TBY talks to Jahangir Hajiyev, Chairman of the Board at the International Bank of Azerbaijan, on its focus on retail banking, plans for international cooperation, and the development of Islamic finance.
TBY What were some of the highlights for IBA in 2011?
JAHANGIR HAJIYEV In 2011, IBA was ranked 33rd in asset scales among banks in the CIS region. IBA was also included on the list of the 1,000 largest and most sustainable banks in the world, according to The Banker magazine. The World Organization of Creditors also recognized IBA as the winner of the “Investment Angel” World Investment Award. Despite global challenges, IBA successfully carried out a number of projects and transactions, entered into several loan agreements with the largest international banks and investment companies, and established new correspondent relations with 90 financial institutions worldwide. For the first time in the history of Azerbaijan, IBA concluded a gold transaction to raise funds through structured financial instruments.
What strategies drive IBA’s focus on retail banking?
One of our main development strategies is to introduce new banking services. Recently, we offered an extraordinary service called “gold deposit” to our customers. Now, they may place their deposits in gold without physical acquisition of the metal. The client gets a two fold chance to win from both bank interest rates and the growth of gold prices. In general, IBA’s customers are offered over 150 different banking products and services. IBA is constantly making efforts to introduce the latest banking technology in Azerbaijan and provide modern financial services to the citizens of the country.
What are IBA’s plans to further its international cooperation and presence?
It is no secret that IBA is the only national credit institution gradually expanding its presence in the global financial space. Our subsidiary bank in Moscow celebrated its 10th anniversary recently, entering into the top 150 largest Russian banks and actively promoting economic relations between Azerbaijan and Russia. IBA’s branches in St. Petersburg and Yekaterinburg have progressed on a path of sustainable growth, which indicates the effectiveness of our investments in these regions. The same can be said about our Georgian branch, which is actively involved in the rendering of services for a number of major regional and international projects. Our representative offices in London, Frankfurt, Luxembourg, New York, and Dubai adequately represent IBA’s interests in the largest financial centers around the world. In 2010, we developed a strategy to enter emerging markets, prioritizing the integration of the banking sector in the CIS. The focus of our international strategy is also aimed at markets in the Middle East (Qatar), Western Europe (Luxembourg and Switzerland), and the US, a program that was established after monitoring trade and political relations with these countries and carrying out a comprehensive study of the dynamics of their banking markets, including the presence of members of the diaspora.
What strategies is IBA implementing to increase the penetration and usage of credit cards among its customers?
We attach special importance to the business of banking cards, and this is one of the main future directions of our integrated strategy. IBA became the second bank in the region to start distributing the most innovative cards. These cards boast a dual-contact and non-contact interface and dynamic data authentication (DDA). IBA also carries out projects related to salary, pension, and social cards, which are services being used by hundreds of thousands of people. The number of card customers is constantly increasing. To date, IBA’s card activity represents 40.7% of the entire card market in the country, 32% of all the ATMs operating in the country, and 32.4% of the country’s total POS terminals.
What is the significance of electronic banking within IBA’s strategy?
Over the past few years, we have introduced a number of new technological solutions. In 2008, we successfully introduced Flexcube, an innovative automated banking system developed by Oracle. The transition to this software allowed IBA to expand its banking product portfolio and minimize operational risks, improving the quality and speed of services simultaneously for customers who may perform various transactions even while sitting in the office. Today we offer internet banking, mobile banking, e-commerce, and other high-tech products that have become very popular among our customers. IBA has the largest customer base in the country and our priority is to improve the quality of customer services. To do this, we are introducing the Customer Relationship Management (CRM) system, which will enable us to create a flexible service system that provides banking services tailored to each customer.
How would you assess Azerbaijan’s potential to become a regional hub for Islamic banking within the CIS area?
IBA was chosen to promote Islamic financing in the CIS region, owing to the fact that the bank is already active in the implementation of Islamic products and services. For the first time in Azerbaijan’s history, we are planning to establish a new office in the field, enabling the country to become a regional center for Islamic financing. This decision was made bearing in mind the favorable geopolitical situation of the country and the availability of the markets in neighboring countries, such as Russia and Kazakhstan. There are also many opportunities to enter other markets. IBA has expressed its desire to host the Annual Caspian Forum on Islamic Banking. Thus, Baku may also become a center for the development of new tools to attract Islamic financing.
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