01100110International Conference on

Islamic Microfinance in Mauritius

CENTER OF ISLAMIC BANKING & ECNOMICS

Organized By :

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Islamic Financial Operations from an IT Perspective

Stephanie Hayek

Corporate Communications Manager, Path Solutions

01100110Agenda

• Islamic Finance Main Features• New Trends in Islamic Finance• An IT Solution for Islamic Banking• Path Solutions in Brief

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• High growth: - Islamic financial services are nearing $1 trillion in managed assets- With about 700 IFIs spread throughout every region of the world

• Innovative instruments & evolving industry

• Different Sharia interpretations

• Different products & services

Islamic Finance Main Features

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Islamic banking services are offered through three types of governance structures:

• Full fledged Islamic banks• Islamic banking windows of conventional banks• Independent Islamic banking subsidiaries

What competitive edge do they provide?

• Provide Sharia-compliant products• Provide innovative products and superior services • Streamline operations in a single platform across the institution

Islamic Finance Main Features

01100110Islamic Finance Main Features

Islamic banking differs from conventional banking in terms of:

Products, such as

Equity-based Expected rate of return vs. interest deposits Investments vs. deposits Partnerships vs. financing

01100110Islamic Finance Main Features

Processes, such as: Workflow Trading Risk-profit participation

Fiscal implication, such as: Deferred income vs. accrual Profit payable vs. cost of fund

Documentation, such as: Contracts, correspondence & confirmations

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Is Sharia compliance the only driver of competiveness?

The main drive for IFIs is Sharia complianceBUTIFIs should not compromise on IT, which drives competitiveness

– Management of information is the main drive to maintain competitiveness

– Optimal use of customer data (KYC & relevant products matching)– Efficiently handling transactions volume – Comprehensive risk & liquidity management– Enabling product creativity and product mix– OLTP, STP, 24/7– Report & query rich

Islamic Finance Main Features

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Islamic finance is different from conventional banking

The business is different The product is different The process is different The mechanism is different The financial and fiscal implications are different

The IT solution should be different

Islamic Finance Main Features

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IT is the tool to increase market share

IT is now permeating every conceivable aspect of the bank’s business and is often the tool of choice for improving:

• Product innovation• Customer satisfaction• Hence, increasing market share

Islamic Finance Main Features

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• The Islamic banking system (IBS) market is predicted to be a $1.2 billion market in 2011

• And to grow at a 10.9% compound annual growth rate (CAGR) between 2009 and 2014

• The IBS market is expected to reach $1.6 billion in 2014

• The number of conventional banks that will open Islamic windows is increasing, especially in Western countries, as a consequence of new legislation taking place

• Although this change will concern mainly the Islamic bond (Sukuk) market

• An increasing standardization process for compliance with the Sharia is taking place

• The replacement process of in-house software with commercial off-the-shelf (COTS) systems is accelerating, especially in mature markets such as the Middle Eastern countries.

New Trends in Islamic Finance

01100110An IT Solution for Islamic Banking

Knowing that partnership is the pivot of Islamic finance:In conventional, a loan is a loan and partnership is very risky. Where Islamic finance understands the risk and the related system accounts for it.

An enterprise component based solution should:

– Be built on the basis of Sharia rules & regulations– Cover the sources of funds, such as RIAs and URIAs– Cover the uses of funds, such as Murabaha, Ijara, Musharaka, etc.– Manage the linkage between the sources and the uses of funds– Produce industry-related financial implication, legal

documentation & confirmations– Support Sharia Audit procedures – Enable Zakat, tax and VAT computations

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01100110Who We Are

– Path Solutions is a Kuwaiti shareholding company with head office in Kuwait

– Founded in November 1992 – Beirut development center October 2000– Manama support office October 2003– London support office February 2007– Kuala Lumpur support office September 2007– Karachi support office April 2009– Riyadh support office August 2009– Jakarta support office November 2009– Khartoum support office December 2009– Dubai sales office May 2010– Singapore support office June 2010– Cairo office June 2010

01100110Vision

To be the most trusted and innovative provider of information technology solutions and services for the global financial industry & in specific the Islamic financial industry

