The Islamic banking industry in the Kingdom of Saudi Arabia (KSA) is set to achieve $683 billion of Shariah-compliant assets by 2019, according to EY’s World Islamic Banking Competitiveness report.
KSA has been a key market for growth in the Islamic banking industry. The first Islamic bank with equity in excess of $10 billion is headquartered in KSA. A strong demand from customers, both retail and corporate, has led to significant growth in Islamic banking in KSA resulting in 54% of all financing being Shariah-compliant in 2013. Overall, the size of Islamic banking assets in KSA has nearly doubled from 2009-2013.
Ashar Nazim, Global Islamic Finance Leader at EY, said: “The Islamic banking industry is preparing to go mainstream globally. KSA is the largest Islamic banking market in the world, representing 31.7% of the global market share. The country has been a pioneer in the Islamic banking industry and we expect it to continue being a driving market for the industry, as Malaysia, Turkey and Indonesia also establish themselves as populous Islamic banking centers.”
Branch experience got the highest in terms of customer satisfaction, the EY report noted.
In the study, EY monitored 567,071 Islamic banking customer sentiments in KSA on social media as part of a wider study, which looked at 2.2 million customer sentiments dispersed across various online sources in nine key markets (KSA, Bahrain, Kuwait, the UAE, Malaysia, Indonesia, Turkey, Qatar and Oman).
Out of the sentiments analyzed in KSA, one in three of the positive sentiments were about branch experience, indicating that customers were generally satisfied in this area of service.
“The experience however varies by banks and types of customers. The younger customers are openly challenging the status quo and asking for more digital solutions,” said Muzammil Kasbati, Director, Global Islamic Banking Center of Excellence, EY.
While online and mobile banking services has taken off well in Saudi Arabia, its sustainability remains a cause of concern, the report noted.
“The retail banking proposition of several banks was found struggling between the legacy people culture and the tech-savvy business model required to win new customers. Islamic retail proposition of conventional and Islamic banks still appears to be operating in silos, which unfortunately hampers their customer satisfaction ratings,” said Muzammil.
“Saudi retail banking customers like the fact that some banks are investing to improve the branch experience. There appears to be a healthy take-up of digital banking on offer, and there is anticipation for more. Islamic banks will need to increasingly shift their expenditure from running the bank to developing the bank. Learning from the customer’s journey can provide very important insight that can be applied in everyday operations. Digital adaptation will be vital when upgrading services,” Ashar noted.
(Albawaba Business / 27 April 2015)---
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