The Eurozone crisis, combined with public anger over the excesses of conventional banks, has presented Islamic banks with a golden opportunity to take a greater share of the world’s banking industry, according to Hussain AlQemzi, GCEO of Noor Investment Group and CEO of Noor Islamic Bank (NIB).
Speaking at the World Islamic Banking Conference Asia Summit, in Singapore, AlQemzi said Islamic banking has the potential to overtake conventional banking, and establish itself as the world’s preferred banking system. However, to do so, he said, Islamic banking must offer a real alternative to the conventional banks.
“The world is crying out for a better, more ethical way of doing business. Now is the time to position our industry as a global alternative financial system; one which can safeguard against the excesses and perceived greed of conventional banks and bankers,” Al Qemzi told delegates.
“But it is simply not enough to say to people that Islamic finance offers a better way of banking. Nor should our appeal be just to Muslims. We need to offer a real alternative to both Muslims and non-Muslims.”
“At present the differentiation between Islamic and conventional banking isn’t very visible. A major contributor to this perception is the fact that the Islamic finance industry has been slow to move beyond replicating products and services offered by conventional banks,” Al Qemzi added.
“For the Islamic finance industry to reach its full potential, there needs to be a greater diversity of products and services. But where are these new products? We have to face up to one simple fact; the pace of innovation is too slow.”
In order to ensure an orderly evolution of Islamic finance from a niche segment into the mainstream international financial markets, Al Qemzi told delegates it is vital to further enhance the industry’s capabilities for cross-border activities, which in turn will encourage innovative product development, robust and standardised regulatory frameworks and the long term stability of the industry.
“What the industry lacks at the moment is the breadth and depth that investors enjoy in the conventional market. An inter-linkage between the key Islamic financial centres, especially the Gulf and South East Asia, will facilitate investor access to a wider range of Shari’a-compliant products beyond those available in domestic markets,” Al Qemzi said.
According to AlQemzi, the retreat of European banks from project financing, in the Middle East, opens the door to the region’s Islamic banks to provide the estimated $800 million that will be invested in GCC infrastructure projects over the next five years. But in order to take advantage of the opportunities that are emerging, Al Qemzi added, Islamic banks must co-operate more, and compete less, to build the scale necessary to drive the industry forward.