The build up to Oman’s introduction of Islamic banking is being heralded by several professional services companies, including IT solutions company International Turnkey Systems (ITS), which held a seminar at Shangri-La’s Barr al Jissah Resort and Spa last week as part of the Oman Islamic Banking Conference 2011.
The seminar, titled ‘Islamic Banking – Towards a New Era of Growing Banking Business’, had Apex Press and Publishing’s Business Today as media sponsor and was attended primarily by industry peers and members of the media. Speakers advised prospective Islamic banking vendors on the challenges, opportunities and technology innovations of modern Islamic banking.
The event was followed by three days of one-on-one workshops hos-ted by ITS to assess participating banks’ existing IT infrastructure and advise on implementation of Islamic finance products. Six experts from established Islamic banks and finance companies, and ITS, conducted the seminar, including Dr Mabid al Jarhi, head of training at the Emirates Islamic Bank; Dr Haroun Dharsey, head of operational projects and support at Dubai Islamic Bank; and Mohamed Roushdy, chief information officer at Siraj Finance.
What they anticipate, or hope, is that Oman will emerge as a global competitor in Islamic banking, incorporating the best policies from current Islamic finance providers all over the world. “Islamic Banking is now a global brand serving both Muslims and non-Muslims,” said Mohamed. “It’s important for people to start fast and start right, with quality. Competition is going to be very high and there are many other countries around here looking for Islamic banking.”
“This is a chance for Oman to make its mark,” said Mabid, who is also the president of the International Association for Islamic Economics. “We hope Oman will compete for an advanced position in the world Islamic market. Latecomers can always be frontrunners.”
He also advised for appropriate modifications in the law, distinguishing Islamic banks from conventio-nal banks and including guidelines for Sharia compliance. He added that Islamic banks should not be subjected to regulation by the Central Bank, but should have in-house regulators. Although Islamic banking is currently a US$1tn industry, it is still relatively new the first Islamic bank was only established in 1975 - and constantly undergoing modifications.
With complicated and non-standardised regulations, and a long way to go in the development and training of staff and customer service, Islamic banking only takes a maximum 20 per cent market share in the countries it trades in.
“Islamic banking products by nature tend to be more complex than conventional banking products,” said Haitham Abdo, marketing group director at ITS. “There are huge burdens on Islamic banks to comply with Sharia regulations and profit calculation and distribution is a huge dilemma.”
“Over the last ten years, we have seen Islamic banking operations become more efficient and effective. However, a lot more needs to be done,” said Haroun. “We have to be open minded to an extent and understand that the world will move on, and we want to move on with it.”