World Islamic Banking Competitiveness Report 2013–14 The transition begins

Conte

2 World Islamic Banking Competitiveness Report 2013–14

OpeningForewordExecutive brief

Performance review

Performance outlookCEO agenda

Qatar

Saudi Arabia

Turkey

nts

3World Islamic Banking Competitiveness Report 2013–14

Foreword

of talent and capital.

Abdulaziz Al-Sowailim

MENA Region

4 World Islamic Banking Competitiveness Report 2013–14

economic and political

17.6%

5World Islamic Banking Competitiveness Report 2013–14

Ashar Nazim Jan Bellens

Executive brief

QISMUT

provided.

6 World Islamic Banking Competitiveness Report 2013–14

Key

7World Islamic Banking Competitiveness Report 2013–14

Growth

QISMUT growing at 5-year CAGR

8 World Islamic Banking Competitiveness Report 2013–14

•

•

•

•

•

•

•

•

on regulatory clarity

•

1

2

3

9World Islamic Banking Competitiveness Report 2013–14

10 World Islamic Banking Competitiveness Report 2013–14

11World Islamic Banking Competitiveness Report 2013–14

•

•

•

GCC*

•

•

•

•

•

•

•

12 World Islamic Banking Competitiveness Report 2013–14

*

•

*

*

•

•

•

• report

•

•

*

•

13World Islamic Banking Competitiveness Report 2013–14

200

0

GCC

•

•

•

•

UAE 5%

Turkey 2%

14 World Islamic Banking Competitiveness Report 2013–14

UAE

Turkey

Turkey 7%

500

200

0

15World Islamic Banking Competitiveness Report 2013–14

70%

50%

20%

0% 25% 205% 225%

KSA

Kuwait

Turkey

Egypt

Qatar

JordanUAE

0 25 50 75 100 125 150 175 200 225million

Indonesia

Pakistan

India

Bangladesh

Egypt

Nigeria

Iran

Turkey

Algeria

Morocco

16 World Islamic Banking Competitiveness Report 2013–14

31%

42%

11%

20%

14%

29%

Qatar

Saudi Arabia

Malaysia

UAE

Turkey

Indonesia

0% 5% 10% 15% 20% 25% 30%

CAGR 2008–12

Islamic Conventional

0 5 10 15 20 25 30 35 40 45 50

Bahrain

Kuwait

Egypt

Jordan

Pakistan

Bangladesh

2%

6%

12%

19%

25%

24%

Islamic Conventional

CAGR 2008–2012

17World Islamic Banking Competitiveness Report 2013–14

2008 2009 2010 2011

US$b

Qatar

2012

30

25

20

15

10

5

0

23%

2008 2009 2010 2011

US$b

Indonesia

2012

14

12

10

8

6

4

2

0

31%

2008 2009 2010 2011

US$b

Saudi Arabia

2012

80

70

60

50

40

30

20

10

0

9%

2008 2009 2010 2011

US$b

Malaysia

2012

90

80

70

60

50

40

30

20

10

0

23%

2008 2009 2010 2011

US$b

UAE

2012

50454035302520151050

6%

2008 2009 2010 2011

US$b

Turkey

2012

30

25

20

15

10

5

0

24%

18 World Islamic Banking Competitiveness Report 2013–14

A natural outcome will be a more direct

medium term.

expected core workforce.

19World Islamic Banking Competitiveness Report 2013–14

for a good platform for organic

0 1 2 3 4 5 6 7 8 9 10CAR2012US$b

2009 2010–12

20.0%

13.9%

33.0%

17.4%

21.4%

15.4%

17.4%

18.2%

16.9%

18.5%

18.7%

12.6%

15.7%

13.6%

34.7%

14.8%

18.5%

14.3%

14.7%

24.4%

20 World Islamic Banking Competitiveness Report 2013–14

Managing capital

21World Islamic Banking Competitiveness Report 2013–14

•

•

•

020406080 0% 15% 30%

Total assets — 2012 Average ROE 2008 - 2012US$b

Average ROE

Average

15.8%

Comparable conventional average 13.8%

22 World Islamic Banking Competitiveness Report 2013–14

Regulatory clarity key to

regulatory framework.

•

•

• management

•

23World Islamic Banking Competitiveness Report 2013–14

Sukuk innovation

0

100

200

300

400

500

600

700

800

0

20

40

60

80

100

120

140

Num

ber o

f iss

ues

Volu

me

US$

b

Volume (US$b) YTD2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

full return of original capital at

of a cumulative coupon.

