Interview With Mohd Muazzam Mohamed

MOHD MUAZZAM MOHAMED – Chief Executive Officer BIMB Holdings Bhd & Bank Islam Malaysia Bhd

YOU ARE THE CEO OF BIMB HOLDINGS BHD AND BANK ISLAM MALAYSIA BHD, THE FIRST ISLAMIC BANK IN MALAYSIA. CAN YOU GIVE A BRIEF OVERVIEW OF BIMB HOLDINGS BHD — THE MISSION AND GOALS, AND ITS SUBSIDIARIES?

Established in 1997, BIMB Holdings Berhad (BHB) is the first and only Islamic Financial Holdings Company listed on the Main Market of Bursa Malaysia to consolidate, support & synergise key pioneering Islamic financial institutions in Malaysia, namely:

• Bank Islam Malaysia Berhad, the first Islamic Bank in Malaysia established in 1983;
• Syarikat Takaful Malaysia Berhad, the first Takaful Operator in Malaysia established in 1984; and
• BIMB Securities Sdn Bhd, as the first full-fledged Shari’a-compliant stockbroking firm in Malaysia, established in 1994.

For over two decades, BHB has contributed significantly to the tremendous growth of the Islamic finance industry, providing access to a wide range of Shari’a-compliant solutions under Malaysia’s dual-financial system.

As envisioned by Bank Negara Malaysia (BNM) in its Financial Sector Blueprint 2011-2020, Malaysia’s Islamic financing penetration rate has successfully surpassed the 40% target and continues to proliferate. The BHB maintains a significant presence in the country and strives to position Shari’a-compliant solutions as the default option for all. We strive to provide sustained and long-term value creation and delivery commitments. It is in line with BNM’s Value-based Intermediation (VBI) to deliver the intended outcomes of Shari’a through practices, conduct, and offerings that generate positive and sustainable effects for the economy, community, and environment. For this very reason, we took the opportunity to refresh and redefine the vision and mission of Bank Islam Malaysia Berhad in 2019. Our vision is to be “the Bank that advances prosperity for all,” with a mission “to provide solutions that deliver value” based on our promise of “Assuring Trust and Delivering Value”.

Apart from laying the foundation for Islamic finance in Malaysia, BHB has played a significant part in nurturing the growth of Islamic banking and finance globally by offering expertise and experience to various foreign countries and institutions; Amana Bank in Sri Lanka is one of them.

Our expertise, experience, and knowledge in creating innovative Shari’a-compliant financial products have transformed the country’s financial landscape into a vibrant international Islamic financial hub.

AS AN ISLAMIC FINANCE PRACTITIONER WHAT TO DO YOU THINK LED TO THE GROWTH OF THE ISLAMIC BANKING AND FINANCE INDUSTRY?

The development of Islamic finance in Malaysia was inspired by the bold vision and unwavering motivation of our prominent thinkers and leaders to address real needs of the people.

When the late Royal Professor Ungku Abdul Aziz mooted the establishment of the Malaysian Pilgrims Fund Board in the early 1960s, the idea was to address the struggle Muslims put up to save money for Hajj. They would set aside money in their homes, often under pillows, and usually, they would lose the money either due to theft or in other unfortunate ways. This noble idea triggered the creation of Islamic finance in Malaysia. Now, Lembaga Tabung Haji has grown to save more than RM80 billion. Another defining moment that inspired the growth of our Islamic banking industry was when the late Tan Sri Jaafar Hussein, the fourth Governor of BNM, set his bold vision for Islamic finance in his version of Martin Luther King’s “I have a dream speech” in March 1990. He shared, “I have a dream, and I dream that one day, Malaysia will have a dual financial system, Islamic financial system operating side-by-side with the conventional financial system.”

It subsequently set the motion for introducing Islamic windows through Interest-free Banking Scheme in 1993 and later Islamic Banking Scheme in 1998 which propelled the Islamic banking industry into the mainstream in Malaysia.

