With the customer base growing, Islamic finance is drawing more banks and nonbank finance firms. Innovation can be a key differentiator.

Author: Darren Stubing

Table of Contents

Rivals Add To Pressure For Islamic Innovations

Islamic finance continues to expand faster than conventional banking, with the numbers of Islamic institutions growing and non-Islamic institutions opening Islamic windows. The resulting competition is driving a raft of innovation that reflects a growing sophistication in Islamic banking. Yet this maturing market is a long way from fully matured.

In the past, Islamic banks lagged their conventional counterparts in developing new services and deploying new technologies. The provisions of shariah law, which spurns interest and speculation, prohibit many common banking products and may have contributed to a lackluster recent history of innovation. Those same provisions may also have insulated Islamic institutions, which performed well in recent challenging years, from the worst of the financial crisis.

More recently, however, shariah-compliant financial institutions have fully recognized the critical importance of service enhancements and technological advances. Innovation, whether in products or processes, is a crucial differentiator in a market in which Islamic institutions compete with conventional banks as well as each other. The increasing use of mobile banking and apps, for instance is helping Islamic institutions widen their reach to markets and customers that were previously unbanked or underserviced.  In some countries this is helping to diversify and boost opportunities and wealth creation. 

Technological and product innovation are breaking down many service and delivery distinctions that existed between Islamic institutions and conventional banks. The growing number of product launches for Islamic institutions are providing customers with a complete range of investment and financing solutions. To maintain growth, Islamic financial institutions must continue to introduce innovative products and deliver services efficiently and easily through up-to-date technology.



Type Of Innovation

Abu Dhabi Islamic Bank

Process Innovation

A New Digital Studio With IBM

Al Rajhi Bank

Organizational Innovation

Self Service Channel With Diebold Technology

Al Rayan Bank/Masraf Al Rayan

Marketing Innovation

Brand Reinforement and Product Expansion

Amãna Bank

Product Innovation

Gold/Pawning Facility

Beehive Group DMCC

Product Innovation

P2P Financing

Bidaya Home Finance

Process Innovation


Dubai Islamic Bank

Organizational Innovation

Central Theme of Innovation and Technology

Emirates Islamic Bank

Product Innovation

El Trade

Malaysian Bank Consortium

Marketing Innovation

Investment Account Platform

Meezan Bank

Process Innovation


Millennium Information Solution

Process Innovation


Noor Bank

Product Innovation

YVO Mobile Application With Yvolv

Path Solutions

Process Innovation

iMal Islamic Banking Platform


Process Innovation

T24 Cloud Islamic


Abu Dhabi Islamic Bank | Process Innovation

Digital Studio with IBM

The digital studio initiative, developed in conjunction with IBM and the first in the region, will fundamentally transform how Abu Dhabi Islamic Bank interacts with customers. The studio enhanced the various digital innovation projects across the bank, including mobile-banking iOS apps that allow a more dynamic customer experience.  ADIB needed to evolve its decision-making process to fast-track development of elegant banking apps and tailored products. The Digital Design Studio includes a multidisciplinary digital team from the bank and experts from IBM Design and IBM Interactive Experience. ADIB will deploy IBM technology that will allow their financial advisers to easily and securely access and manage client portfolios from iPads.

Al Rajhi Bank | Organizational Innovation

Self-Service Channel with Diebold Technology

Working with Diebold technology, Al Rajhi migrated transactions from the traditional teller line to the self-service channel and transformed the in-branch banking experience to lift efficiency and profitability. In Saudi Arabia the vast majority of transactions are performed with cash, and roughly 70% of banking transactions happen in bank branches, which leads to long teller queues. The addition of 300 deposit ATMs across its entire network will allow Al Rajhi Bank to reduce transaction operating expenses by up to 55% and improve customer satisfaction, decreasing wait times in retail branches. As customers begin to perform more transactions on their own, staff will have more time to assist with more complex needs and build deeper relationships. In the future, Al Rajhi plans to implement more-advanced technology, such as customized kiosks that will enable customers, through biometric access, to open new accounts, encode new cards and more.

Al Rayan Bank/Masraf Al Rayan | Marketing Innovation

Brand Reinforcement and Product Expansion

Since acquiring Islamic Bank of Britain, Masraf Al Rayan has successfully rebranded and transformed it, expanding its retail and commercial product offering to a wider audience. Brand identity is now reinforced at all touchpoints, from bank branches to the website to printed literature. Al Rayan, through its innovation and product development, also frequently tops the UK tables for savings products, and many new customers of the bank are non-Muslim. The bank continually brings new products and services to the market and has built a growing reputation through widening the knowledge of Islamic finance and using this forum as a marketing tool. The bank launched the UK’s only Home Purchase Plan to be backed by the UK government’s Help to Buy guarantee scheme. Al Rayan Bank further enhanced its HPP range by introducing new products, reducing the rental rates for customers with larger deposits, and extending the length of time that customers can benefit from fixed or discounted variable monthly payments. Al Rayan Bank’s HPP range enables home finance to be secured with a range of deposits.

Amãna Bank | Product Innovation

Gold/Pawning Facility

Amãna Bank pioneered a new product in Sri Lanka by launching a gold facility that operates under the principles of Islamic finance. The innovation breaks the pawning action into two steps, with a separate product at each step. This offering aligns with Amãna’s strategic focus on reaching out to underbanked segments of the market and economic need to facilitate convenient credit at grass-roots levels to help fund agriculture and other small industries.