24 World Islamic Banking Competitiveness Report 2013–14

to give a verdict.

25World Islamic Banking Competitiveness Report 2013–14

Primary Sukuk

Malaysia• 525• 76,914

Singapore• 3• 423

Pakistan• 1• 419

China• 3• 275

Saudi Arabia• 20• 14,491

UAE• 12• 6,818

Turkey• 7• 4,770

Gambia• 49• 46

Germany• 1• 55

Luxembourg• 1• 20

Indonesia• 53• 6,718

Qatar• 8• 2,274 • Number of issues

• Total size of issues (US$m)

Brunei Darussalam• 14• 1,085

Maldives• 1• 3

Bahrain• 25• 1,585

Kuwait• 2• 44

United Kingdom• 1• 11

26 World Islamic Banking Competitiveness Report 2013–14

27World Islamic Banking Competitiveness Report 2013–14

28 World Islamic Banking Competitiveness Report 2013–14

29World Islamic Banking Competitiveness Report 2013–14

Hammad Younas

annum. Average per capita income range

Volume of trade

current decade.

opportunity.

total population

gaining market

of conventional

13In addition to QISMUT

or regulatory

banking.

30 World Islamic Banking Competitiveness Report 2013–14

and Africa could be unnerving for

advantage.

31World Islamic Banking Competitiveness Report 2013–14

Impact of macro and micro environmental

Enabling job creation

32 World Islamic Banking Competitiveness Report 2013–14

• on price only

•

•

•

•

digital banking economy

•

•

33World Islamic Banking Competitiveness Report 2013–14

growing number of credible Dubai

provider A legal

framework

regulatory

market

A favourite

center for

world

digital economy

providing a platform

A global capital for

A world

economy

and

34 World Islamic Banking Competitiveness Report 2013–14

growing number of credible Istanbul

35World Islamic Banking Competitiveness Report 2013–14

enacted

growing number of credible Kuala Lumpur

36 World Islamic Banking Competitiveness Report 2013–14

growing number of credible London

37World Islamic Banking Competitiveness Report 2013–14

growing number of credible Manama

38 World Islamic Banking Competitiveness Report 2013–14

39World Islamic Banking Competitiveness Report 2013–14

40 World Islamic Banking Competitiveness Report 2013–14

41World Islamic Banking Competitiveness Report 2013–14

KSA

UAE

205

Qatar

Turkey

42 World Islamic Banking Competitiveness Report 2013–14

0

5

10

15

20

25

30

35

3.2x

2012 2018

43World Islamic Banking Competitiveness Report 2013–14

•

•

•

compliance

Rauf Rashid

44 World Islamic Banking Competitiveness Report 2013–14

16.9%Noticeable

improvement

Revival driven by improved

retail and trade

1.6% 1.9%partly due to

improve by

Value not fully

average product

Segmentation

45World Islamic Banking Competitiveness Report 2013–14

could be a key differentiator

2 5 7 20 22 25 27

Cana

da

Uni

ted

King

dom

Japa

n

Sing

apor

e

Hon

g Ko

ng

Swed

en

Germ

any

Nor

way

Fran

ce

New

Zea

land

Finl

and

Taiw

an

Irela

nd

Spai

n

Saud

i Ara

bia

Pola

nd

46 World Islamic Banking Competitiveness Report 2013–14

50 52 55 57

Italy

Port

ugal

Indi

a

Turk

ey

Mex

ico

Hun

gary

Kuw

ait

Slov

enia

Colo

mbi

a

Slov

akia

Rom

ania

Arg

entin

a

Jord

an

Mor

occo

Om

an

Egyp

t

Croa

tia

relatively better placed

47World Islamic Banking Competitiveness Report 2013–14

48 World Islamic Banking Competitiveness Report 2013–14

49World Islamic Banking Competitiveness Report 2013–14

Customertransformation

Mobilebanking

Capitalplanning

management capacity.

