Islamic Banks need to showcase ethics to continue rapid growth, says CEO of ADIB
Islamic banks need to position themselves as ethical banks with universal appeal in order to continue on their rapid growth path, Abu Dhabi Islamic Bank (ADIB) Chief Executive Officer Tirad Al Mahmoud told a global economic summit in Dubai on Tuesday (26 November).
Al Mahmoud said the Islamic banking industry, which has its roots in the 1970s, is approaching a natural level of maturity following a period of accelerated expansion, especially since the global economic crisis. The biggest 20 Islamic banks have increased their assets by an average 16 per cent annually over the last three years, but the pace of growth is slowing down.
A survey commissioned by ADIB this year shows that between 12 and 20 per cent of people in key predominantly Muslim countries -- the UAE, Egypt, Turkey and Indonesia -- wanted only to bank with a sharia-compliant institution. But as many as half of the population of these countries are seeking higher ethical standards than they are currently experiencing from their banks.
"I believe we are coming to the natural end of a growth cycle, and the question is now, can we take Islamic banking to the next level? We shouldn't be complacent just because we've had strong growth," Al Mahmoud told the Global Islamic Economy Summit in Dubai.
"But I am hopeful. Islamic banks have a unique opportunity, because they put ethics at the heart of their business. In the long term, ethical businesses are stronger and more successful. Our future growth will come from focusing on substance, rather than form, keeping our products and services simple and straight forward, and being inclusive, so that all communities feel welcome when they bank with us."
ADIB's "Banking as it should be" survey of 1,000 people showed that customers of all banks find that the gap between expectations and reality is widest in the areas of ethics, particularly around the questions of whether banks keep promises to its customers and always have the best interests of their customers in mind.
Al Mahmoud was participating in a banking industry leaders' debate, which also featured Dr. Adnan Chilwan, CEO of Dubai Islamic Bank, Hussain Al Qemzi, CEO of Noor Islamic Bank, Mohammad Al Omar, CEO of Kuwait Finance House, and Rafe Haneef, CEO of HSBC Amanah, Malaysia.
The two-day Global Islamic Economy Summit, organised by the Dubai Chamber and Thomson Reuters, attracted over 2,000 delegates. ADIB, the world's fourth largest Islamic bank by assets, was a title sponsor of the event.