Under the stewardship of Tan Sri Dr Zeti Akhtar Aziz as the Governor of BNM, the formulation of a dedicated long-term plan for Islamic finance was drawn up under the Financial Sector Masterplan (FSMP) 2001-2010. Subsequently, the Financial Sector Blueprint (FSBP) 2011-2020 charted the growth of Islamic finance in tandem with the growing awareness and demand for Shari’a-compliant solutions domestically and globally.

On a personal level, the journey and growth of Islamic Finance in Malaysia has always been fuelled by the commitment to address the real needs of the people, be it for Shari’a-compliant solutions or financial products that serve the real economy sustainably.

IN YOUR OPINION, WHAT ROLE CAN ISLAMIC BANKS PLAY IN CLOSING THE FINANCIAL GAP, AND HOW CAN THEY ACHIEVE FINANCIAL INCLUSION IN MALAYSIA IN PARTICULAR AND GLOBALLY IN GENERAL, WHILE ENSURING GREATER EQUALITY AND OPPORTUNITIES?

We believe the role of an Islamic bank is not merely to serve as a financial intermediary. It also serves to produce social and economic benefits. In this regard, Bank Islam offers products, services, and initiatives that deliver social and financial returns – other than merely providing Shari’a-compliant offerings. Sadaqa House is one of our key initiatives to close the financial inclusion gap for those with fewer privileges or needs. Similar to Equity Crowdfunding (ECF), in which capital is raised from the crowd to fund a venture, Sadaqa House is also a charity crowdfunding platform that raises donations from the public to support high-impact social initiatives in collaboration with change makers in a transparent and highly governed environment.

It democratises and digitalises the donation process. Potential donors and the charity projects’ initiators meet at a common point virtually to support a specific cause facilitated by Bank Islam. To date, it has successfully raised more than RM6 million in donations and assisted hundreds of underprivileged individuals, including heart disease patients, micro-entrepreneurs, university students, and the indigenous community. Toclosethefinancialinclusion gap sustainably, we believe in providing guidance and a safe environment to enable these groups to nurture into successful micro-entrepreneurs.

Another critical initiative under Sadaqa House that was recently launched is the BangKIT microfinance. It is a one-of-a-kind micro-financing solution funded by donations to enable zero-profit lending based on the Qard Hassan principle to assist unserved and underserved micro-entrepreneurs in obtaining capital to start or expand their businesses. It will subsequently help build their credit record to qualify them for commercial financings in the future. It is offered along with mentoring and a business-coaching program to ensure sustainable business development. To ensure continuous benefits, recipients who have successfully graduated from the program are encouraged to donate so the fund can be redeployed for the new recipients.

Islamic financial services providers must also bridge the misconception that Islamic banking is only meant for Muslims.

Financial literacy, particularly the concept and principles of Islamic finance at an early stage, would guide the young entrants from the onset. Islamic financial services providers must also devise products and services that can meet the needs of the underserved segments, such as the unbankable and gig economy workers, which is increasingly becoming a fundamental source of income for many. Islamic financial services providers must also bridge the misconception that Islamic banking is only meant for Muslims. After more than 30 years of serving the nation by providing Shari’a-compliant financial instruments, it is time for Islamic banks in Malaysia to introduce the third tier of the Islamic economy, i.e., the social welfare (ijtima’iy).

Financial inclusion can be achieved by having concerted and strategic commitment among industrial players to create upward mobility among the unbanked segment of the societies. Islamic Financial Services Board (IFSB) took proactive measures when it issued Technical Note on Financial Inclusion and Islamic Finance to optimise the potential of Islamic social finance. It integrates with Islamic commercial finance through three modalities: Direct Integration, Third-Party Integration, and Reverse Integration.

In Bank Islam Malaysia Berhad, social finance has become our DNA since its inception in 1983, leading us to, eventually, embark on a structured social finance agenda in 2019. We define social finance in our context as “an approach to strategically offer banking products, services and initiatives beyond traditional banking which delivers social impacts and economic return with the underlying focus to nurture the unbanked to become bankable.”

