Session 1:
Strategy Statement:
In five years to be the number one Islamic bank in the Middle east region in terms of business, service and profitability by providing customer centric end to end products and services with long term relationship strategy.
Critically analyse the statement:
Area | Opportunities | Threats |
Economy: Middle east market is growing on quarter to quarter basis. Banking and service sector has shown a growth of 2% on an average over last three year.
- Global Islamic banking assets witnessed a compounded annual growth rate (CAGR) of around 17% from 2009 to 2013.
- Sharia compliant asset crossed US$ 100 billion.
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| - Introduction of Sharia complaints products and services in the field of share financing and SME sector (enterprise finance sector)
- Mortgage sector for UAE nationals being supported by the Govt.
- Room of diversification of offering product and service as long term strategy of the emirates is to support various industry / sectors as part of growth plan.
- GBP growth rate is expected to 5% on an average over the period of next five years. Financial services contributes 12-15% in GDP of the country and it is growing by 2.5% on an average every year.
- Major international events are to be organized in the region e.q. world expo 2020, motor shows etc.
- Customers are increasingly active online and vocal about their experiences.
- As per the EY report; 4 out of every 10 Participation banks are not “listening.”
- For the first time in history in 2013, the combined profit of Participation banks crossed the US$10b mark. By 2019, collective profits would touch US$37b as the industry continues its double-digit annual growth. Migration from physical to digital channels requires more attention. Half of the banks surveyed did not have a Twitter account and only 1 in 18 banks offered full customer engagement on social media.
| - Expatriates contributes 80% of total population in the region. SME and enterprise lending market is emerging.
- Political regional issues i.e. relationship of gulf countries with Iran.
- Regulations and policies are weak which possess threat to have a level playing field for the financial organizations and to play a responsible role in maintaining the
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Market (Islamic banking) | There are a total of 9 Islamic banks offering sharia compliant products. The market leader is Dubai Islamic Bank. |
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Competition | Major competition is with Dubai Islamic Bank which holds 35% in pie. Major strengths of the competition are (as a whole) - Largest branch network
- Efficiency in digitalization of acquisition channels and services.
- Effective outsourcing strategy to bring in economy of scale and better control.
- Robust / highly customized core banking system i.e. single platform for acquisition and back end activities.
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Core Competence | |
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Short term goals | - Increase 18 branches
- Centralized core operations and synergizing
- Selling of dead retail portfolio to 3rd parties.
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Long term strategy | - Outsource core functions of the retail banking e.g. underwriting, field verifications, collections and customer services for better control.
- Implementation of Core banking software for all products and services.
- Achieve 40% net growth in profit for retail banking division by 2020 e.g. 2.4 billion AED.
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