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International Conference on Islamic Banking & Finance in Mauritius
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01100110International Conference on
Islamic Microfinance in Mauritius
CENTER OF ISLAMIC BANKING & ECNOMICS
Organized By :
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010000100
Islamic Financial Operations from an IT Perspective
Stephanie Hayek
Corporate Communications Manager, Path Solutions
01100110Agenda
• Islamic Finance Main Features• New Trends in Islamic Finance• An IT Solution for Islamic Banking• Path Solutions in Brief
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• High growth: - Islamic financial services are nearing $1 trillion in managed assets- With about 700 IFIs spread throughout every region of the world
• Innovative instruments & evolving industry
• Different Sharia interpretations
• Different products & services
Islamic Finance Main Features
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Islamic banking services are offered through three types of governance structures:
• Full fledged Islamic banks• Islamic banking windows of conventional banks• Independent Islamic banking subsidiaries
What competitive edge do they provide?
• Provide Sharia-compliant products• Provide innovative products and superior services • Streamline operations in a single platform across the institution
Islamic Finance Main Features
01100110Islamic Finance Main Features
Islamic banking differs from conventional banking in terms of:
Products, such as
Equity-based Expected rate of return vs. interest deposits Investments vs. deposits Partnerships vs. financing
01100110Islamic Finance Main Features
Processes, such as: Workflow Trading Risk-profit participation
Fiscal implication, such as: Deferred income vs. accrual Profit payable vs. cost of fund
Documentation, such as: Contracts, correspondence & confirmations
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Is Sharia compliance the only driver of competiveness?
The main drive for IFIs is Sharia complianceBUTIFIs should not compromise on IT, which drives competitiveness
– Management of information is the main drive to maintain competitiveness
– Optimal use of customer data (KYC & relevant products matching)– Efficiently handling transactions volume – Comprehensive risk & liquidity management– Enabling product creativity and product mix– OLTP, STP, 24/7– Report & query rich
Islamic Finance Main Features
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Islamic finance is different from conventional banking
The business is different The product is different The process is different The mechanism is different The financial and fiscal implications are different
The IT solution should be different
Islamic Finance Main Features
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IT is the tool to increase market share
IT is now permeating every conceivable aspect of the bank’s business and is often the tool of choice for improving:
• Product innovation• Customer satisfaction• Hence, increasing market share
Islamic Finance Main Features
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• The Islamic banking system (IBS) market is predicted to be a $1.2 billion market in 2011
• And to grow at a 10.9% compound annual growth rate (CAGR) between 2009 and 2014
• The IBS market is expected to reach $1.6 billion in 2014
• The number of conventional banks that will open Islamic windows is increasing, especially in Western countries, as a consequence of new legislation taking place
• Although this change will concern mainly the Islamic bond (Sukuk) market
• An increasing standardization process for compliance with the Sharia is taking place
• The replacement process of in-house software with commercial off-the-shelf (COTS) systems is accelerating, especially in mature markets such as the Middle Eastern countries.
New Trends in Islamic Finance
01100110An IT Solution for Islamic Banking
Knowing that partnership is the pivot of Islamic finance:In conventional, a loan is a loan and partnership is very risky. Where Islamic finance understands the risk and the related system accounts for it.
An enterprise component based solution should:
– Be built on the basis of Sharia rules & regulations– Cover the sources of funds, such as RIAs and URIAs– Cover the uses of funds, such as Murabaha, Ijara, Musharaka, etc.– Manage the linkage between the sources and the uses of funds– Produce industry-related financial implication, legal
documentation & confirmations– Support Sharia Audit procedures – Enable Zakat, tax and VAT computations
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01100110Who We Are
– Path Solutions is a Kuwaiti shareholding company with head office in Kuwait
– Founded in November 1992 – Beirut development center October 2000– Manama support office October 2003– London support office February 2007– Kuala Lumpur support office September 2007– Karachi support office April 2009– Riyadh support office August 2009– Jakarta support office November 2009– Khartoum support office December 2009– Dubai sales office May 2010– Singapore support office June 2010– Cairo office June 2010
01100110Vision
To be the most trusted and innovative provider of information technology solutions and services for the global financial industry & in specific the Islamic financial industry
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iMALComplete Integrated Solution
01100110Solution Architecture
Scalable system
Platform independent
Open systems architecture
Relational database
True 24x7 operation
On-line transaction processing
Store & Forward
Object oriented development
Client server environment
Thin client architecture
Web enabled solution
Client centric - 360 view/processing
Built-in electronic workflow
Multi-lingual
Multi companies
Multi branches
Multi profit / cost centers
Multi currencies
Financial positions and reporting
Modular / Fully integrated system
Single version
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Industry expertise - No learning curve Industry evolvement commitmentQuick time to market productsFully integrated modularized solutionUser-autonomy solution capabilityPath's commitment to continuous R&DCustomization / Interfacing Swift implementation - Model bankComplete system & project documentation – UMG, WP, othersTraining / Transfer of knowledge
Why Path Solutions?
