Leadership in Action: A Chat with Dubai Islamic Bank

[Music] thank you for the great introduction and I'm so happy to be here with you all thank you for coming and joining us on this fine morning so today it is my pleasure to sit down with an industry leader uh who is at the Helm of the oldest Islamic Bank and as mentioned by our lovely MC here he is renowned for his transformative contribution and Visionary leadership so what we will be discussing or asking Dr Adnan is to guide us through this session uh through the remarkable growth of Islamic banking while offering insights into the sector's future trajectory so Dr Adan I have to start this session by asking you what does it take to lead the world's oldest Islamic Bank into the future and what I mean by that is how do you balance um preserving the foundational principes of Islamic banking while driving Innovation and growth uh good afternoon everyone Salam alikum uh I would have wanted to say uh it takes a lot of money to lead the uh largest Islamic Bank in the world but it doesn't um now I think you've got to be true to your principles um you know when Islamic banking started the way back in 1975 um clearly at that time it was uh it was a alternative to Convention Banking and um you know it targeted certain Niche um segments but today it has become a global phenomena um what does it take obviously we've got to make sure that um there's a balance between tradition and transformation um or if you want to say it another way between principles and progress um at no point in time does um you know leading an Islamic Bank meaning compromising with the principles of U Sharia or or banking uh but at the same time you cannot be complacent and you can't Bank on beliefs um you've got to also make sure that there is adequate Evolution uh because that is the name of the game today which would mean that you've got to be as transformative as you can um because uh you know if you just keep uh banking on your laurels that you're the first Islamic Bank in the world or you know you you are the probably the largest global Islamic player um you know it's going to disappear very quickly so I think in the last uh decade or so uh what the Islamic banking industry has faced is that uh massive transformation in terms of evolution uh in terms of making sure that everything that they do becomes very customer Centric in nature uh and that is obviously uh balanced by technology and the digital imprint that we are talking about these days uh artificial intelligence blockchain uh fex and and and what have you so I think um the way Islamic banking actually has um panned out in the last 10 years is that while it has stayed true to its principles it has completely transformed itself and become so evolutionary in nature uh and it has adapted and adopted digital uh transformation that has allowed it uh to to not just um be be uh growing within some of the domicide regions but also spreading it globally yes and you mentioned technology here and I think a lot of people here want to know going into some details how has Dubai Islamic Bank adapted to the huge technological shifts um and advancements like we're seeing in the banking sector more uh specifically like blockchain and fintech and you mentioned AI as well um to innovate Islamic banking services in your view I think Lena you know not just Islamic Banks but any financial institution today has to adopt uh this digital transformation and that is exactly what even Islamic banking or Dubai Islamic Bank has done uh because if you do not do that you are not going to uh meet uh you know the growing demands of your customers because today the focus is more on customers Journeys uh customers um um centricity as well as making sure that everything that you do is very agile and it's very lean now if you want Islamic banking also to come out of that myth of that traditional way of operating ations you've got to make sure that you have the stack of technology that allows customers to be on board it uh uh you know very seemlessly and once they are on board it seamlessly their their experience with the bank has also got to be as um um you know um you know for the choice of better words as um uh interesting uh or as pleasing as they can so in order to do all of that you've got to make sure that your technology is probably now more cloud-based than uh you know uh core banking based uh you've got to also make sure that you have uh you know AI enabled functionalities like uh you know facial recognition if you want to do your kyc you know compliance has become extremely important these days but that doesn't mean that you need all your customers to come and sit in front of you you can also enable uh you know uh facial recognitions which is artificially uh intelligent uh you also then make sure that security is Paramount so blockchain comes into into play uh so what Dubai Islamic Bank has done is that as recent as uh this year we've uh you know made sure that we've got engagements with IBM Consulting for example that comes to my mind that has allowed us to um uh you know to make sure that we've got artificially intelligent customer based Journeys um you know we've got in order to make sure that security is is uh the Prime Focus we have you know engagements with Moro hub for example within