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Wider banking image: obvious and dire need for liquidity management products

Understanding and awareness of Islamic banking growing in Pakistan; set to meet with success

Meezan Bank is running rigorous training programs for Islamic banking knowledge and skills and supports other institutions in image building
Interview with Mr Irfan Siddiqui — President & Chief Executive Officer, Meezan Bank


Mr Irfan Siddiqui is the founding President and Chief Executive Officer of Meezan Bank. His educational background includes a Foundation Course in Accountancy from Sunderland, UK and he is a Fellow Chartered Accountant from Institute of Chartered Accountants, England and Wales. He has served on a number of senior management positions including Chief Executive Officer at Al-Meezan Investment Bank Limited, as a General Manager at Pakistan Kuwait Investment Company, Manager Finance and Operation at Abu Dhabi Investment Company and Senior Business Analyst at Exxon Chemical (Pakistan) Limited. In 2002, Al-Meezan Investment Bank stepped into the domain of Islamic commercial banking through the acquisition of Pakistan operations of Societe Generale and was issued first Islamic commercial banking license. Al-Meezan was thus renamed as Meezan Bank. Meezan Bank was born as Pakistan’s first Islamic bank offering products and services in line with the principle of Shariah. As we developed over the years, we brought new and innovative Riba-free products and solutions in an industry that was solely based on interest. Meezan Bank, however, took up the challenge and through our determination, perseverance and team of well-rounded members, managed to emerge as Pakistan’s premier and largest Islamic bank offering Islamic banking products that are at par with conventional offerings in the country.


IRFAN SIDDIQUI: In Pakistan, the innovative/technological transformation for the banking sector has been sluggish but not absent. A number of banks are now focusing on digital, electronic and mobile banking products and working solutions in order to keep up with the changing consumer trends.

Meezan Bank is doing banking as it should be in the current time. We have recently embarked on the aim of further strengthening our technological backbone and this is an exciting phase for us. To give an example we have recently deployed the Oracle Exadata Database Machine to cut the close of business time by 30 percent. We have also been able to reduce our data centre footprint and administrative efforts by running our core banking database on Oracle’s flagship engineered system.

We started with fairly niche products and are now expanding our product portfolio and services to an extent that we are now partnering with Homesend, a joint venture between Mastercard, eServGlobal and BICS, to leverage on the global money transfer hub’s extensive sending network to enable cross border and cross network value transfers through a single connection. Under this agreement, Meezan Bank’s state-of-the-art Home Remittance service, ‘Meezan Easy Remit’ or MEX will start processing HomeSend’s worldwide remittances sent by millions of expatriates and Non Resident Pakistanis (NRPs) around the world to the beneficiaries in Pakistan.

We realize that in contrast to other industries, innovation in the banking sector as well as other financial institutions has remained sporadic. A number of banks are struggling with archaic regulations and high barriers to entry for new products and services. This also means that the room for opportunity in this sector is plenty and essentially untapped into.

As the leading Islamic bank in Pakistan, our success is no secret. With a team that is determined to forge ahead even in these difficult times, we are now poised to take an important leap towards building a culture of innovation. We have recently established an Innovation Unit in the Bank that shall facilitate the Bank to embrace change by adapting products, services and technology to not just continually meet, but exceed the evolving needs of our customers. If you ask us how we are leveraging the technology to reach our customers, it is not merely our technological progression or our readiness to evolve with the changing attitude of consumers but also the execution of our products and services in line with Shariah principles.


IRFAN SIDDIQUI: E-wallet transactions bring the convenience associated with technological advancements in the banking industry. Not only do they lower the costs but also provide the benefit of increased transactional security. But that is just one perspective. For banks, the growth of non-traditional/third party players raises concerns regarding the validity of the revenue model. For third-party wallets, the biggest concern for a Bank other than revenue sharing is the use of their own digital infrastructure. Of course limiting the usage of the banking channels is hardly recommended given the e-commerce boom in the region. Banks may, however, form partnerships with non-traditional players or levy a certain charge for leveraging of their infrastructure in order to ensure that the proportion of income/profitability for the services rendered remains balanced.


IRFAN SIDDIQUI: I think that challenges are inherent to any new industry; particularly one that is governed by a business model with strong religious underpinning. I think that at the local level, especially in a country like Pakistan with a large Muslim majority, the first thing that we need to focus on is spreading awareness and education regarding Islamic finance.

Meezan Bank emerged as a pioneer of Islamic banking in Pakistan 15 years ago. During this period, Islamic banking has spread across the globe to Muslim as well as non-Muslim countries owing to strong education and awareness initiatives that have ensured that the message is put loud and clear.

At Meezan Bank, we ensure that all of our products and services are governed by the Shariah law and meet the financial necessities of Muslim and non-Muslim communities. Islamic banks form part of a larger system, which can lead to an economy in which people in need of commodities and services can gain access to interest-free facilitating financial arrangements.

Since our inception, we laid a heavy focus on educating people about Islamic banking. At Meezan Bank, we run a rigorous training plan for our staff to enhance their knowledge and skills about Islamic banking. The learning initiatives include a comprehensive orientation program for all new staff that makes sure that they understand the concepts underlying Islamic banking as well as the various products of Meezan Bank; specialized functional modules on various business products and processes. These are supplemented with comprehensive short and long term certificate programs on Islamic banking as well as refresher programs on both Islamic banking products as well as their underlying concepts.

The Bank also provides learning opportunities to its staff through in-house, external and international training programs to improve their knowledge and skills. The Bank has employed a robust Distance Learning System through which video-based training courses are rolled out to the staff who can complete these from either home or office.