In a nutshell, our approach can be described as:

• Strategically connecting banking products, services, and initiatives with traditional social finance instruments.
• Nurturing unbanked and under-banked groups of societies to become bankable through the creation of upward mobility.
• Project execution through synergy among various implementation partners drawn from the public, private, and civil society organizations.

YOU WERE HONOURED AT THE 5TH ISLAMIC RETAIL BANKING AWARDS FOR YOUR LEADERSHIP ROLE AS CEO IN THE ISLAMIC RETAIL BANKING INDUSTRY AND AS THE GIFA TRANSFORMATIONAL LEADER OF THE YEAR 2020. HOW HAVE THESE ACHIEVEMENTS SHAPED YOUR FOCUS AND YOUR PROFESSIONAL COMMITMENTS?

I am very humbled to receive the GIFA Transformation Leader of the Year 2020 award. Indeed, the recognition is not possible without the trust and cooperation given by the stakeholders of Bank Islam, especially the Board of Directors, the workforce, and our customers.

Leadership and teamwork directly impact an institution’s ability, like Bank Islam, to carry out it mission. Therefore, the honour bestowed is a testament to the dedication of each member of Bank Islam in ensuring that the business remains afloat and resilient in the current challenging landscape, at the same time, continuously assisting those adversely affected by the pandemic.

Ever since I have stepped into this institution on May 11, 2015, as its then Chief Financial Officer, I have wanted to lead it to greater heights, and I know this cannot be done alone. Engagements with stakeholders, teamwork collaboration, and working in an innovative environment are the key to achieving that.

Hence, this honour motivates me to continue doing what I do best and constantly improve my capabilities to realize my mission to take Bank Islam to the next level, including getting it listed on the Main Board of Bursa Malaysia. In Sha Allah, this move will further improve the Bank and, subsequently, the Islamic finance and banking industry in Malaysia and the region.

THERE IS NO DOUBT ABOUT THE ROLE TECHNOLOGY IS GOING TO PLAY IN THE POST-COVID WORLD. HOW CAN ISLAMIC FINANCE PLAY A SIGNIFICANT ROLE IN THE GLOBAL DIGITAL ECONOMY?

Technology enables the financial industry to practice more transparency and accountability. In addition, it facilitates the provision of sustainable products that previously hit snags due to operational challenges. Social finance could be one of the products. Technology has assisted Bank Islam in expanding coverage and distribution, manage charitable funds, and identify areas of need. Innovative modern instruments powered by technology ensure responsible investments and track profitable investments like SRI Sukuk.

RECENTLY, BIMB HOLDINGS WAS RANKED AS ONE OF THE TOP 3 ESG-SCORING BANKS IN MALAYSIA. HOW HAS THE ORGANISATION IMPLEMENTED SUCH STRONG SUSTAINABILITY PRACTICES, AND WHAT STRATEGIES ARE IN PLACE FOR THE ORGANISATION TO RESPOND TO EMERGING CHALLENGES AND STAKEHOLDER EXPECTATIONS?

Delivering value to all of our stakeholders has become our goal as we advance our Value-Based Intermediary (VBI) and our banking solutions and services; we aim to positively impact our shareholders, industry, customers, employees, and environment and the community. Therefore, the Bank strives forward, driven by the six strategic objectives as the yardstick to measure the Bank’s overall performance. With the VBI agenda at our forefront, the Bank’s strategic directions are shaped through Bank Islam’s six key strategic pillars of Sustainable Prosperity, Value-Based Culture, Community Empowerment, Customer Centricity, Real Economy, and Digitalisation. More business opportunities could be formed if the current paradigm shift extends beyond delivering value propositions to all financial consumers and the broad stakeholders within the organisation, society, and the economy.

