ABDUL KARIM JUMA-DIRECTOR OF ISLAMIC BANKING, RAKBANK
RAKislamic, the Islamic banking window of RAKBANK, offers a wide range of Islamic financial services in the UAE. Would you care to share with our readers the strategic position in which RAKislamic has managed to put itself vis-à-vis its competitors, especially the other Islamic banking windows in the country?
We, at RAKBANK, recognised the increasing demand in the market for Islamic financing products and started venturing in with a retail proposition under the brand name “Amal”, marking the beginning of our journey in 2013. During the following year, we expanded our Islamic offerings by introducing home-financing solutions and in 2015 we entered the business and corporate banking realm, offering Shari’a-compliant commercial property finance and asset-based financing solutions. In line with industry best practices, we decided to rebrand our “Amal” Islamic financing solutions into RAKislamic, incorporating our customer-centric approach, the Bank’s strategy and most importantly, building a unified brand proposition and image for the Islamic division.
In 2017, the Bank began implementing a strategy that focused on diversifying the Business Banking and Wholesale Banking portfolio, which also translated into the launch of a complete trade proposition for our RAKislamic customers. Similarly, RAKislamic offered a first-of-its-kind Shari’a-compliant Term Structured Deposit, based on the Murabaha contract called “Fawrun”, allowing customers to receive their due profit upfront upon deposit placement instead of waiting until the maturity date. This was followed by the integration of Treasury and Financial Institutions Shari’a- compliant financial services and solutions.
Overall, throughout the years it is evident that RAKislamic is constantly improving and ultimately aiming to offer a wide range of Shari’a-compliant products, services and solutions spanning across the Bank’s verticals from Personal Banking, Bancassurance (Takaful) and Business Banking to Wholesale Banking as well as Treasury, and the most recent Financial Institutions Group.
RAKBANK, and of course as a result of this, RAKislamic has developed itself as a specialist in the provision of SME Financing. Admittedly, many banks shy away from this segment of the market because it is a difficult area. What made you focus on SME Financing?
Many banks and financial institutions have shied away from the SMEs sector after they performed poorly in 2015 and 2016. However, SMEs are a part of RAKBANK’s DNA and this is why we are considered the leading SME bank in the country. Our whole approach at RAKBANK was to stick with the existing SME business, but change the way we lend to SMEs and focus on reducing the associated risk element. This also translated into our RAKislamic portfolio of Shari’a-compliant products and services that were introduced to cater directly to our SME customer base.
This strategy and approach have been very successful and to be very frank we’ve probably benefited from the fact that a number of other banks exited the space, which has allowed us to operate within a set of parameters that we are more comfortable with. Additionally, this led to the recent award received that named RAKislamic the Best SME Bank in UAE by the Islamic Business and Finance magazine.
“The beautiful thing about learning and knowledge is that it cannot stop unless you want it to. I believe that one must continuously evolve and find a purpose to move forward, whether it involves banking or something else.”
RAKBANK and RAKislamic have developed an impressive digital banking platform. Needless to say, that adoption of technology has huge cost implications for any bank. Do you think that the commitment to adopting state-of-the-art technology has helped the bank in winning more business?
Technology is becoming the main focus of the banking sector, especially at RAKBANK. We understand the importance of operating efficiently, effectively and seamlessly and the influence it has on how we are perceived by our customers and the market as a whole.
Innovation is at the forefront of our Bank’s strategy and our focus has been to support and implement new technology initiatives and/or transform existing ones, in order to serve our customers through smart applications that save time and require minimal paperwork.
Furthermore, in the case of fintech, we’ve partnered up with a number of companies. Our approach is to work with different fintech companies and various other parties as and when we see value in doing so. We are also in touch with international players in different advanced markets to explore and adopt new and innovative practices that can help us reach our targets.
A related question is about the effect of technology on the growth of Islamic banking and finance. In your view, how has technology helped you, as Director of RAKislamic, to win more business for the Islamic franchise of RAKBANK? Technology has helped us to understand our customers and the market. This has allowed us to come up with new services and value-added products offered through multiple channels. Through our partnership with fintech companies, we were able to attract a large segment of personal and business banking customers who prefer technology-based banking over traditional banking, while still enjoying our Shari’a-compliant product suite. This holds especially true with millennials, thus expanding our customer base who seek convenience and instant Shari’a-compliant financial solutions via our apps and digital solutions.
RAKBANK reported nearly 25% year-on-year growth in net profits by the end of 2019. How much did RAKislamic contribute to this growth? How much value did the top management at the Group level attach to the Islamic business?
