Mergers and acquisitions among Islamic banks and insurers need to be increased in order to keep up with the challenging business environment and achieve the best scale of operations, according to Central Bank of Bahrain (CBB) governor Rasheed Al Maraj.
The small size of Islamic banks is a factor that hurts them more than their conventional counterparts, Al Maraj said at the opening of the 23rd World Islamic Banking Conference (WIBC), reported Gulf Daily News.
The governor also said the banks needed to improve their customer experience as it is a “key factor determining loyalty to the bank.”
“Islamic banks have to do better in understanding the needs of their customers. Given the faith-based nature of Islamic banking, it is critical for Islamic banks to adopt a robust Sharia governance framework,” he said, adding that new rules to safeguard and reinforce Sharia compliance are currently under consultation by the banking regulator.
However, Al Maraj said it is up to the board of directors and senior managers of Islamic banks to comply with the laws and build a reputation for ethical banking.
He said the banks need to be more risk-sensitive in uncertain economic conditions and more vigilant on what type of risk they should and should not take.
He also emphasised on the importance of training a second line of management executives with strong ethical conduct, strategic thinking, leadership qualities and technical knowledge. In addition, Al Maraj urged Islamic banks to make full use of technological enhancements and invest more in the space of financial technology.For all the latest banking and finance news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
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