Indeed, the recognition is not possible without the trust and cooperation given by the stakeholders of Bank Islam, especially the Board of Directors, the workforce, and our customers

The spread of COVID-19 brought the global economy to a standstill, resulting in an inevitable disruption in the way businesses operate. With weaker global growth prospects, it could weigh on the earnings. Nevertheless, the Malaysian banking system has always thrived on its resiliency and agility. Despite the challenges faced by the Bank, we continue to maintain to build a sustainable and robust franchise. The Bank takes heed of the emerging trends to persevere sustainability and acknowledge emerging trends amidst COVID-19. Against a strong backdrop of credit metrics in conjunction with the reaffirmation of AA3/Stable/P1 by RAM Ratings, BIMB Holdings announced it would proceed with its proposed group restructuring exercise. It will unlock significant value for shareholders and transfer its listing status to its subsidiary, Bank Islam. The exercise will see the Bank becoming the only full-fledged Islamic financial institution listed in the region, having greater access to tap the capital markets for an exciting future expansion.

The pandemic should be seen as a window of opportunity to grow sustainably. In this trying time, our initiatives further reflect our commitment towards financial inclusivity, which ensures development for all, as we seek to support economic recovery and safeguard the rakyat’s livelihood.

Towards becoming “The Bank that Advances Prosperity For All” and “Providing Solutions that Deliver Value”, the Bank is setting out a 5-year roadmap to deliver the promise of technology, redefine growth and work in new ways to address the unprecedented challenges. By 2025, the Bank aspires to be a champion in offering Shariah Environmental, Social and Governance (“Shariah- ESG”) total financial solution with leadership in digital banking and social finance. The Bankwillcontinuously pursue traction on our lines of businesses (LoBs) and channels towards 2025 through our five business drivers: Wealth Management, Social Finance, Digital Bank, Enterprises, and Wholesale Banking. It is premised on our key business lines – Consumer Banking, SME Banking, Commercial Banking, Corporate Banking, Treasury, Deposit and Cash Management and our investment arm, BIMB Investment Management Berhad. To further enable this journey, the Bank’s Sadaqa House aims to increase impactful beneficiaries. Digitalisation is expected to allow for the core infrastructure hence supporting the entire six pillars.

BECOMING THE CHIEF EXECUTIVE OFFICER OF BANK ISLAM MALAYSIA BHD MUST HAVE PRESENTED YOU WITH ITS CHALLENGES. HOWEVER, UNDER YOUR LEADERSHIP, BANK ISLAM HAS BEEN NAMED MALAYSIA’S STRONGEST ISLAMIC RETAIL BANK 2020 AT THE 6TH ISLAMIC RETAIL BANKING AWARD FOR THE SECOND TIME. HOW HAS THE JOURNEY BEEN SO FAR?

To be named the Strongest Islamic Retail Bank, it takes years of hard work to build good fundamental and solid financial standings. For this, I would like to attribute the award to our people at Bank Islam, which we fondly referred internally as BITIZEN (Bank Islam’s Citizen), and all the past leaderships of Bank Islam. Without them, the award would not have been possible.

The prestigious award acknowledges Bank Islam’s strong commitment to delivering our customers’ expectations and recognises the Bank’s continuous focus in providing comprehensive and innovative Shari’a-compliant financial and banking solutions. The journey has been challenging yet wonderful for me so far. The unprecedented COVID-19 pandemic came just a year after I took over the leadership role at Bank Islam. The pandemic has altered how the Bank usually operates and makes me more aware of today’s workforce’s current market scenario and demands.

I always believe that every cloud has a silver lining, like how the impact of COVID- 19 has accelerated Bank Islam’s Digital Journey and catalyse new and innovative products and services in the market. We needed to be agile and make adjustments to address the needs of different segments. We need to move forwards, and Alhamdulillah, we are embarking on our 5-year business strategy, which is aptly called LEAP25, to ensure Bank Islam continues to stand and make its mark in the industry.

Bank Islam continues to provide financial assistance and support to the community, particularly the adversely impacted customers, not focusing solely on profit-generating. It includes microfinancing facilities via the BangKIT program, Targeted Repayment Exercise to assist distressed borrowers based on their specific financial circumstances, including deferment of their loans, reduced installment payment schedule, and Rescheduling and Restructuring (R&R) of their financing facility.

