Dr. Khirbash commends increased focus of global banking sector on Islamic finance products

He was addressing delegates at the First Islamic Retail Banking Conference held on 3rd-4th March 2004 at the Grand Hyatt in Dubai.

Citing the examples of Citibank, Credit Suisse First Boston, Deutsche Bank, Freddie Mac and HSBC which had added Islamic products and services to their portfolio, Dr. Khirbash also noted that the UAE's commercial banking sector has seen a strong trend towards the conversion of conventional banks into Islamic ones.

"Islamic finance has proven its competence and can grow to be a powerful force for good in our own societies and beyond. For an industry that is still considered something of a newcomer, in the past three decades, we have seen a very impressive dynamic. Retail managers at banks both here in the UAE and globally have an opportunity and a responsibility to provide the marketplace with the products and services consumers require" said Dr. Khirbash. Dr. Khirbash also stated that that there have been moves on the part of the Financial Services Authority in the UK, to support the development of Islamic mortgages.

Dr. Khirbash went on to highlight specific Islamic financial products and services that the banking sector had developed that had given people a strong sense of being offered comprehensive financial solutions. "We now see a sector that offers a wide range of convenient e-banking services. We provide services such as murabaha, mudaraba and Ijara services. The takaful and assurance sector of the industry are now growing".

Despite this strong trend in Islamic retail banking, Dr. Khirbash listed managing growth, as one of the most crucial challenges before the banking sector. "There are still some clear impediments that prevent us from bridging the gap between the sophistication of our customers and the speed of innovation", he said.

Referring to some of the other challenges ahead of the Islamic banking sector Dr. Khirbash said "We need to address the structural issue of the liability mismatch and the lack of Islamic bankers, experienced in product development". Pointing to the fact that a deposit insurance system needed to be developed, Dr. Khirbash called for accurate and regular research on the Islamic banking sector. "Our credit analyses and our risk management techniques vary widely from bank to bank. There are still difficulties related to cash management due to the lack of Islamic investment opportunities", he added.

Noting that the UAE was the host to the world's first Islamic bank, Dr. Khirbash went on to say that the hosting of the first ever Islamic Retail Banking Conference in Dubai reflected the UAE's growing role and contribution to the industry.