Al Maktoum International Airport expansion boosts real estate demand in Dubai South in the long term
The Dubai South region is still untouched and offers attractive investment opportunities
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At an Islamic award ceremony and ensuing Press release, the CEO of an Islamic financial institution usually thanks his staff and employees, and typically says, “... without our hard working employees none of these achievements is possible...” These are not hallow words, as he ‘flies or falls’ based upon staff meeting their KPIs down the chain of command to the clerk in the mailroom and the janitor.
The beating heart of an Islamic bank is actually the treasury and its uniquely qualified people. Treasury, at one time, was about liquidity management, and now has become a profit centre for banks. The challenge for Islamic finance treasury is there are not many options, vis-a-vis, conventional treasury on liquidity management, hence, their important contribution adds to not only the bottom line, but also the bonus!
In launching the pricing benchmark for Islamic Interbank Benchmark Rate (IIBOR), compliant alternative to Libor, Thomson Reuters showed the implicit importance of treasury and credit pricing reference rate to the banking and financing world.
These folks are really the unsung heroes, as they cannot hide behind an office, cubicle or desk when things like compliant credit cards not working, delays in personal loan or customer service leads to hang-ups.
The ultimate front liner is the bank teller. He/she needs to be a combination of an accountant and fireman(woman). They have to keep the line moving, make sure slips are properly filled out and signed, explain financial statements (including to the expatriate low income with linguistic challenges), including discrepancies while smiling.
Then there are the sales people meeting targets in selling, say, various third party funds, often white labelled as banks own. The issue of Islamic banks raising money locally (as have community confidence) and exporting to managers (value add) in other countries is a topic for another day.
The challenge arises when the fund loses money, and having to explain the loss to irate investors who believed, because it was Islamic, there would not be losses. It should not be assumed that such investors read or understand the fine print disclaimer (requiring a comprehension of a professional) buried in the prospectus.
The people working in Islamic private banking, some call it Royal Banking, must have the toughest jobs, as high net worth people are more demanding and less tolerant on mistakes and negative market movements. The escape goat is usually the relationship manager when things do not follow the game plan.
There must be a super-honourable mention of human resource, as they provide the ‘fit for purpose’ staffing and continuous updating. This is the team surrounding the CEO: from senior leadership team (SLT) to sales people to administrative staff, including the very important personal and executive assistants. Finally, choosing the right vendors for IT platforms for measuring and monitoring staff KPIs.
Finally, the collections department, if it’s not outsourced. The collection call and chase on defaulting party on financing, say, an Islamic mortgage. It must be extremely challenging (PR nightmare) for an Islamic bank to start foreclosure proceedings against a local/national (Muslim) for defaulted Islamic mortgage. This was one of the challenges in Saudi Arabia with the delay in the mortgage laws.
Islamic banks operate in a data eco-system, hence, require much content, whether its news, pricing of instrument and commodities, indexes, sukuk or fund prospectus, etc, and not many know that it requires army of dedicated people to make it look seamless and keep it updated.
Companies like Thomson Reuters, Bloomberg, Zawya, etc, are the data backbones for Islamic finance. For example, we, at Thomson Reuters, are extremely proud of the content build out by our dedicated Islamic finance team in Bahrain. These dedicated young people are working hard and smart to make Islamic finance conventionally efficient for information intermediation in the cross sell of this niche market (led by eco-data).
Finally, the journalists covering Islamic finance, they deserve a round of applause for their stories, as getting access to senior executives to answer tough questions is not easy.
The writer is Global Head of Islamic Finance & OIC Countries for Thomson Reuters. Views expressed by the author are his own and do not reflect the newspaper’s policy
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