We have also increased our corporate responsibility initiatives to provide the necessary support to those in need by supplying PPE and equipment to the front-line workers, food to the needy, and tablets to selected students to help them access online learning due to the closure of schools.

The concept of wealth sharing has been part of Bank Islam since its inception and will continue to be despite the challenges faced by the industry. Compassion has always been part of our DNA, and I am proud to be part of it.

FINTECH AND ISLAMIC FINTECH ARE EMERGING AS NEW PLAYERS IN THE GLOBAL INDUSTRY. HOW IS THE BANK POSITIONED TO CATER TO THE NEED OF A DIVERSE POPULATION IN TAILORING PRODUCTS AND SERVICES AND THE USAGE OF TECHNOLOGY IN LINE WITH ISLAMIC FINANCIAL PRODUCTS?

In the past few years, the number of Islamic FinTechs steadily increased due to a strong and growing demand for the services. According to IFN FinTech, Malaysia is considered one of the main hubs for Islamic FinTech alongside Indonesia, the UK, UAE, and the US. It spreads across significant sectors such as digital banking, P2P finance and crowdfunding, payments and remittance, trade and personal finance, wealth management, and blockchain. Reports by INCEIF and other institutions indicate that Malaysia seems to have the potential to be the world leader in Islamic FinTech. It has shown steady growth in FinTech investments and activities.

Regulatory limitations and concerns are among the initial factors that need to be addressed for Islamic finance institutions, Islamic banks, takaful, and FinTech companies to forge ahead in adopting new models linked to various themes such as P2P, crowdfunding, and big data. Nevertheless, we have seen rapid growth in Islamic FinTech throughout the years and the increasing availability of Islamic FinTech services. Based on Malaysia Digital Economic Corporation’s (MDEC) Islamic FinTech Report published in February 2020, 26 Islamic Fintech providers are currently operating, from 198 FinTechs as reported in the Malaysia Fintech Report.

Furthermore, we have seen rising demand around the world for Shari’a-compliant financial services. Global Islamic banks financing had expanded by 8.9% YoY in 2018, compared with the 2.5% that conventional banks generated. Islamic finance is now entrenched in Malaysia, accounting for 36% of financing to customers.

With such prominence of Islamic finance, Shari’a-compliant FinTech is likely to become an increasingly visible part of the global FinTech landscape.

Finance plays a crucial role in the growth of developed as well as developing nations. A financially healthy society leads to robust growth. The development of Bank Islam’s products and services has always focused on our customers’ needs and desires. Taking customer feedback into account is an excellent move because it allows the Bank to develop goods and services that appeal to a wide range of people.

Bank Islam is also constantly aware of the rapid change impacting the customers and societies we service, amidst changes within demographics and the transformations brought about from the mixture of traditional economic power and the digital economy. The growth of the digital economy has brought about tremendous disruptions across all industries, including the Banking Industry. The usage of technology in financial products helps the Bank bridge the gap and enable every section of people from all parts, whether rural or urban, to participate in mainstream economic activities.

Bank Islam has partnered with several FinTech companies in the markets as the FinTech companies (FinTechs) solutions can better address customer needs and preferences to ensure enhanced availability, accessibility, usage, convenience, and quality of services tailored products. In 2020, Bank Islam partnered with FinTechs in few areas, including Payment, E-wallet, Risk, Investment, and IT.

Take the example of Bank Islam’s collaboration with KiplePay in the eWallet area to introduce a cashless payment ecosystem for universities in Malaysia. The partnership helped widen the Bank’s consumer base by enabling Bank Islam to tap into KiplePay’s established consumer base, allowing it to expand its market share and reach previously uncontacted customers. In addition, since university students will be the primary users of the eWallet, the bank will attract a younger audience.

