Dubai Masterclass: Digital Transformation and the Future of Islamic Finance

Blockchain, digital transformation, client-centricity – these are all themes that business leaders are familiar with. But how do they impact the Islamic Finance sector? And what can leaders and decision-makers do to bring value and offer solutions to teams who are embracing innovation and undergoing change?

These are some of the questions that senior executives from the banking, insurance and financial services sectors had a chance to discuss during an exclusive Headspring Masterclass designed for decision makers in the Islamic Finance industry.  Hosted in Dubai on Tuesday, 16 April, in partnership with the DIFC, the event focused on the importance of leadership and people development in a sector that is being revolutionised by FinTech, machine learning, blockchain and artificial intelligence.

Bringing the insights of Professor Joe DiVanna, one of the world’s leading experts in Islamic Finance, as well as journalists and the CEO of one of the leading local Islamic insurance companies, the event provided a unique perspective and a wider context on the trends that are transforming financial institutions in the Middle East. As the first Headspring Masterclass in the Middle East, the event attracted executives from some of the regions best established organisations such as First Abu Dhabi Bank, Noor Bank, Habib Bank as well as global banks such as Standard Chartered and HSBC.

Some of the key topics discussed included:

• Islamic economic thought incorporating Shariah-principles and the evolution of Islamic finance are entrenched in Islamic ethics, but their ideals and means are not exclusive to Islam.
• For many consumers (Muslim and non-Muslim) Islamic Finance is not well understood. Loans, savings and investments products are often opaque when compared to conventional finance containing additional costs and associated fees. Historically these factors have limited the appeal of Islamic Finance in many markets because the value proposition has not been articulated in a clear and concise manner.
• The market for Islamic finance is undergoing a transition from its early stage (where Islamic products simply replicated conventional products) to new innovations that more accurately reflect emerging Muslim lifestyles. With less than 50% of the global Muslim population having access to Islamic finance the growth potential for this market has yet to be realized.
• The impact of technological advances, social preferences couple with the development of financial infrastructure will drastically change how Islamic financial services are delivered to customers.
• Numerous changes are occurring in the delivery of Islamic Finance that will directly impact the nature of how people incorporate its use into their daily financial activities.

The event also had a live intervention by Martin Arnold, Deputy Companies Editor at the FT, who joined from the FT studios in London. Some of the key insights from his session includes:

• While global banks are still trying to recover from the reputational damage generated by the last financial crisis, the industry is facing the challenge of keeping up with digital disruption.
• Technology players are now moving to the financial services industry – this is a particularly important trend in China where companies such as Alibaba and WeChat have built huge financial services balance sheets and assets, with a large client base.
• These trends raise an inevitable question: does the average consumer really need a traditional bank?
• Banks are looking at ways to become leaner and more effective. One of the ways to achieve that goal is by adopting technologies such as machine learning and AI to automate processes, especially data-handling and customer service.
• To survive, banks should not lose the relationship they have with their customers. Client-centricity will be key.
• FinTechs may have the best technology, but banks still have the customers. One way for banks to remain competitive is by collaborating with FinTech start-ups or, in some cases, create their own start-ups within their own internal ecosystem.

Digital Transformation – one of our areas of expertise

For many businesses, digital transformation is a leap into the unknown. Whether change is incremental or disruptive, at Headspring we believe it is your people not your technology that matters most. We understand these challenges and have worked with organisations in the Middle East to help them embrace a new mindset.

Our custom programmes on digital transformation can help your business to adopt a digital-first mindset, optimise user interfaces, turn offline process into digital workflows and transform happy customers into online brand ambassadors.

Global organisations today face real, complex challenges that can’t be solved by generic solutions.  That’s why we fully embrace co-creation and customisation as the foundation of our work. Customisation is present in absolutely everything we do.

Visit our regional hub for more insights on Headspring’s presence in the Middle East & Africa markets.