01100110iMAL Compliance
• AAOIFI-certified since November 2008: The AAOIFI certification covers all iMAL modules, business processes, contracts, accounting treatments, implications and behavior
• IFSB compliant• IAS compliant• Basel II compliant
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National Investment Company
Selected Client List
01100110Awards & Accolades • In December 2010, Path Solutions was chosen as the ‘Best Islamic Software Provider of the Year’ by Lebanon-based
Capital Issues of Data & Investment Consult group.• Path Solutions has been adjudged for the third consecutive year “Best Islamic Technology Provider” in the 2010 Islamic
Finance News Poll conducted by REDmoney.• On August 3rd, 2010, Path Solutions picked up KLIFF Award for “Most Outstanding IT Company for Islamic Finance”. • iMAL is the 1st Banking Software to be certified by AAOIFI (Accounting and Auditing Organization for Islamic Financial
Institutions).• May 2010: “Sheikh Mohammed Bin Rashid Al Maktoum Award” for Best IT Solutions Provider to the Islamic Finance
Industry.• March 2010: For the third consecutive year, Path Solutions ranked Nb. 1 Best Selling Islamic Software Provider and World’s
5th Universal Banking Solutions Provider in IBS Sales League Table for 2009. • January 2010: Path Solutions adjudged “Best Islamic Technology Provider” in the 2009 IFN Awards Poll conducted by
REDmoney. • March 2009: For the second consecutive year, Path Solutions ranked Number One in the Islamic Banking Segment and
amongst World’s Top 5th Banking Solutions’ Providers in the recent IBS Sales League Table 2008 Report. • January 2009: “Best Technology Provider for 2008” in the Fourth Islamic Finance News Poll conducted by REDmoney• December 2008: “Best IT Solutions Development Firm” for the Year 2008 by Lebanon-based Capital Issues of Data &
Investment Consult group.• November 2008: “Most Outstanding IT Company Award” at the KLIFF Islamic Finance Awards 2008.• October 2008: “Best Banking Software Firm” at the Capital Issues Financial Award for this category.• April 2008: “Sheikh Mohammed Bin Rashid Al Maktoum Award” for Path Solutions’ Global Continuing Contribution to
Islamic Finance in IT.• March 2008: iMAL ranked “Number One Islamic Banking Solution” and the 4th Best Universal Banking Solution in IBS
2007 Annual Sales League Table.• December 2007: iMAL recognized as the “Best Islamic Finance Technology” for 2007 at the Islamic Business & Finance
Awards Ceremony.• 2006: “Best Islamic Finance Technology Firm” by Islamic Finance News, in the Best Islamic Banks Poll 2006 organized by
REDmoney.• 2006: Award Winner of “Sheikh Mohammed Bin Rashid Al Maktoum Islamic Finance Awards” for Global Continuing
Contribution to Islamic Finance in IT.• 2005: Best Selling True Islamic Banking Software Provider by the International Banking Systems.
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THANK YOU
www.path-solutions.com
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CENTER OF ISLAMIC BANKING & ECNOMICS
Head Office: 192- Ahmad Block, New Garden Town , Lahore, Pakistan
Ph: +92-42-35913096-8, 35858990, 38407850 Fax: +92 -42-35913056
E-mail : [email protected]: www.alhudacibe.com