the UAE that allow us to make sure that there is real time uh you know uh threat detection so I think uh What uh what Islamic Banks and Islamic financial institutions around the world have done is that they have also adapted uh this technology uh which if you don't you will be very quickly uh you know uh be written off yes for sure and um you've mentioned a lot about technology just now but I wanted to ask if dib is planning or can we expect it to integrate with certain uh fintech uh platforms which are really competing with traditional Banks Islamic Banks just the whole banking uh uh system and if you're planning to make me to acquire one of these platforms or are you building maybe a platform within uh dib so I think the the first simple answer to that is yes Islamic Banks as well as Dubai Islam Bank have to um uh you know step on it and have to be a part of this trend I'm not going to say anything that is going to move the price but uh for example if you actually uh look at what we've been doing recently uh we have just acquired uh you know a digital um uh you know uh fintech firm within within turkey for that matter okay um you know that allows us to set up the first Islamic digital Bank within turkey now why is this important is because not just that market is uh is very lucrative and uh you know underpenetrated when it comes to uh Financial inclusion uh but it allows us to venture out into a space that would only uh grow from where we are um you know we've just soft launched this digital Bank um in April May this year and uh we are counting 10 million customers already so that can actually tell you the kind of uh uh you know uh the the the kind of pace at which digital banking specifically and Islamic digital banking has the potential of it's a huge Niche I think absolutely absolutely and I think the one thing that I would like to clarify to the audience is that you know with Dubai Islamic Bank making inroads into not just within the UAE but in in in major markets around the world including turkey now uh the one thing that we've done well as as a strategic outfit is that we have positioned ourselves a little differently uh you know gone are those days where where you could only Bank on beliefs right you've got to make sure that you come up with a proposition which is fit for purpose and it targets everyone uh today if you EX for example look at the UAE and our operations within the UAE right we we are probably the third or the fourth largest bank and and a decade ago we probably were not even in the top 10 now how we've managed to do that is because we have come up with a value proposition that can attract anybody and everybody uh and not just the Muslim base it's because we firmly believe that Islamic banking is for all we are never going to compromise our principles uh around Sharia but we would also make sure that we are transformative and evolutionary in that process and if you follow these key principles in in making sure that that's how you operate in you are clearly going to widen uh the the customer base as well as the investor Base today the stakeholders within an Islamic Bank or an Islamic financial institution are not only the customers but uh you know Regulators for that matter analysts for that matter uh rating agencies for that matter investors now if you need to attract all of these uh various stakeholders then you've got to kind of change the way you do your business you don't need to change your business but you need to change the way you do your business and I think that's where evolutionary practices have come in and Technology only plays a a small part but you've got to make sure that you know your key proposition uh targets everybody why should a customer uh who is probably sitting on the fence come to an Islamic Bank if it's going to be more expensive or it does not match uh you know his or her needs today uh uh a transformative Islamic Bank is ensuring that it has something for everyone and uh without compromising its core uh traditions and it core Roots um so I I firmly believe in this ideology that you know we got to make sure that we uh you know innovate uh with Integrity yes right so that's exactly what an Islamic Bank should be doing awesome um we're kind of running out of time but this is a question that I really wanted to ask and and obviously to make the audience understand a bit more now we all know that interest rates have no place in in Islamic banking but what we're seeing is that Islamic Banks usually benefit in a uh High interest rate environment and now we have a US president that is coming in and promising lower interest rates uh in the uh Federal Reserve does that affect you and how do you handle this uh fluctuating interest rates that are going around in the world just to uh sort of uh make it clear what is that relation if any uh you know I'm not surprised with Lena's background she would ask me a political question right I'm not surprised but uh but listen I think it's a myth that uh that higher interest rate environments are beneficial for Islamic Banks and I think thank you for that question because it gives me an opportunity to clear that is because um you know whether the interest rates are high or low any financial institution will benefit if you've got a good balance sheet structure uh