The Arab world of recent years is perhaps best characterised by crisis. However, quite apart from the issues that have befallen a number of nations, including Syria and Egypt, the area is home to some of the most impressive advances in the banking industry to date.
Islamic finance in particular is exhibiting impressive gains and looks on course to reach a $2trn milestone by year’s end, with 78 percent of that sum accounted for by Islamic banking. What is most extraordinary, however, is that the industry has been unaffected by the conflict and is actually on the upturn, and nowhere else can this better be seen than in Kuwait.
“This type of turmoil is giving the bank a level of appetite to go for certain risks they were not in the past taking,” says Mourad Mekhail, Board Advisor, Kuwait International Bank (KIB), which has negotiated on-going problems with an overriding focus on the client in these areas. “We created some innovative structures that mean we can accommodate the business of our clients, even in these countries that have this turmoil.
Islamic finance in particular is exhibiting impressive gains and looks on course to reach a $2trn milestone by year’s end
“We have the investment banking department, where international banking professionals are doing their utmost to accommodate the business of the clients by creating innovative structures to mitigate and eliminate such political – and also commercial – risk, related to doing business in these countries.” By-and-large, turmoil in the surrounding area has had little to no effect on Kuwait’s banking industry, owing to the sector’s core constituents, who have together shepherded the industry from strength-to-strength.
Expanding in a niche market
KIB, a stalwart of Kuwait’s Islamic banking sector since 2007, is highly representative of the capacity of those in the Islamic banking sector to bring about positive social and economic change, regardless of inopportune market conditions. “We are focusing on our niche,” says Mekhail. “We are establishing that, and building it based on our client needs.
“We listen to our clients, we know the market very well, and we are always maximising the penetration of the market. We are partnering globally, bringing the expertise, the know-how. We are bringing new products and new ideas and new business solutions to our clients.”
While the reasons for KIB’s success are many and various, the common thread here is client centricity, and it is only with a strong commitment in this space that sharia-compliant banks can reach a level of success on par or even close to that of KIB. “We know our clients very well – we listen exactly to what they need. We are prepared to offer all types of services that can be required in the markets in terms of international banking, using the services of our treasury, and in terms of using our retail banking network.”
An all-encompassing view
This focus on the individual is far from exclusive to the client, however, and also extends to employees and individuals in the communities in which the institution plays a part. “It’s very important here to say that really we rely on the teamwork and the spirit and cooperation of every employee in our bank,” says Mekhail.
In essence, the success of KIB and those in the Islamic banking industry is owed to a focus on the individual, which in itself constitutes a core component of sharia-compliant banking and represents a mentality that those in conventional banking should seek to emulate.
It remains to be seen to what extent client centricity will feature in the near future when put alongside Kuwait’s growing capital markets, increasingly stringent regulation and $130bn national development plan, however, institutions such as KIB look to remain essentially unchanged in this regard.
“The year has started very positively. This is confirming what we have as a major target, is being a market player and a market maker. Of course we will be continuing doing our homework and concentrating and focussing our market niche, concentrating and focussing on our client needs, and increasing the return on equity of our stakeholders.”
