Latest news with #IbrahimAlMheiri
Khaleej Times
20-05-2025
- Business
- Khaleej Times
Fintech to elevate the banking industry, says Ibrahim Al Mheiri
Demand for seamless, convenient and accessible transactions is driving uptake of fintech solutions while AI-driven solutions have also enhanced Islamic investment options, providing hyper-personalised results that comply with Islamic principles, says an industry veteran. Ibrahim Al Mheiri, Head of Islamic Banking, Mashreq, said Shariah-compliant banking is actually suitable for every customer, including non-Muslim customers. 'We are seeing increased demand for financial solutions that align with customers' ethical principles, and by its very nature, Islamic banking meets that demand,' Al Mheiri told BTR. In an exclusive interview, Al Mheiri deep dives into how Islamic finance can harness the potential of open banking and embedded finance have made financial transactions seamless, more convenient and accessible. Excerpts from the interview: Fintech has changed banking and sets new benchmarks. How did it revolutionise Islamic banking? As with conventional banking, fintech has had tremendous impact on Islamic banking. Innovations such as open banking and embedded finance have made financial transactions seamless, more convenient and accessible, while digital banking and mobile apps have allowed customers — especially in underserved regions — access Shariah-compliant financial services easily, as well as making transactions faster and more efficient. Technology such as blockchain has enabled greater transparency in Islamic financial contracts, such as Murabaha and Sukuk, increasing compliance. Predictive analytics based on artificial intelligence (AI) and generative AI (GenAI) now help Islamic banks assess creditworthiness in a Shariah-compliant way, avoiding interest-based credit scoring, and sophisticated fraud detection and compliance monitoring tools enhance operational security and regulatory adherence. AI-driven solutions have also enhanced Islamic investment options, providing hyper-personalised solutions that comply with Islamic principles. How do you see fintech will drive Islamic banking in the coming years? Do you think it will help promote Shariah-compliant products? The more fintech — and the associated technology and innovation — makes Shariah-compliant banking and financial solutions more accessible and convenient, the more it will drive uptake of Islamic banking. Essentially, we will see parallels between fintech in conventional banking and fintech in Islamic banking; it stands to reason that what will drive trends in one will be replicated in the other. A key area in which fintech will help promote Islamic banking is in ethics and principles; with tech and innovation enabling ever greater transparency and compliance, the involvement of fintech will make it easier for customers to choose financial products and services that match their religious and ethical requirements. What are the key factors influencing the Islamic banks to adopt fintech and promote its usage in today's day-to-day banking? As with conventional banking, the technology and innovation with which fintechs are associated are enabling something of a revolution, as are shifts in consumer expectations and developments in operational processes. Demand for seamless, convenient and accessible transactions is driving uptake of fintech solutions such as those made possible by open banking and embedded finance, while automation of everyday processes behind the scenes is enabling banks to enhance the customer experience to keep pace with expectations of always-available service. Financial inclusion, a core tenet of Islamic finance, is also a key factor; by adopting fintech solutions and the associated technology and innovation, we can expand our reach, increase financial inclusion and ensure the unbanked and underbanked can access the financial solutions they need. Underscoring all of this is the simple fact that Shariah-compliant banking is actually suitable for every customer, including non-Muslim customers. We are seeing increased demand for financial solutions that align with customers' ethical principles, and by its very nature, Islamic banking meets that demand. Do you see any adverse impact of fintech on Islamic banking? While developments such as automation — with technology and innovation taking over many of the more mundane, previously human-led processes — can naturally cause concern in the banking industry thanks to changes in human capital deployment, we see such changes as an opportunity. Instead of having their time taken up with routine tasks, our teams can focus on customers, and on providing a vastly enhanced customer experience. Automation also means quicker processes with fewer errors, benefiting everyone, and more time to focus on more complex tasks means customers can have their needs met faster and more intuitively. How do you expect fintech to lift Islamic banking in the next five years? We expect fintech to elevate the banking industry, whether conventional or Islamic. Technology and innovation are opening whole new avenues for banks and their customers, with vast enhancements to the customer experience and to operational efficiency. Key areas of evolution will be in driving innovation, enhancing efficiency, expanding reach, and increasing financial inclusion. With the continued acceleration of digital transformation, Islamic finance will become ever more accessible, transparent, and competitive, both in the GCC region and across the globe.
