Islamic banks 'must showcase ethics'
Abu Dhabi, November 27, 2013
Islamic banks need to position themselves as ethical banks with universal appeal in order to continue on their rapid growth path, said a senior executive.
The biggest 20 Islamic banks have increased their assets by an average 16 per cent annually over the last three year, but the pace of growth is slowing down, said Tirad Al Mahmoud, CEO of Abu Dhabi Islamic Bank (ADIB), speaking at the Global Islamic Economy Summit recently in Dubai.
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.
Between 12 and 20 per cent of people in predominantly Muslim countries – the UAE, Egypt, Turkey and Indonesia – wanted to bank only with a sharia-compliant institution, which about half the population of these countries seek higher ethical standards than they are currently experiencing from the banks, said a survey commissioned by ADIB.
“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,” said Al Mahmoud.
“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.
The two-day Global Islamic Economy Summit, organised by the Dubai Chamber and Thomson Reuters, attracted over 2,000 delegates.
To encourage ethical practices in finance and innovation in Islamic banking, ADIB has partnered with information provider Thomson Reuters to offer two awards, worth a combined $150,000 in prizes. - TradeArabia News Service