The Islamic banking and finance industry may still be posting positive growth but the industry has recognized that to move forward and be at par with the conventional, digital innovation is imperative. In this exclusive interview with MOHAMMED KATEEB, the group chairman and CEO of Path Solutions, we explore latest banking technology trends, market outlook and gain an insight into the firm’s strategy, aspirations and achievements.
2015 has been an interesting year with a strong technological focus on mobile banking, branchless banking, fintech, digital currencies and cloud platform among others. What are some of the most exciting trends you’ve witnessed in 2015, and what are some of the most momentous achievements for Path Solutions?
The financial services industry is undergoing significant structural and regulatory changes as a consequence of changing customer behavior, channel proliferation and the digitization of operations in general. Financial institutions are responding by making significant investments in core banking systems’ replacement, digital channels and data analytics to ensure their ongoing competitiveness.
As you know, Path Solutions’ operations focus around a very specific area of expertise to a niche market which is developing software solutions for the Islamic finance sector. Our multi-award-winning Shariah compliant solution offers extensive coverage of compliance and reporting with robust capabilities focused on mitigating risk, reducing costs, automating and streamlining processes, and improving customer responsiveness across the organization, all top priorities toward achieving Islamic financial institutions’ continued growth and profitability.
Geographically, we have witnessed traction and were winning contracts last year in Oman following the new CBO’s Islamic Banking Regulatory Framework which opened the door for both conventional and Islamic banks to market Shariah compliant products, and where Islamic banking services could make up to 20% of the country’s overall financial services sector in the future. This was one of our greatest achievements to date, as Path Solutions won the contracts of six out of eight new Islamic banks in just one year in the Sultanate.
Which markets were most interesting in the Islamic banking technology space in 2015 and why?
Our company’s business strategy is reflected in our approach to providing next-generation Shariah compliant software solutions and services to a booming Islamic financial services industry, which would position Path Solutions as the undisputed market leader in this segment globally.
Geographically, in 2015 we shifted our focus to North Africa. We have been monitoring countries like Tunisia, Morocco and Algeria for accurate forecasting of industry trends to effectively cater to market requirements from an IT perspective. In 2015, major reforms were announced in Morocco and the liberalization process got started by adjusting regulatory frameworks to accommodate Islamic finance. The North African countries are still in their early development stages, far from achieving a completely rational exploitation of their full potential in this sector, therefore the growth of Islamic finance in North Africa denotes lots of opportunities for us, and hence Africa remains a focal point of our upcoming agenda.
What is your 2016 market outlook for the Islamic banking technology market?
Islamic finance, along with underlying technologies, continues to develop in various parts of the world, each of which is at a different level of development. In some markets, the industry is mature with very strong fundamentals and regulations, and in others like in the west, it is just starting to wake up to its potential.
We saw some markets go through consolidations in the last few years and other new markets came to existence. Due to the political and economic turbulence in the Middle East and Europe, the last few years experienced tremendous slowdown in key Shariah compliant financial markets like Iraq, Syria, Egypt, Yemen, Libya and others. In Europe, many key initiatives either halted or slowed down. The demand for Islamic banking technologies in those markets specifically decreased as it is no longer a priority. On the other hand, Africa continues to grow as an emerging market as we’ve seen rapid growth in several regions in which we find greater opportunities for our Shariah compliant software solutions and services. Southeast Asia continues to be a stable and mature market and Central Asia is a key emerging region, forecasted to be the next center of Islamic finance, but still at its infancy stage right now.
What do you hope to achieve next year?
This year, we have brought in the mobility and the cloud to our offerings, and introduced new and improved Business Intelligence and Risk Management solutions characterized by flexible technical architectures and an expanding data warehouse. We are also upgrading and expanding our eChannels, so that our clients could offer the best digital services to their customers, run more efficient operations and gain insight into their businesses. In addition, we will continue to grow our line of Shariah compliant software solutions, invest and launch next-generation banking applications, thus meeting clients’ and market expectations. Of course, we are determined to continue our expansion into new geographic markets such as the CIS countries, and thus broaden further our client base.
Mohammed Kateeb is the group chairman and CEO of Path Solutions. He can be contacted at [email protected].