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iMALComplete Integrated Solution

01100110Solution Architecture

Scalable system

Platform independent

Open systems architecture

Relational database

True 24x7 operation

On-line transaction processing

Store & Forward

Object oriented development

Client server environment

Thin client architecture

Web enabled solution

Client centric - 360 view/processing

Built-in electronic workflow

Multi-lingual

Multi companies

Multi branches

Multi profit / cost centers

Multi currencies

Financial positions and reporting

Modular / Fully integrated system

Single version

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Industry expertise - No learning curve Industry evolvement commitmentQuick time to market productsFully integrated modularized solutionUser-autonomy solution capabilityPath's commitment to continuous R&DCustomization / Interfacing Swift implementation - Model bankComplete system & project documentation – UMG, WP, othersTraining / Transfer of knowledge

Why Path Solutions?

01100110iMAL Compliance

• AAOIFI-certified since November 2008: The AAOIFI certification covers all iMAL modules, business processes, contracts, accounting treatments, implications and behavior

• IFSB compliant• IAS compliant• Basel II compliant

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National Investment Company

Selected Client List

01100110Awards & Accolades • In December 2010, Path Solutions was chosen as the ‘Best Islamic Software Provider of the Year’ by Lebanon-based

Capital Issues of Data & Investment Consult group.• Path Solutions has been adjudged for the third consecutive year “Best Islamic Technology Provider” in the 2010 Islamic

Finance News Poll conducted by REDmoney.• On August 3rd, 2010, Path Solutions picked up KLIFF Award for “Most Outstanding IT Company for Islamic Finance”. • iMAL is the 1st Banking Software to be certified by AAOIFI (Accounting and Auditing Organization for Islamic Financial

Institutions).• May 2010: “Sheikh Mohammed Bin Rashid Al Maktoum Award” for Best IT Solutions Provider to the Islamic Finance

Industry.• March 2010: For the third consecutive year, Path Solutions ranked Nb. 1 Best Selling Islamic Software Provider and World’s

5th Universal Banking Solutions Provider in IBS Sales League Table for 2009. • January 2010: Path Solutions adjudged “Best Islamic Technology Provider” in the 2009 IFN Awards Poll conducted by

REDmoney. • March 2009: For the second consecutive year, Path Solutions ranked Number One in the Islamic Banking Segment and

amongst World’s Top 5th Banking Solutions’ Providers in the recent IBS Sales League Table 2008 Report. • January 2009: “Best Technology Provider for 2008” in the Fourth Islamic Finance News Poll conducted by REDmoney• December 2008: “Best IT Solutions Development Firm” for the Year 2008 by Lebanon-based Capital Issues of Data &

Investment Consult group.• November 2008: “Most Outstanding IT Company Award” at the KLIFF Islamic Finance Awards 2008.• October 2008: “Best Banking Software Firm” at the Capital Issues Financial Award for this category.• April 2008: “Sheikh Mohammed Bin Rashid Al Maktoum Award” for Path Solutions’ Global Continuing Contribution to

Islamic Finance in IT.• March 2008: iMAL ranked “Number One Islamic Banking Solution” and the 4th Best Universal Banking Solution in IBS

2007 Annual Sales League Table.• December 2007: iMAL recognized as the “Best Islamic Finance Technology” for 2007 at the Islamic Business & Finance

Awards Ceremony.• 2006: “Best Islamic Finance Technology Firm” by Islamic Finance News, in the Best Islamic Banks Poll 2006 organized by

REDmoney.• 2006: Award Winner of “Sheikh Mohammed Bin Rashid Al Maktoum Islamic Finance Awards” for Global Continuing

Contribution to Islamic Finance in IT.• 2005: Best Selling True Islamic Banking Software Provider by the International Banking Systems.

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THANK YOU

www.path-solutions.com

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CENTER OF ISLAMIC BANKING & ECNOMICS

Head Office: 192- Ahmad Block, New Garden Town , Lahore, Pakistan 

Ph: +92-42-35913096-8, 35858990, 38407850 Fax: +92 -42-35913056

E-mail : info@alhudacibe.comWeb: www.alhudacibe.com