Consulting - Shari'ah compliance

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Consumer interest in Shari'ah compliant finance continues to encourage core banking system vendors to add Islamic financial products and services to their portfolios.

The geographic spread and growth of Muslim communities has broadened the catchment area for Islamic financial services into new markets away from the traditional heartland in the Middle East. In order to benefit in this expanding market, a growing number of software vendors have launched or are in the process of introducing Islamic and ethical banking services.

In these new regions, where formal Shari'ah supervision or approval is not readily available, many developers will be unable to gauge whether systems conform to the stringent standards required in the Islamic finance community.

Within IBS's proven benchmark, IBS examines and assesses the degree of Shari'ah compliance in the vendor's products and services, then reports back and advises on what, if any, action is required to bring these systems to compliance. The benchmark provides a systems-based evaluation by consultants with the required level of knowledge of Islamic banking, knowledge of banking packages, the ability to gauge systems against widely held Islamic banking principles and seek solutions regarding functional gaps.

If the vendor decides to publish and distribute the benchmark findings, these will allow prospective customers to gain an independent, assured view of the level of Shari'ah compliance, allowing them to readily and better understand the proposition with a view to inclusion in a selection process.

By establishing a benchmark, the vendor can also evaluate the overall level of work and the degree of development risk involved in attaining a reasonable level of compliance before seeking approval from a supervisory board of Shari'ah scholars.
 
Download the free Shari'ah compliance benchmark (PDF)

IBS Credentials

IBS is ideally positioned to analyse and make recommendations on Islamic financial systems:

• Tried and tested methodology - IBS has provided benchmarking analysis for market leading vendors in the Islamic finance sector
• 20 years conventional banking experience - IBS is an acknowledged leader in the field of core banking systems in conventional banking
• IBS researches and publishes the definitive work on systems and vendors in the field in the Islamic Banking Systems and Suppliers Guide
• IBS's lead consultant is an affiliate member of the Institute of Islamic Banking & Insurance (IIBI), with the requisite Post-Graduate Diploma in Islamic Banking

 IBS Approach

Assessment will be a systems-based evaluation that requires a level of knowledge of Islamic banking, knowledge of banking packages, the ability to gauge the vendor's system against widely held Islamic banking principles and seek solutions regarding functional gaps.

System review

• Areas of Shari'ah compliance
• The system's capabilities regarding Islamic processing
• Any shortfalls that we may identify.

Product analysis

• Discuss methods the system uses to process transactions
• Discuss system capabilities for coping with profit distributions, accounting events and general ledger processing
• Distinguish areas where segregation of funds can be maintained so that the product can be used in a mixed Shari'ah-compliant and conventional banking environment
• Identify the range of conventional banking products that would need only minor amendment to become generally Shari'ah-compliant
• Evaluate existing functionality that could be modified or further developed to support Islamic products
• Discuss the source of the Islamic functionality and any Shari'ah board approvals that the system supplier may have received.

Final report

We will discuss our findings with Shari'ah scholars to gain clarification and obtain their feedback, where necessary. A final report will be available for internal consumption but the supplier could use the output as marketing collateral and in a sales context.

Download the free Shari'ah compliance benchmark (PDF)

Contact us today to discuss how we can help you position your system in the competitive Islamic banking market.

Email: info@ibsintelligence.com
Call: +44 (0)1303 262 636

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