BIMB HOLDINGS BHD (BHB) HAS OBTAINED APPROVAL FROM THE MINISTER OF FINANCE FOR ITS PROPOSED TRANSFER OF LISTING TO ITS SUBSIDIARY, BANK ISLAM MALAYSIA BHD. HOW WILL THIS IMPACT THE ORGANISATION IN PARTICULAR AND THE ISLAMIC FINANCE INDUSTRY IN MALAYSIA IN GENERAL? WHAT ARE YOUR PLANS AND STRATEGIES FOR THE COMING YEAR?

The growth of the digital economy has brought about tremendous disruptions across all industries, including the Banking Industry. The usage of technology in financial products helps the bank bridge the gap and enable every section of people from all parts, whether rural or urban, to participate in mainstream economic activities

The transfer of listing will unlock greater value and pave the way for Bank Islam Malaysia Berhad to be the only listed full-fledged Islamic Bank in Malaysia. The restructuring will:

• Simplify and streamline shareholding, corporate and governance structures of Bank Islam for efficiency, agility, and synergy;
• Enhance positioning of Bank Islam to deliver a full spectrum of Islamic financial offerings to our customers;
• Provide Bank Islam direct access to raise capital to fund future growth and expansion;
• Provide an opportunity to investors seeking exposure in a Shari’a-compliant banking counter;
• Promote transparency in disclosure as a public

listed entity; and

• Free up capital for Bank Islam to fund new business activities while addressing requirements for Financial Holding Company by BNM.

Our plans and strategies are to advance sustainable banking and become the champion in Shariah-ESG total financial solution with leadership in digital banking and social finance.

To achieve this goal, we have formulated a five-year Plan, known as LEAP25, which focuses on:

• Promoting purposeful mobilisation of capital to help clients achieve sustainable growth;
• Advancing from financing-centric to the ecosystem;
• Catalysing entrance into new markets and penetration into new segments, particularly the underserved and unserved segments of society, via new technology and business model;
• Transforming from product-centric to holistic financial advisory; and
• Championing adequate wealth circulation through social finance.

The Proposed Transfer of Listing will enable Bank Islam to access the equity capital market for fundraising activities directly. It supports its organic growth and allows investors to invest directly in Bank Islam via new Bank Islam Shares.

The Proposed Transfer of Listing will also enhance the Malaysian corporate and capital markets via its true-blue Islamic financial solutions. The Malaysian Corporate can anticipate and participate in this exciting journey of this listed full-fledged Islamic financial institution.

Malaysia is one of the leading countries in Islamic finance, and Bank Islam is the leading Islamic bank in the country. It is systemic in the financial institution industry and should undoubtedly be regarded. Bank Islam has a solid stance with solid assets, which gives a sense of security to investors on their investment.

Bank Islam is highly regulated by local authorities such as Bank Negara, Securities Commission, and Bursa Malaysia. The listing can potentially enhance the commercial viability of our key business drivers outlined earlier (Refer to Q6):

1. Integrated Wealth Management Business Model – Transform from product-centric to holistic financial advisory, resulting in higher revenue growth and customer base. AUM growth will pave the way to fortify recurring non-fund-based income. A revenue model based on the Islamic profit-sharing concept can potentially attract new and grow customers’ assets.
2. Enterprises (SMEs) – Advance from financing-centric to ecosystem play. It is achieved through enabling the Halal economy/ platform.
3. Wholesale Banking proposition – To promote mobilisation of capital to help the client achieve sustainable growth. It means we want to target more extensive business portfolios from corporate customers while boosting non-fund-based income.
4. To attain new revenue stream with greater synergy with our investment arm, BIMB Investment, via AUM growth.
5. Digital Bank – Catalyse entrance into new markets and penetrate new segments via new technology and business models.
6. Social Finance – To be a champion in wealth circulation through social finance impacting the livelihood of beneficiaries. To date, we have more than 3,000 beneficiaries for the Sadaqa House, our social finance arm.

AS THE PIONEER OF ISLAMIC BANKING IN THE COUNTRY, WHAT CHALLENGES DO YOU FACE IN PROVIDING AUTHENTIC SHARI’A-COMPLIANT PRODUCTS AND SERVICES?

