Islamic bank

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Al Rajhi Bank Malaysia to build a state-of-the-art Islamic digital bank

Several banks in Malaysia have been actively looking into Islamic digital banking. Compared to normal banking services, Islamic banking has been proven to be favorable among consumers not just in Malaysia, but globally as well.

As such, Al Rajhi Bank Malaysia (ARBM), a wholly-owned subsidiary of the world’s largest Islamic bank by assets, Al Rajhi Bank of the Kingdom of Saudi Arabia, recently announced that it plans to build a state-of-the-art Islamic digital bank.

The Asian Banker ranks Al-Rahji Bank as the strongest Islamic bank based on a detailed and transparent scorecard that evaluates Islamic banks on six areas of balance sheet financial performance, namely the ability to scale, balance sheet growth, risk profile, profitability, asset quality and liquidity.

In Malaysia, ARBM has selected Thought Machine, the cloud-native core banking technology firm, to power their upcoming next-generation digital bank and strengthen their position as a leader in Islamic banking.

Having embarked on a multi-year digital transformation in 2021, ARBM will deploy Thought Machine’s core banking engine, Vault, to launch a new digital bank in 2022 with a range of sophisticated retail and SME financial services, such as savings and financing products.

The unique design of the Vault platform will enable ARBM to deliver on its ambitions and launch an end-to-end next-generation bank. The bank will harness Vault’s universal product engine to design, launch and manage a full suite of products on a single, clear architecture.

Furthermore, Al Rajhi Bank Malaysia is also building a full suite of Shariah-compliant products, and Vault’s product-building capabilities will be instrumental and critical in allowing the bank to build and offer services tailored to their customers’ individual needs.

According to Arsalaan Ahmed, CEO of ARBM, the launch of a state-of-the-art digital bank will be differentiated by its high levels of innovation, customer convenience, and reliability.

“We are tapping into the vast potential in technology offered by our key partners to help advance towards our vision of becoming the number one Islamic finance innovation bank in Malaysia. Thought Machine has demonstrated that its highly competitive services are supported by exceptional technology and engineering,” said Ahmed.

Thought Machine has already been selected by several tier one and large retail banks and the company also works with smaller, agile fintech and challengers. Clients include JPMorgan Chase, Lloyds Banking Group, Standard Chartered, ING Bank and SEB.

In 2019, Thought Machine was selected by Standard Chartered Bank to power their greenfield digital banking service, Mox. Across the Asia Pacific, Thought Machine continues to execute its growth strategy to supply more banks with cloud-native core banking technology in 2022.

For Paul Taylor, CEO and founder of Thought Machine, ARMB has a considerable opportunity to launch an exceptional next-generation banking service and have no doubt they will succeed.

Enabling an Islamic digital bank ecosystem

Apart from ARBM, last year, Hong Leong Islamic Bank also expanded its digital Islamic wealth management ecosystem with the introduction of the first-in-market digital restricted investment account, Portfolio Investment Account (PIA-i). The PIA-i is a simplified investment product that allows customers to digitally diversify their investments across a blend of Shariah-compliant funds.

Three other organizations, Green Packet Berhad, ZICO Holdings and M24 Tawreeq have formed a consortium and applied for an Islamic digital banking license in Malaysia to provide Syariah-compliant digital microservices for the underserved segment.

Sedania Innovator Bhd unit Sedania As Salam Capital Sdn Bhd (SASC) has also inked an MOU with FCA Capital Sdn Bhd in its bid for a digital Islamic bank license from Bank Negara Malaysia (BNM). Sedania said FCA acted as the financial advisor for a consortium that submitted a bid for approval of a digital Islamic bank license from BNM.

The decision for the digital Islamic bank license is expected to be announced by the first quarter of 2022.