International Conference on Islamic Microfinance in Mauritius

Organized By :

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CENTER OF ISLAMIC BANKING & ECNOMICS

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Islamic Financial Operations from an IT Perspective

Stephanie Hayek Corporate Communications Manager, Path Solutions

Agenda

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

Islamic Finance Main Features

High growth:

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- 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

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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

Islamic 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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Islamic Finance Main Features

Is Sharia compliance the only driver of competiveness?

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The main drive for IFIs is Sharia compliance BUT IFIs 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

New Trends in Islamic Finance

2011
And to grow at a 10.9% compound annual growth rate

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

(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.

An IT Solution for Islamic Banking

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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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Who We Are

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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

Vision

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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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iMAL
Complete Integrated Solution

Solution 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

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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

Why Path Solutions?

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Industry expertise - No learning curve Industry evolvement commitment Quick time to market products Fully integrated modularized solution User-autonomy solution capability Path's commitment to continuous R&D Customization / Interfacing Swift implementation - Model bank Complete system & project documentation UMG, WP, others Training / Transfer of knowledge

iMAL Compliance

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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

Selected Client List

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National Investment Company

Awards & Accolades

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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.com Web: www.alhudacibe.com