WHAT ROLE DID BANK ISLAM PLAY IN FOSTERING A FAVOURABLE ENVIRONMENT FOR THE GROWTH AND DEVELOPMENT OF THE ISLAMIC BANKING AND FINANCE INDUSTRY IN MALAYSIA AND THE REGION?

Some of the challenges Islamic financial institutions, including Bank Islam, face in Malaysia are:

1. Heightened competition in an increasingly crowded marketplace
2. Fierce war for talents – e.g., shortage of financial experts with adequate Shari’a knowledge to accelerate product innovation.
3. Given the existence of different schools of thought in the Muslim world, the divergence in Shari’a interpretations and opinions is a daunting task to achieve greater harmonisation and convergence across jurisdictions regarding products and services, practices, and systems.

The next significant shift would be adopting value-based intermediation as a shared vision for the Islamic banking industry. Bank Islam has already embraced Value-based intermediation (VBI) as its core business model. VBI aims to deliver the intended outcomes of Shari’a through practices, conduct, and offerings, which generate a positive and sustainable impact on the economy, community, and on the financial return to the shareholders. More opportunities could be created if the mindset goes beyond compliance towards delivering value propositions to all financial consumers and the broader stakeholders within the society and the economy.

As a pioneer Islamic financial institution, Bank Islam would go the extra mile to achieve new goalposts. These include:

1. The creation of ESG-embedded Islamic wealth creation funds and Green Sukuk by our subsidiary, BIMB Investment Management, collaborated with the global asset manager, Arabesque, to help encourage sustainable investing and divert investment to Sustainable- focused corporations/businesses.
2. Focus on social finance initiatives that include the creation of microfinance platforms and products. Technology will play a significant role in adopting FinTech and online platforms to allow greater access to financial products and services for the underserved and unbanked segment. Sadaqa House is an excellent example of this, where a digital platform is leveraged for the convenience of the public to contribute to a noble cause. The full scope of the Sadaqa House effort is yet to be explored, and we look to unlocking the potential of this initiative to enhance social finance.
3. The Waqf development project represents another way for us to leverage the traditional aspect of property donation and leverage it to create sustainable business products for the Bank.

• We aim to nurture and propagate the SME business segment by establishing SME Academy. Already we are working with AIM to work with the underserved families to find a means for them to earn livings through microfinance services.

In terms of Product offering, Bank Islam provides a range of financial products to suit customers’ needs. The Shari’a authenticity of the Bank’s products and services lies in Bank Islam’s Sharia Supervisory Council (SSC). Since the Bank’s establishment, the SSC members have a good industry reputation. The council ensures that the product offering meets the highest Shari’a standard.

Assessing the market needs will elevate the demand for Bank Islam’s products and services, such as fund placements. Similarly, compared to the fixed or term deposit, the investment account product, namely Wafiyah, provides a competitive return. In addition, the Bank also offers various programs and financial solutions for individual to corporate and SME type of customers.

The evolution of financial markets coupled with the advancement of technology demands introducing new products/services on a timely basis to cope with the dynamic environment.

More opportunities could be created if the mindset goes beyond compliance towards delivering value propositions to all financial consumers and the broader stakeholders within the society and the economy

Bank Islam would need to be competitive to compete on a level playing field with other financial institutions. It means producing and having more innovative products that meet the demands of the individual and businesses.

One of Bank Islam’s roles is to focus on financing companies with higher Environmental, Social and Governance (ESG) standards. As a result, it would likely reduce credit risk in the longer term, as businesses would be more sustainable moving forward.

Bank Islam actively supports companies in the renewable energy sector and implements green technology solutions, such as solar farms, hydropower and waste management projects. As a result, the Bank plans to increase the proportion of its green financing (over total financing) from 4% in FY2020 to 10-12% in the next three years.

Bank Islam is primarily a retail bank. However, we have more room for the Bank to grow in non-retail segments such as businesses and enterprises.

In line with its vision to become the Bank that advances prosperity for all, Bank Islam has intensified its support for the SMEs through further collaborations with GLCs and other large corporations via vendor development and financing programs.

