TBY talks to two bank executives on the prospects for Dubai as a hub for finance and the nature and adaptability of their offerings.
How viable is Dubai as a regional retail banking center for excellence?
FARHAD D. IRANI We have a fair amount of confidence in Dubai’s future as a financial and commercial hub. Mashreq has operations outside the UAE as well, and my team and I also look after our operations in Egypt and Qatar. We are slowly looking at our regional operations in India as well—we have offices all over the world on the institutional side, but on the retail side this is what we have. Dubai seems to be a natural center of economic activity and growth for the future. It has become an island of prosperity. It has become the place that is the benchmark for all of the nations and communities to aspire to. I think that with the establishment of the Dubai International Financial Centre (DIFC) and the creation of all of the investments and promotion is a reflection of a very forward-looking government. And coupled that with rule of law, safety, and security, and that it is a great place to live in terms of comfort, I think you get the picture. There are very few places in the world that reflect this kind of stability. Look at Singapore, for example. In the 1980s and 1990s Singapore grew as a consequence of unrest and uneasiness within its region surrounding. Around 35% of all Singapore banking assets are Indonesian owned, 40% of all property is Malaysian owned, and the Chinese have a major presence as well. It is the island of prosperity and stability in the region. Dubai runs a parallel path as well. Both of these markets and countries have benefitted from leadership that is forward looking and business oriented, and I think the results are here for us to see.
HUSSAIN AL QEMZI Dubai is already a logistical international hub with a huge port facility. This is a city that can clear 1,200 containers per hour. We supply and re-export to many nations around us, from companies on our border to East Africa. For example, Somalia has been relying on Dubai for years, and all of its shipments and goods have been coming from Dubai. We also reach Turkmenistan, the Kurdistan region of northern Iraq, and North Africa. This is an international hub that seeks to consolidate its services. The vision we have is to create a financial presence outside of the Emirate, but that has yet to happen. However, we have done a lot of business in Turkey. Although Noor Islamic Bank is predominantly a corporate, wholesale bank, our activities are determined by our banking partners. We work very closely with Turkish bankers and our relationship allows us to operate together. We have now completed transactions totaling over $2 billion in 18 months; we are raising funds for Turkish financial institutions, and we have many possibilities in the pipeline. This is what we have envisioned, and we aim to duplicate this activity in Southeast Asia or North Africa. This is where we see a lot of interest and potential to grow.
How was your bank affected by the global economic crisis?
FI We had to change mindsets in the organization, and remember that in the aftermath of the economic crisis, you can forgive a financial institution for being a little more conservative than otherwise. So we discovered that we had multiple checks with customers, multiple call-backs, and multiple form-filling endeavors. We eliminated 422 processes in six months. Records that were redundant, we just took out. We created a concept called first point resolution (FPR). My target FPR is 85%. The front-end service person getting a complaint from a customer should be able to resolve it there and then 85% of the time.
Is there a misconception that Islamic banks are heavily exposed to real estate investments and not as reliable as their conventional counterparts?
HQ I do think these misconceptions exist to a certain degree. Historically, Islamic banks have always looked at asset-based finance, and this is how the model started in the beginning. However, the model of Islamic banks has devolved significantly, and today there are many products that meet almost every need. There is plenty of room for creativity, and the consumer side has already established clear products. The wholesale side of banking still needs improvement, and every transaction involves innovation. Some of our experiences deal with a number of large companies. We sought opportunities to prove that we do not simply want to manage property finances, and we have been able to create a very good structure.
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