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This year the theme was "New Strategies for New Economic Realities" given the turbulent times and changing business landscape worldwide. MTI's Global CEO Hilmy Cader presented a concept paper on "Marketing Strategies for Islamic Financial Institutions." This year, the keynote speaker was sMr. Nassim Taleb the author of the international bestseller "The Black Swan: The Impact of the Highly Improbable"., MTI's presentation began with an analysis of the Global Economy and the impact of Financial Crisis on Islamic Finance. MTI's analysis illustrated the worldwide economic outlook is on the recovery. Inflation has reduced significantly, while worldwide trade value, consumer confidence index, retail sales performance and overall global stock market performance are all on the up. MTI also revealed the ongoing financial crisis had less impact on the Islamic Finance Industry. This was attributed mainly due to less exposure to financial derivatives or conventional financial institutions' securities. Islamic financial institutions also have greater reliance on customer deposits thus lesser exposure to credit market. However there was a slowdown in 2009 due to lower consumer spending and credit growth as well as high exposure to risky real estate and construction sectors (significantly high in UAE and Qatar). Despite this MTI stressed there are immense opportunities specifically in Middle East and South Asia, given the low overall banking penetration. The Islamic assets as a percentage of total assets is also very low even in these markets.
MTI provided its thought leadership on how Islamic financial institutions can develop their value proposition; go-to-market strategies and other crisis specific strategies. MTI's CEO Hilmy Cader stated "Islamic Finance cannot ignore the global financial crisis. Beyond the threats, Islamic financial institutions should look to seize the downside opportunities." He suggested internally companies should pursue lean thinking as business philosophy and trim rather than chop costs. MTI also expressed it is essential for understanding customer needs from banking in recessionary time rather than assuming and responding with inward looking cost-cuts only. Time is also opportune to develop research based products, rationalizing existing ones and consolidation of distribution channels. Given the tough times the marketing and advertising budget is often the first to be slashed.
MTI recommended more non traditional approaches such as direct marketing through CRM as well as an increased focus on Ad-ucation. There is also no better time to make acquisitions of smaller banks, channels, capabilities and consolidations.
Given its advantages over conventional banking Islamic Finance is even gaining popularity around the world even amongst non muslims. The global crisis gives players in Islamic Finance the opportunity to communicate this and stride ahead. Beyond opportunities in Middle East and South East Asia, South Asia, North Africa and Europe is also showing potential for growth. Besides Islamic Banking, MTI also stated there is plenty of potential in the global takaful industry which has nearly doubled USD 3.5 bn in 2004 to about USD 6.3 bn in 2007.
Islamic banking has grown at an annual rate of 15% and reached a volume of $1 trillion, five times higher than in 2003. The future does look bright. As the world seeks a new monetary system post the financial crisis, Islamic Banking definitely seems to stand out.
MTI Consulting is an international strategy consultancy with a global team covering Bahrain, Bangladesh, India, Malaysia, Pakistan, Sri Lanka, and UAE focusing on Strategy Consulting, Corporate Finance, Human Resource Management, Marketing and Research & Analytics.
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