The Bank leveraged Syarikat Jaminan Pembiayaan Perniagaan (“SJPP”) government-guaranteed programs and launched WinBiz, a programme offering a comprehensive product tailored to the needs of women entrepreneurs in the SME space.

Bank Islam would utilise this platform to target customers from various segments while offering new products and services via digital banking on the digital bank aspiration.

We collaborated with KiplePay to facilitate cashless transactions on the university campus using the mobile app.

Maqasid al-Syariah, a selling point of Islamic finance, is that profit maximisation should not be the only objective of financial institutions. Instead, offering social value should be a part of the value proposition. Accordingly, Bank Islam has substantially increased financial inclusivity to serve the underserved community better.

We have improved credit access to underprivileged communities by collaborating with Yayasan Pembangunan Ekonomi Islam (“YaPEIM”) on agent banking services in underserved areas. In addition, we have collaborated with Syarikat Jaminan Kredit Perumahan Berhad (“SJKP”) to provide home financing to the country’s underserved B40 population category.

Bank Islam actively supports companies in the renewable energy sector and implements green technology solutions, such as solar farms and hydropower and waste management projects.

In the social finance agenda, our primary target segment is the vulnerable group in the societies. Therefore, we need to create novelty in product structuring, especially to convince the regulator that products to be offered to this segment are handled diligently and responsibly to bring this segment to the next higher level in terms of incomes and economic status.

One of the products, namely Personal Financing (Assaf), was launched in collaboration with the Kedah State Zakat Board, Malaysia’s state’s zakat authorities. The specific aim is to enable the salaried class to acquire an affordable home. This product is embedded with a credit enhancer to ensure the offering is in line with regulatory requirements and, at the same time, compatible with the status of the target segment.

In waqf, Bank Islam Malaysia Berhad launched Awqaf Ummah Financing Programme in 2020 with the allocation of MYR200 million by offering bridging and end-financing to support waqf property development projects in Malaysia.

However, the real challenge in the waqf property development project is to convince other players of Islamic banking to offer end-financing products. Due to a robust risk management framework, Islamic banks are subject to concentration risk in one property development. The average allowable range is 30% exposure in one particular project. Thus, we need at least four (4) Islamic banks offering end-financing products to support the acquisition of developed waqf properties.

DO YOU THINK THAT ISLAMIC BANKING AND FINANCE HAS THE POTENTIAL OR CAPACITY TO OFFER A GLOBALLY RELEVANT FINANCIAL SOLUTION TO THE POST-COVID WORLD?

We anticipate the post-COVID world will see an increase of new players in the gig economy, and nano and micro-entrepreneurs. Most of them are employees in the small and medium-sized enterprise (SME) sector impacted or closed due to pandemics.

Islamic banking and finance can potentially connect Islamic social finance funds to Islamic finance or banking instruments to offer higher return financing facilities to these vulnerable target segments. We believe that the synergy of various parties would contribute to a better and more effective financial solution. The Shari’a-compliant financial solution would always be a wise option not only post-COVID-19 but also for all customers’ needs.

Bank Islam, during the pandemic, tapped the unbankable customers that are notably a segment that COVID-19 adversely impacts. Moreover, it brought the Bank to another level to be seen as a profit-driven firm that promotes Sustainable Development Goals (SDG), where we give back to society, economics, and the environment.

WHAT WOULD BE YOUR MESSAGE TO THE GLOBAL ISLAMIC FINANCIAL SERVICES COMMUNITY, PARTICULARLY THE YOUNG PROFESSIONALS?

We must bring new solutions to Islamic financial services rather than be an Islamic version of a conventional product. Therefore, innovation in providing solutions is critical and as such, having capabilities to understand and provide for the ever-changing customer needs is vital.

Agility to adapt and embrace digitalisation is essential to growing quickly, which means acquiring technology, embracing new knowledge, using data analytics, robotics, etc. Also, we would have to remain anchored to our values, underpinned by unwavering ethics and integrity in doing business. In crux we shall uphold the trust placed on us.