Khaleej Times
16-03-2025
- Business
- Khaleej Times
UAE: Market share of Islamic banks grows to 17.6%; which Shariah-friendly products are in demand?
Islamic banking is gaining currency in the UAE as Shariah-compliant financial institutions expand their product offerings to cater to a variety of clients. Industry executives say that the ethical, transparent, and risk-sharing nature of Islamic finance makes it appealing to a broad audience, including non-Muslim customers looking for sustainable and responsible financial products. In 2024, UAE Islamic banks grew 11.1 per cent compared to 9.2 per cent in the previous year for the overall banking system resulting in a slight increase in the market share of Islamic banks in the country to 17.6 per cent versus 17.3 per cent at the end of 2023, said Dr Mohamed Damak, managing director and global head of Islamic finance, S&P Global Ratings. 'From a performance perspective and based on the numbers disclosed by the top 7 conventional banks and top 4 Islamic banks, the profitability of both types of banks has been strong and comparable with return on assets (RoA) for conventional banks reaching 2.2 per cent versus 2.4 per cent for Islamic banks underpinned by a lower cost of risk for Islamic banks, as efficiency and margins were comparable,' said Damak. In early 2024, the Central Bank of the UAE ranked the country as the fourth-largest Islamic finance market worldwide. By the end of the first half of 2024, Fitch Ratings reported that Islamic financing accounted for 29 per cent of the UAE's total sector financing. Ibrahim Al Mheiri, head of Islamic banking, Mashreq, said the demand for Islamic finance products in the UAE continues to grow, driven by increasing customer preference for Sharia-compliant solutions and the country's commitment to positioning itself as a global Islamic hub. This momentum is expected to continue, with Islamic banks projected to outpace conventional banks in growth over the medium term. Factors such as supportive regulations, enhanced digital offerings, and the growing appeal of ethical banking are reinforcing this trend,' he said. Badis Shubailat, assistant vice president,and analyst at Moody's Ratings, said that UAE Islamic banks exhibited a higher return on asset performance last year relative to their conventional peers. Amongst Moody's rated entities, net income to tangible assets stood at 2.2 per cent for Islamic banks against 1.8 per cent for their conventional peers in 2024. 'UAE banks benefited from high rates during most of last year and strong operating conditions underpinned by sound business sentiment while ongoing structural reforms continued to safeguard the country's competitive edge,' said Shubailat. What products are growing? While demand for all types of Islamic financial products is increasing, Ibrahim Al Mheiri said there is strong demand for those that align with environmental, social and governance (ESG) principles. 'By integrating such principles, Islamic finance is attracting a new wave of socially conscious investors seeking ethical and impact-driven financial solutions. Key growth areas include the Green Sukuk, used to raise capital for environmentally friendly projects such as renewable energy and sustainable infrastructure, and sustainable investment options,' he said. Competitive returns Ray Vermam luxury broker at Eden Realty UAE, said Islamic banks in the UAE often provide comparable or slightly higher returns than conventional banks, particularly for fixed-term deposits. However, he said Islamic returns are not guaranteed, as they depend on profit-sharing (Sharia-compliant investments like trade/real estate), while conventional banks guarantee fixed interest. 'Risk-averse customers may prefer conventional stability, while ethical investors favour Islamic banks' alignment with religious principles.' Based on mortgage rates in 2024 for the UAE market, Vermam added that the difference between Islamic and conventional mortgages is minimal, Islamic banks in the UAE often provide slightly cheaper credit for fixed-term. 'While the rates are comparable, Islamic mortgages often have more transparent fee structures and typically don't charge prepayment penalties. Conventional mortgages may include additional costs like prepayment penalties and variable interest rates that could increase over time,' he added. Ibrahim Al Mheiri of Mashreq said in many cases, Islamic banks offer competitive and structured pricing that aligns with customers' financial needs while ensuring compliance with Shariah principles.
