Speaking on the occasion, Vice Chairman and CEO of Middle East Global Advisors Dr. Sayd Farook shared, “The Outlook Report is expected to serve as a compass for Islamic Finance leaders who are undertaking key decisions that will fundamentally shape their business strategies for 2016.”

The uniqueness of the report, he continued, is that it combines meaningful insights from Islamic finance leaders - gathered from an extensive survey of practitioners’ sentiment – with robust analysis of the performance of Islamic financial institutions.

According to the report, three major global macro developments of 2015 will shape the outlook of the industry: commodity prices (particularly oil), development in global interest rate policy, and a slowdown of the Chinese economy. Low commodity prices do not bode well for either the GCC or Southeast Asian economies, home to most of the world’s Islamic banks.

However, a positive outcome for Islamic banks in a ‘new normal’ of low oil prices is that they enter with low rates of non-performing loans, high liquidity, high capital levels and simple balance sheets with mostly Tier 1 capital overall. Thus, while the outlook for Islamic banks is likely to be muted going, many leading Islamic banks have built up their resilience in the face of tightening liquidity, slowing loan growth and worsening credit risks.