which means that if youve got liabilities or uh you know lowc cost uh deposits uh you can always benefit even if interest rates are high or down so uh of course you know it's a Level Playing Field Islamic banks are competing within the same Global space that conventional banks are competing I don't think so interest rates have a direct correlation with President Trump if I can um you know it's a it's a function of uh you know where the inflation in the in uh in the global economies are uh of course because we are in a in a region that are Peck to the US Dollars we take interest in in knowing that you know where the interest rates are and what the next move or the FED is uh I think um Muhammad and Mustafa did cover this in the previous panel that we looking at roughly around 100 basis points decrease in the uh in the upcoming 12 months but uh you know nobody has a crystal ball um you know you know what we've seen in the recent past is exactly uh completely opposite to the narrative that comes out of the of the FED meeting so I think we are also uh holding holding our breaths and making sure that uh you know uh we are riding the the wave uh but you know even if interest rates go down uh Dubai Islamic Bank and I'm sure that most of the Islamic banks are very well poised uh to make sure that they can benefit from um uh from their structural balance sheets but more importantly I think we are in a region which is poised for growth um you know so whether interest rates are up or down I think there's a lot of activity that is happening uh within this region um side the geopolitical issues uh we feel that 2025 is going to be a another tremendous year for financial institu for sure I wanted to ask as well I mean dib's Investment Portfolio is is is huge and pretty impressive um but you are a majority shareholder in a company like Dior and Dior is obviously very well known in the region and uh in the UAE how do you assess your investment in Dior yeah there are some new projects the is launching so if you guys are looking at the real estate market you can but listen I think um uh Dr is is a property developer yes and we have a majority stake in Dr and we um we have a controlling influence uh but it's not a Core Business of Dubai Islamic Bank right so uh you know Dr does not contribute more than 5% of the overall um you know revenues having said that uh you know it's an important subsidiary for us it's a line by line Consolidated within our uh within our financial statements uh we have worked very hard to make sure where they are is today it's a extremely robust company uh today is taking advantage of the real estate market which I know is also going to uh grow within 2025 uh and and 2026 um so I think it's a great time for uh uh you know investors to look at Investments uh within the real estate space and I think how is it different um from 2020 um 2010 is that today it's uh it's a end users market and it's not a speculative Market anymore uh because every activity that is happening within the real estate um sector is uh is end use and that is what is driving prices up and when prices go up it benefits companies like the DRS of the world or you know uh some of the listed companies and uh being being a shareholder I think it's it's a great opportunity for us also to make sure that we uh maximize the most but uh clearly I think uh you know it's a it's a company that has done well in the recent past and we we have a very clear strategy for the company going forward okay I know we ran out of time but I want to make use of my time here with you Dr Adan and I have to ask this last question to you where you see Islamic banking uh industry heading in the next decade and what will be the critical factors for maintaining relevance and growth in your view I think you've got to make sure that you continue to evolve um you know because Islamic banking uh has um you know come a long way uh in the last 50 odd years uh with the establishment of Dubai Islamic Bank 2025 we are going to complete 50 years which means Islamic banking completes 50 years right um and I think a lot has happened the last two decades or so uh and I think if you just look at the direction of travel I can always tell you that this is going to just grow further and further not only because people are adopting to it but you know a lot of corporates and sovereigns around the world are also understanding the benefit of Islamic Finance uh of course you know when there is volatility and there's a lot of Crisis around the globe uh you know this financial industry has done better um uh relatively speaking to its conventional counterparts uh so I feel that you know uh the future is very bright um and we've only scratch the tip of the iceberg so hopefully uh you know um conferences like these and Summits like these only clear the air and allow people to understand that you know Islamic banking is here to stay what used to be an alternative form for conventional banking has actually now become a norm uh and I think that's the reason why there is a lot of adoption in Islamic finance and you're seeing more and more players as as well as investors taking up this it's a pleasure to hear your insights and give it up for Dr Adan and everyone thank you thank you so much thank you Lena thank you very much [Music]