50 World Islamic Banking Competitiveness Report 2013–14

Strategy

Value proposition and target customers

Segmentation Treatment strategies

Product ranges

Distribution model

Service excellence

Cross-selling operating

model

Right product

Right timeRight

customer

Increase in average product holding, advocacy and retention

Clear vision, mission and values of the bank

Abid Shakeel

51World Islamic Banking Competitiveness Report 2013–14

Customertransformation

Mobilebanking

Capitalplanning

Mature customer insights from data analytics Identifying customer needs Increased sales per meeting for sales advisers

Develop a product suite for different segments Relevant product range to attract quality customers

Increase in average product holdings and profitability of customers

Approach the right customers with the right products at the right time Targeted marketing campaigns Increase in marketing ROI

What Islamic banks need Capability from segmentation Impact on profitability

Increase in customer advocacy and recommendation to family and friends

Increase in customer engagement and satisfaction Increase in customer acquisition at lower costs

Needs-based selling

Profitable product suite

Marketing mix across channels

Increased customer satisfaction

Segmentation can not only provide

Mohammed Khan

Customertransformation

Mobilebanking

Capitalplanning

52 World Islamic Banking Competitiveness Report 2013–14

69%

Customertransformation

Mobilebanking

Capitalplanning

53World Islamic Banking Competitiveness Report 2013–14

12%

44%

30%

product development can produce

Combining product development

Customertransformation

Mobilebanking

Capitalplanning

54 World Islamic Banking Competitiveness Report 2013–14

Evaluating your

•

•

•

• •

•

•

•

•

•

• Marketing department

•

•

55World Islamic Banking Competitiveness Report 2013–14

Shoaib Qureshi

Cross-selling operating

model

build a collaborative management model Account planning for

proactive regular feature

to collaborate for account penetration

Customertransformation

Mobilebanking

Capitalplanning

56 World Islamic Banking Competitiveness Report 2013–14

Selim Elhadef

•

•

•

and experienced workforce will be a factor

57World Islamic Banking Competitiveness Report 2013–14

•

•

•

•

•

Customertransformation

Mobilebanking

Capitalplanning

58 World Islamic Banking Competitiveness Report 2013–14

0

50

100

150

200

0

50

100

150

200

2012 2013 2014 2015 2016 2017 2018

QISMUT trade flows World trade flows

Customerease of doing

business

Seamlessprocess

functionality

Productinnovation

Treasury

*F/Xhedging

Workingcapital

*LCs and*LGs

Trade finance

Internationalconnectivity

Customertransformation

Mobilebanking

Capitalplanning

Houssam Itani

59World Islamic Banking Competitiveness Report 2013–14

capital planning

15.9%14.3%

2.7% 3%

1.2%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

18.0%

20.0%

Capital (Basel II) Capital (Basel III)

Tier2 Tier1

•

•

•

•

Maged Fanous

Customertransformation

Mobilebanking

Capitalplanning

60 World Islamic Banking Competitiveness Report 2013–14

•

• 0%

5%

10%

15%

20%

25%

30%

35%

0 12% Min. Cap Req. CAR (B3) — Estimate

Customertransformation

Mobilebanking

Capitalplanning

61World Islamic Banking Competitiveness Report 2013–14

Mobile banking

62 World Islamic Banking Competitiveness Report 2013–14

Example of mobile money implementation road map

Mobile moneylaunch

Strategy

Productand

services

Customerexperience

Agentnetwork

Operatingmodel

Technology

Regulation

Concept and feasibility approved Design completed

Define offering line(person-to-person M-Pesa

like vs. full financialproducts line)

Design high -leveloperating model optionsand interaction amongbank, telco providers,

third parties

Set vision, aspirations andgoals for mobile money: bank

for unbanked? Paymentplatform?

Engage stakeholders and maintain commitment

Definepositioning

Draft productconcept ofservices

Business case

Assess unexploitedusage opportunities

through mobile money

Design customerexperience

Define customerprocesses to

implement desiredexperience

Prepare customeragents manual

and FAQ

Traincustomer

agents

Fine-tune andfinalize actual

pricingDefine pricing

models

Definemarketing

plan

Mobile moneylaunch

campaign

Define saleschannel for

mobile money

Designsales agentprocesses

Size salesagent network

Preparesales agents

manual and FAQ

Train salesagents

Design internalprocesses (activation,

assurance, inquiry,etc.)

Contract andservice-level

agreements withthird parties

Design interactionprocesses andinterfaces with

third parties

Test integrationwith third parties

Design technologyarchitecture for

mobile money andintegration withlegacy systems

Scout technologyplatforms to

enable mobile money

Select technologyplatform and

system integrator

Assess mobile moneytransactions models

(i.e. USSD, direct billing,NFC, etc.)

