The global Islamic banking industry has been on the digital transformation route since the Fourth Industrial Revolution began in earnest almost a decade ago, but the COVID-19 pandemic, the impact of which was felt by all industries across the globe since the beginning of 2020, has certainly accelerated the process.
In a podcast interview with IFN, Mohammed Kateeb, the group chairman and CEO of Path Solutions, noted how it has taken the slow-moving financial industry in general by storm, allowing fintech start-ups to come in and start competing with the banks by providing specific services with more efficiency and better interfaces and technology.
“Generally, both the Islamic and conventional financial industries are in the same boat when it comes to the challenges that come with digital transformation,” Mohammed explained.
For instance, younger and smaller banks did not have the infrastructure or readiness to meet digitalization head-on, and with the pandemic spurring the need for a seemingly overnight change, they have had to speed up the process, along with keeping up with updated regulations as issued by the authorities in relation to digitalization.
But for the Shariah banking sector in specific, a key challenge came when regulators required financial institutions to implement moratoriums and delays to help customers with payments.
“It was very easy for conventional institutions to make simple calculations and adjust interest rates, but for Islamic contracts, some of them had to be redone in full. Islamic finance structuring is much more complex, and adjustments make them more challenging,” Mohammed said.
To address these challenges, Path Solutions has a suite of products that supports Islamic banks. “Path Digital focuses on their digital transformation, particularly in removing any manual work that could be digitized, and Path Intelligence helps them become a data-driven organization, using the data they have collected all these years more strategically, and applying artificial intelligence and analytics to make better decisions,” Mohammed explained further.
This is an excerpt from an exclusive IFN interview with Mohammed Kateeb, the group chairman and CEO of Path Solutions, on the global Islamic banking industry’s digital transformation. For the full discussion, log on to IFN Podcast.