Beehive Group DMCC | Product Innovation

P2P Financing

The Beehive shariah-certified online funding platform is the first and only P2P (Peer-to-Peer) financing platform in the UAE. Beehive’s platform applies the innovative technology of crowd funding to eliminate the cost and complexity of conventional finance. Businesses bypass conventional intermediaries and receive financing directly from the public. In September 2015, the Beehive finance platform was certified as shariah-compliant by the Shariyah Review Bureau, the first time in history such a platform has been independently confirmed as compliant with shariah principles.

Bidaya Home Finance | Process Innovation


Bidaya developed a website that enables users to browse through its calculator and find the amount they are eligible for, then apply online and upload all required documents necessary to process their home finance application—a first for Saudi Arabia. Bidaya’s website provides a one-stop shop for all consumer financing needs in the kingdom.

Dubai Islamic Bank | Organizational Innovation

Central Theme of Innovation and Technology

DIB has become one of the most technologically advanced banks in the Islamic market and has established itself among the world’s leading Islamic institutions, improving returns through investments in technology, workplace design and brand image. DIB is continually enhancing its mobile-banking apps for Apple iOS and Android, apps that now provide access to more than 60 services. In addition, the new mobile app offers features like instant chat, currency converters and interactive navigation. DIB recently introduced a Virtual Branch, which provides bank employees with the vital experience of end-to-end business activities and cements their understanding of banking operations. The Virtual Branch aligns with DIB’s Smart Bank initiative, which aims to serve customers quickly. It will also enable staff to better manage the risks associated with more-complex transactional banking services and meeting compliance requirements.

Emirates Islamic Bank | Product Innovation

EI Trade

Emirates Islamic Bank launched EI Trade, a first-of-its-kind, shariah-compliant, online trade finance and supply chain platform. EI Trade offers the bank’s customers an electronic platform to initiate trade finance transactions on a secured system, available 24/7. The platform offers a breakthrough in the Islamic trade and supply chain industry by enabling the financing part of trade transaction to be done electronically, making financing much more efficient than is typical. The EI Trade portal can be used to submit, process and monitor various trade-related transactions, including letters of credit issuances/amendments, promises to purchase, murabaha sales contracts, wakala contracts and master agreements, online at a click of a button. Organizations using the platform can customize the portal too.

Malaysian Bank Consortium | Marketing Innovation

Investment Account Platform

Six Malaysian Islamic banks (Affin Holdings, Bank Islam Malaysia, Bank Muamalat Malaysia, Maybank Islamic, Bank Kerjasama Rakyat Malaysia and Bank Simpanan Nasional) launched a shariah-compliant investment platform. Backed by the Malaysian government with 150 million Malaysian ringgits ($37 million) in seed money, the platform will serve as a central marketplace to finance small and midsize businesses. The banks vet the applicants, provide a secondary market for investors and in some cases underwrite the equity transactions. The IAP is also open to international investors, with no restrictions on foreign capital, and profits are exempt from income tax for the first three years. What IAP brings to the table is the “trust” factor provided by Islamic banking institutions’ expertise, which is valuable in boosting investor confidence. 

Meezan Bank | Process Innovation


Meezan Bank and Ufone, an Etisalat Group company, formed a strategic partnership to launch MeezanUPaisa, one of the world’s first Islamic branchless banking solutions. With MeezanUPaisa, customers are now be able to send and receive money, pay utility bills and do mobile top-ups through Islamic banking. Meezan Bank has played a vital role in expanding access to Islamic financial services in Pakistan. This initiative is poised to accelerate financial inclusion by adding convenience and greater reliability, deepening the role of Ufone through enhancing the value it provides to its customers—and that of Meezan Bank in expanding the reach of Islamic financial services to every citizen of the country.

Millennium Information Solution | Process Innovation


Millennium, a leading software company in Bangladesh, has launched a number of new applications for Islamic banking. Solutions include core Islamic banking, mobile-banking applications, Internet banking, Islamic treasury activities, loan/proposal management, Islamic foreign exchange, off-shore banking, check requisition system, human resource management system and payroll, and employee performance management systems. Ababil, one of the flagship products of Millennium, provides a complete solution for Islamic banking. Millennium designed and developed this shariah-compliant solution with many Islamic banking clients in Bangladesh.

Noor Bank | Product Innovation

YVO Mobile Application with Yvolv

Noor Bank, in conjunction with Yvolv, introduced a unique mobile application, YVO, in 2015. Noor Bank handles all wallet and fund transaction settlements for the application. A mobile-wallet feature under development will enable users to make secure payments at Dubai retail outlets through their mobile phones. YVO will be the first application with a stored-value mobile-wallet feature in the region. Users will have an option to top up their YVO mobile wallet using cash, their existing credit cards or direct bank account transfers, or by transferring funds from one wallet to another—allowing multiple channels. The new mobile-wallet feature offers best-in-class smart technologies to ensure that Noor Bank customers enjoy a supreme level of convenience and have access to an extensive range of benefits. In 2015, Noor Bank also introduced the world’s first instantly issued and activated Islamic finance prepaid card, entitled the DubaiCard, in partnership with National Pay and Tuxedo Money Solutions. 

Path Solutions | Process Innovation

iMAL Islamic Banking Platform

Kuwait’s Path Solutions continues, after two decades, to lead the development of core Islamic banking solutions, with more than 100 clients worldwide. Islamic banks across the globe are adopting Path Solutions’ new core banking platform—iMAL R14, the only shariah-compliant solution in the market, providing real-time, 24/7, nonstop banking.

Temenos | Process Innovation

T24 Cloud Islamic

Temenos, another market-leading provider of mission-critical solutions to the financial services industry, made its specialist T24 Islamic core banking solution available as a Cloud-based service, T24 Cloud Islamic, delivering access to enterprise-level IT at an affordable price.


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