Design ITinterfaces with

third parties Design integrationwith internal

systems to managemobile money

Design self-servicechannels (web, mobile)

to enable/managemobile money

ImplementIT systems todeliver mobile

money

TestIT systems

Mobile moneypilot

Fine-tunesprocesses

Assess currentregulations

Inquiry andchallenge gaps

Monitor alignmentof design with

regulation evolution

Monitor alignment ofdesign with strategy

Designcontractual

agreements andclauses

Design cross-sellingcampaign for

current customers

Identify customerstarget segments for

mobile money services

Evaluate and select vertical integrationoptions to deliver services

(roles and involvement of bank,telco providers, third parties)

Scout technologiesfor user authentication

and security

Design sales andcustomer channel

integration (for mobile moneyand traditional products)

Assess value addedthrough mobile money

(current customer pain pointsand overcoming solutions)

Identify organizational/HRgaps and definefulfillment plan

Scout technologiesfor mobile Wallet

solutions

Design mobilewallet vs. legacy

products integration

Asses cultural and skillgaps for mobile money

products and definetransformation plan

management.

Shabkhez Mahmood

Customertransformation

Mobilebanking

Capitalplanning

63World Islamic Banking Competitiveness Report 2013–14

64 World Islamic Banking Competitiveness Report 2013–14

65World Islamic Banking Competitiveness Report 2013–14

Qatar

66 World Islamic Banking Competitiveness Report 2013–14

•

•

trajectory over medium term

•

2008 2009 2010 2011

US$b

Assets growth

2012

50

45

40

35

30

25

20

15

10

5

0

26%

2008 2009 2010 2011

US$b

Financing growth

2012

30

25

20

15

10

5

0

23%

Islamic Conventional

2008 2009 2010 2011

Return on assets

2012

6.0%

5.0%

4.0%

3.0%

2.0%

1.0%

0.0%

2008 2009 2010 2011

US$b

Deposits growth

2012

35

30

25

20

15

10

5

0

31%

2008 2009 2010 2011

Return on equity

2012

25%

20%

15%

10%

5%

0%

Islamic Conventional

2008 2009 2010 2011

Cost to income ratio

2012

35%

30%

25%

20%

15%

10%

5%

0%

Islamic Conventional

67World Islamic Banking Competitiveness Report 2013–14

68 World Islamic Banking Competitiveness Report 2013–14

•

•

•

2008 2009 2010 2011

US$b

Assets growth

2012

25

20

15

10

5

0

36%

2008 2009 2010 2011

US$b

Financing growth

2012

14

12

10

8

6

4

2

0

31%

2008 2009 2010 2011

Cost to Income Ratio

2012

80%

70%

60%

50%

40%

30%

20%

10%

0%

Islamic Conventional

2008 2009 2010 2011

US$b

Deposits growth

2012

18

16

14

12

10

8

6

4

2

0

37%

2008 2009 2010 2011 2012

3.0%

2.5%

2.0%

1.5%

1.0%

0.5%

0.0%

Islamic Conventional

Return on assets Return on Equity

Islamic Conventional

2008 2009 2010 2011 2012

22%

24%

20%

18%

16%

14%

12%

0%

69World Islamic Banking Competitiveness Report 2013–14

Saudi Arabia

70 World Islamic Banking Competitiveness Report 2013–14

•

•

•

Assets growth

2008 2009 2010 2011

US$bAssets growth

2012

160

140

120

100

80

60

40

20

0

16%

Islamic Windows2008 2009 2010 2011

US$b

Financing growth

2012

80

70

60

50

40

30

20

10

0

9%

2008 2009 2010 2011 2012

45%

43%

41%

39%

37%

35%

33%

31%

29%

27%

25%

Islamic Conventional

Cost to income ratio

2008 2009 2010 2011

US$b

Deposits growth

2012

100

90

80

70

60

50

40

30

20

10

0

21%

2008 2009 2010 2011

Return on assets

2012

3.5%

3.0%

2.5%

2.0%

1.5%

1.0%

0.5%

0.0%

Islamic Conventional

2008 2009 2010 2011

Return on equity

2012

17%

16%

15%

14%

13%