Meezan Bank also supports institutions such as Centre for Islamic Economics (CIE), State Bank of Pakistan (SBP) and National Institute of Banking and Finance (NIBAF) in conducting Islamic banking training sessions.

Staff of Meezan Bank taught Islamic banking courses and degree programs at different institutes, including IBA-Karachi, Sheikh Zayed Islamic Centre and Commecs, as their personal contribution towards spreading knowledge about Islamic finance.

The Bank has four dedicated learning centres, located at Karachi, Lahore, Islamabad and Multan, where learning sessions are conducted round the year under an organized learning calendar developed to address the learning needs of the staff at each Region. In addition to classroom-style learning facilities, the Bank also has mock branches at Karachi, Lahore and Islamabad where technical training programs are conducted on a regular basis. The Learning facilities are also equipped with libraries which help employees stay abreast of developments in the field of banking.

The Bank has also employed a robust Distance Learning System through which video-based training courses are rolled out to the staff who can complete these from either home or office. We are also taking measures to alleviate the dearth of human capital in at the entry level by providing 500-700 fresh graduates the right opportunities and training through its Batch Training programs each year. These trainings focus on promoting human capital development and on developing dynamic and well-rounded executives equipped with the knowledge of banking and the core principles and regulations of Islamic banking.

We also regularly arrange public awareness seminars on Islamic banking across various cities and in various institutes of Pakistan. Staff of Meezan Bank teaches Islamic banking courses and degree programs at different institutes, including IBA-Karachi, Sheikh Zayed Islamic Centre and Commecs, as their personal contribution towards spreading knowledge about Islamic finance.

Meezan Bank has also been able to develop strong relations with various educational institutions exerting an influence towards the education of Islamic finance through mutual cooperation.

This process, however, small, has created a butterfly effect where a number of institutes are now attracted towards Islamic finance courses; and the support doesn’t end here — we make our expertise readily available, be it in the form of syllabus design, case study formulation or by providing some of our most skilled employees as faculty.

The Bank also supported IBA, LUMS and IMSciences to establish Centres of Excellence in Islamic Finance under the guidance of State Bank of Pakistan. Areas of collaboration include curriculum revision and development, jointly arranged executive trainings, joint research on Islamic finance and human capital development. Alhamdulillah, these efforts have paid off and awareness and understanding about Islamic Banking has grown tremendously over the years.


IRFAN SIDDIQUI: Currently, the Islamic Banking industry is growing at approximately 1.1%* per annum which might increase to 2-2.5% as the other smaller Islamic banks start growing. At present, Islamic Banking assets and deposits form approximately 11.2% and 13.1% respectively of the total banking industry in Pakistan and keeping in view the number of Islamic banks and their growth, this could grow to 15% over the next few years.

The overall banking industry is growing at a rate of 7% while the financing portfolio of Meezan Bank grew by 18.4% in the year 2015. Other than Meezan Bank, there are now 22 other Islamic banking institutions in the country and it is a healthy for the economy to have such an expansion in this industry.

Meezan Bank holds around 60% share of the dedicated Islamic Banking industry in Pakistan. One of the advantages we had was that we were the first Islamic Bank in the country. Our heavy focus on developing our Shariah-expertise, expanding our product menu to cater to the diverse banking needs of our customers and our focus on providing quality service has enabled us to maintain our leadership position in the industry, grow rapidly and give a decent return to both our depositors and our shareholders.

As, with the passage of time, other Islamic banks are growing, this is introducing healthy competition in the industry and is making Islamic Banking available to an even larger section of the country’s population. We see this as a positive trend and wish success to all Islamic banks since they are all playing their role and hopefully will flourish and give a boost to the economy.


Overall Market Share of Revenues (Islamic Scheduled Banks only)


Overall Market Share of Revenues in Financial Services (across the whole banking industry in Pakistan)


Overall Market Share of deposits (Islamic Scheduled banks in Pakistan)


Overall Market Share of deposits (among Islamic Banking windows of conventional Banks and dedicated Islamic Scheduled banks in Pakistan)


Overall Market Share of deposits (across the whole banking industry in Pakistan)



IRFAN SIDDIQUI: As CPEC moves towards its implementation phase I believe it has the power to change Pakistan from a lower-middle-income nation to an upper-middle-income nation. The project has promising potential in terms of attracting foreign investment and creating numerous employment opportunities in the country.

And I believe with an increased economy, comes greater political stability and a greater control over religious extremism. However, the political and security risks and uncertainties are also a stark reality in this region. Internal security lapses and the failure to maintain national extremists from creating hurdles in the execution of these projects is something that may not be overlooked.

The successful completion of the 2013 elections has shown an improvement in Pakistan’s democracy, a factor that plays a major role in CPEC’s success. Lastly, as we predict a boom of Chinese corporations investing in Pakistan in the near future; we also need to consider the risks associated with cultural differences such as language barriers and an inherent difference in norms and modus operandi.

Furthermore, Pakistan needs to be cognizant of the fact that the role of an economic corridor is maximised once it operates in terms of a series or network effects. We therefore need to focus on building major industry and manufacturing hubs in our western regions; particularly in areas that are close to Gwadar, in order to further maximise the benefits of the corridor instead of treating it as a standalone project.

Lastly, CPEC promises a tremendous trade flow into Pakistan, implying that the country shall emerge Insha allah one of the main trade players in the region – fact that has attracted a host of international conspiracies. While CPEC promises new opportunities for Pakistan and the region at large, we must act swiftly and proactively to make the most of this opportunity.

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