Gulf Insider catches up with the head of Bahrain Islamic Bank to find out more about the Sharia-compliant banking system, innovation in the era of AI and more. Does BisB cater to non-Muslim customers and if so, why would a non-Muslim choose your bank? Being an Islamic bank doesn’t restrict the institution or the customer from dealing with one another. In fact, Islamic banking sets its products and services based on equitable transactions, ensuring the risk/reward dynamics are fair and clear. The governance elements are quite strong, and require transactions to be asset-backed. This provides an added sense of security. In today’s world, the question is not about whether you are Sharia-compliant as an institution or a conventional bank. Consumers have the right to select whoever provides the best price and service. That’s what differentiates BisB as an institution. You are a recognised leader in the Islamic banking sector. In your opinion, why is this? I believe it’s the DNA of the institution. We started as the first Islamic bank in Bahrain and the third retail bank in the region. Right from the start, we set the path and that’s embedded in our approach. The institution is driven by innovation, catering to the customer's needs while being Sharia-compliant. We’re fortunate to have a Sharia Board that’s very experienced and adopts a pragmatic and innovative approach while understanding FinTech and digital services. Today, the best way to serve the client is through collaboration and partnership. Our focus is on being the best at banking services, ensuring the security, confidentiality, and privacy of our customers. We ensure this by building platforms that can connect with other service providers, allowing clients to meet all their needs through us or in partnership with us. Islamic banking operates under a unique set of principles that differ from traditional banking practices. Can you explain how these principles are applied at Bahrain Islamic Bank? On a macro level, there are certain principles that can be distilled to understand Islamic banking. First, Sharia-compliant banking usually bans transactions that involve excessive interest that makes it impossible for the borrower to pay you back over time. The second principle is excessive risk. Transactions cannot be conducted based on uncertainty like not knowing the potential outcomes or risks of your transactions. The third principle is that transactions are typically asset-backed. These principles find expression in four broad terms of financial interactions (some of which have derivations). The first is Mudarabah - I, as the institution, will facilitate buying on your behalf and sell it to you at a profit, which you can pay me back over time. The second principle is Musharakah means we partner, and share the profit and the risk. The third one is Wadiah, which means you need something managed, and I have the expertise so, I will manage it on your behalf, and charge you a fee. Fourth, Ijarah is effectively a lease contract. I buy a property, lease it to you, and charge you a rent. Bahrain is positioning itself as a regional hub for fintech innovation; what role is BisB playing in supporting fintech development in the country? The Central Bank of Bahrain, our governing body, has established itself as the leading regulator in the region in terms of its approach to the industry and openness to technology, FinTech, and the new wave of Web 3.0, Crypto and other instruments. BisB prides itself on being an active player in the space, as evidenced by our continued work with the CBB and FinHub 973, our collaboration with StartUp Bahrain and other accelerators and incubators on the island. We put together programs and support SMEs and startups and work closely with the EDB, the CBB, Bahrain Bay and others, to help support and empower entrepreneurs, founders and VCs in the region. We were among the early adopters of open banking principles. All of this stems from the view that FinTechs are not a threat if seen as complementing what an institution can offer. Finally, tell us a bit about the BisB Innovation Lab and how the bank is keeping up with rapidly changing technology, AI trends, and customer demands in the banking industry. BisB set up its Innovation Hub several years ago, encouraging teams within the bank to come up with new concepts, experiment and create solutions that would address the needs of the customer while disruptions in tech kept happening. My firm belief is that innovation must be embedded within the DNA of the institution across disciplines. So it's great to start with a lab where there are a few people involved and experiment. For it to be effective in the long run, you need an institution where the employees have an innovation mindset. And that's what we're striving towards.