12%

11%

10%

Islamic Conventional

71World Islamic Banking Competitiveness Report 2013–14

72 World Islamic Banking Competitiveness Report 2013–14

•

•

• 20%

2008 2009 2010 2011

US$b

Assets growth

2012

140

120

100

80

60

40

20

0

24%

2008 2009 2010 2011

US$b

Financing growth

2012

90

80

70

60

50

40

30

20

10

0

23%

2008 2009 2010 2011 2012

50%

45%

40%

35%

30%

25%

Islamic Conventional

Cost to income ratio

2008 2009 2010 2011

US$b

Deposits growth

2012

120

100

80

60

40

20

0

32%

2008 2009 2010 2011

Return on assets

2012

1.4%

1.3%

1.2%

1.1%

1.0%

0.9%

0.8%

0.7%

0.6%

0.5%

Islamic Conventional

2008 2009 2010 2011

Return on equity

2012

17%

16%

15%

14%

13%

12%

11%

10%

9%

8%

Islamic Conventional

73World Islamic Banking Competitiveness Report 2013–14

United Arab

74 World Islamic Banking Competitiveness Report 2013–14

•

• Greater regulatory clarity and new enabling

•

2008 2009 2010 2011

US$b

Assets growth

2012

90

80

70

60

50

40

30

20

10

0

13%

2008 2009 2010 2011

US$b

Financing growth

2012

50

45

40

35

30

25

20

15

10

5

0

6%

2008 2009 2010 2011 2012

50%

45%

40%

35%

30%

25%

Islamic Conventional

Cost to income ratio

2008 2009 2010 2011

US$b

Deposits growth

2012

70

60

50

40

30

20

10

0

14%

2008 2009 2010 2011 2012

1.9%

1.7%

1.5%

1.3%

1.1%

0.9%

0.7%

0.5%

Islamic Conventional

Return on assets

2008 2009 2010 2011

Return on equity

2012

16%

14%

12%

10%

8%

6%

4%

2%

Islamic Conventional

75World Islamic Banking Competitiveness Report 2013–14

Turkey

76 World Islamic Banking Competitiveness Report 2013–14

•

•

•

2008 2009 2010 2011

US$b

Assets growth

2012

45

40

35

30

25

20

15

10

5

0

29%

2008 2009 2010 2011

US$b

Financing growth

2012

30

25

20

15

10

5

0

24%

2008 2009 2010 2011

US$b

Deposits growth

2012

30

25

20

15

10

5

0

24%

2008 2009 2010 2011 2012

70%

65%

60%

55%

50%

45%

40%

35%

30%

25%

Islamic Conventional

Cost to income ratio

2008 2009 2010 2011 2012

3.0%

2.5%

2.0%

1.5%

1.0%

0.5%

Islamic Conventional

Return on assets

2008 2009 2010 2011

Return on equity

2012

22%

20%

18%

16%

14%

12%

10%

8%

Islamic Conventional

77World Islamic Banking Competitiveness Report 2013–14

•

•

•

•

•

•

Thought Leadership Award, 2011

Best Takaful Advisory Firm, 2011/2009

Best Islamic Research, 2011

Thought Leadership Award, 2011

Best Takaful Advisory Firm, 2011/2009

Best Islamic Finance Advisory Firm, 2009/2008/ 2007/2006

WIBC Leading Islamic Financial Services

Provider, 2008

Most Outstanding Business Advisory & Consulting Firm,

2007/2006

Best Islamic Consulting Firm,

2006

78 World Islamic Banking Competitiveness Report 2013–14

•

• on

•

•

•

•

•

factor

•

•

•

•

•

•

•

•

•

•

•

•

•

•

•

•

•

•

•

report

79World Islamic Banking Competitiveness Report 2013–14

•

•

•

•

•

•

•

•

•

•

•

•

•

•

•

•

•

•

•

•

•

•

•

•

•

•

•

•

•

•

•

•

•

•

•

•

•

•

•

•

•

•

•

•

•

•

•

•

•

•

•

•

•

•

•

•

•

Turkey

•

•

• Kuveyt Turk

•

80 World Islamic Banking Competitiveness Report 2013–14

•

•

•

•

•

• Samba Financial Group

•

•

•

•

•

•

•

•

•

UAE

•

•

•

•

•

•

•

•

•

•

•

•

•

•

•

• Agrani bank

•

•

•

•

•

Turkey

•

•

•

•

•

81World Islamic Banking Competitiveness Report 2013–14

82 World Islamic Banking Competitiveness Report 2013–14

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SCORE No. EK0214

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