Back in 2017, RAKBANK adopted a bank-wide diversification strategy focusing on the portfolio that was also implemented in the Islamic banking window. The emphasis shifted from Islamic cards and auto finance to become a full-fledged Islamic finance service provider, covering a full spectrum that ranges from Islamic cards, mortgages, all the way to SME business finance and trade finance solutions. Our diversification strategy proved to be successful and RAKislamic contributed significantly to the overall year-on-year profit growth.
Furthermore, our focus this past year for RAKislamic has been to finance leading industries that are vital to the Islamic economy such as the halal food industry, family-friendly tourism, digital economy, fashion, arts and design, economic education, and lastly implement industry standards and attain certifications.
The UAE is a very dynamic banking and financial market, with a number of mergers and acquisitions in the recent past. With the ever-changing banking landscape in the country, how does RAKislamic aim to maintain its distinct value proposition to remain competitive?
The recent mergers occurring amongst Islamic banks have created some giants, but what RAKBANK offers is agility. We may not be the largest Islamic banking provider, however, our Shari’a-compliant solutions span across all of the Bank’s six verticals from Personal Banking, Business Banking, Insurance (Takaful), Treasury, Wholesale Banking and the recently set up Financial Institutions Group.
Our approach is to develop Islamic banking products and services at the same pace as RAKBANK’s conventional ones, including access to seamless digital banking solutions and platforms.
On a personal level, how did you get attracted to Islamic banking? Was it a deliberate choice or circumstances led you to become an Islamic banker?
Islamic banking was created to supply banking solutions and financing for customers who seek Shari’a-compliant banking. Personally, it was a faith-driven decision and I continuously strive to increase my knowledge base in Shari’a financing and aspire Insha’ Allah to attain knowledge and wisdom to become a Shari’a scholar. Knowing the ins and outs of Shari’a financing will help me achieve my goals on a personal level and also help built a strong foundation to make sound decisions that will help RAKislamic constantly improve within this ever-changing sector.
In your experience and observation, is it more difficult for an Islamic banker to work in an Islamic banking window of a conventional bank rather than working for a fully-fledged Islamic bank?
It has its challenges but it is not an impossible task. These challenges motivate us to utilise every resources available to promote Islamic finance across our wide customer base. RAKislamic is one of RAKBANK’s diverse solutions that directly caters to a range of customers from different beliefs and backgrounds who ultimately seek access to a suite of Shari’a-compliant products and services that will support them in carrying out their day-to-day banking activities and help achieve their financial goals.
A number of personalities must have influenced you throughout your career. Whom amongst them you would consider as your greatest mentor or inspiration?
First and foremost is HH Sheikh Zayed bin Sultan Al Nahyan (may his soul rest in peace). I am honoured to continue supporting his vision in developing a thriving economy in the UAE. Secondly, HH Sheikh Saud bin Saqr al Qasimi, Ruler of Ras Al Khaimah and member of the Supreme Council, and of course, HH Sheikh Mohammed Bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai.
They have inspired me with their dedication to constantly find ways to make our country more diverse, successful and renowned worldwide as a tourist and business destination. Lastly, Elon Musk who marches tirelessly towards creating new innovative ideas and technologies, and his ability to envision a modern world that is yet to exist. His ideas, launches and initiatives focus on building a better and more energy-efficient world.
What would be your advice to the younger generation of Islamic bankers?
The beautiful thing about learning and knowledge is that it cannot stop unless you want it to. I believe that one must continuously evolve and find a purpose to move forward, whether it involves banking or something else. Facing challenges helps create resilience, and as long as they are passionate and dedicated they will achieve their career goals within the Islamic financing world.
Personally, my passion for Islamic banking and the efforts to promote its ethical financing solutions drives me to press forward at all times, because I believe in it wholeheartedly. I also want to play a role in the developments and advancements that are happening in the Islamic banking world.
What is the future of Islamic banking and finance in the UAE and worldwide?
Islamic banking and finance is a growing industry that is continuously evolving with the help of progressive Shari’a scholars guided by Islamic economics. There are ongoing efforts in the UAE to achieve HH Sheikh Mohammed bin Rashid Al Maktoum’s (Prime Minister of the UAE) vision of transforming Dubai into a capital for Islamic banking with the establishment of the Higher Sharia Authority to regulate the industry as well as the adoption of the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) as a standard for Islamic finance.
At RAKBANK we are constantly striving to keep up to date with the international and regional developments and best practices that are changing at an extremely rapid pace within the Islamic finance space.
