Case Study Meezan Bank - Enterprise Innovation · PDF fileMeezan Bank is managing rapid branch...

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Meezan Bank is managing rapid branch expansion with Temenos T24 core banking. It has developed a range of Islamic banking products for customers ranging from governments to individual consumers and is establishing a centre of excellence for Islamic banking. Numbers Business Benefits • Rapid rollout of comprehensive integrated core banking solution. • Advanced architecture to provide performance to large branch network. • Out-of-the-box Islamic banking functionality. • Support from local partners and Temenos for development of Islamic banking products. • Profit after tax (2011): Rupees 3,391,000,000 (US$36,075,000) • Total assets (2011): Rupees 200,550,000,000 (US$2,133,511,000) • Return on average assets (2011): 1.91 Name Meezan Bank Headquarters Karachi, Pakistan Sector Islamic Banking Case Study Meezan Bank

Transcript of Case Study Meezan Bank - Enterprise Innovation · PDF fileMeezan Bank is managing rapid branch...

Page 1: Case Study Meezan Bank - Enterprise Innovation · PDF fileMeezan Bank is managing rapid branch expansion with Temenos T24 core banking. It has developed a range of Islamic banking

Meezan Bank is managing rapid branch expansion with Temenos T24 core banking. It has developed a range of Islamic banking products for customers ranging from governments to individual consumers and is establishing a centre of excellence for Islamic banking.

NumbersBusiness Benefits

• Rapidrolloutofcomprehensiveintegratedcorebankingsolution.

• Advancedarchitecturetoprovideperformancetolargebranchnetwork.

• Out-of-the-boxIslamicbankingfunctionality.

• SupportfromlocalpartnersandTemenosfordevelopmentofIslamicbankingproducts.

• Profitaftertax(2011):Rupees3,391,000,000(US$36,075,000)

• Totalassets(2011):Rupees200,550,000,000(US$2,133,511,000)

• Returnonaverageassets(2011):1.91

Name MeezanBank

Headquarters Karachi,Pakistan

Sector IslamicBanking

Case StudyMeezan Bank

Page 2: Case Study Meezan Bank - Enterprise Innovation · PDF fileMeezan Bank is managing rapid branch expansion with Temenos T24 core banking. It has developed a range of Islamic banking

TemenosCaseStudy02

MeezanBankistheleadingIslamicbankinPakistan,andthefastestgrowingamongstbothconventionalandIslamicfinancialinstitutions.

TemenosT24supportsMeezanBank’sbranchtrading,fromretailtotradefinance,treasury,andallkindsofalternativedistributionchannelsbyintegratingwiththebank’smiddleware.

MeezanBankwasestablishedin2002withfourbranches,nowhas291andplanstohavemorethan700by2017.Thenumberofemployeeshasdoubledtomorethan4,000since2007.

TheinitialprocuringofT24asitscorebankingsystemwasinresponsetotheirmanagementsettinganambitiousbranchopeningtargetinitsfive-yearplan.“BeforeT24,wehadadecentralisedserviceinallbranches.Theexpansionpolicyof2004/5forcedustorethinkandwedecidedtoadoptforacentralisedintegratedapplication,”explainsExecutiveVicePresident,IT,IqbalAhmad.

AhmadheadsupIToperationsandisresponsibleforimplementingT24inallbranches,forsupportandfordevelopmentandenhancementofapplications.“WeevaluatedanumberofapplicationsandchoseT24becauseofitsabilitytosupportthisambitiousgrowthfromasingleintegratedplatform.MeezanBankwasoftheviewthatimplementationofT24wasthequickestandsafestroutetoacquiringandembeddinginternationalbestpractices,”saysAhmad.“T24offeredstringentcontrolswhicharecritical,indeedinevitable,andthesingleplatformhelpswithdisasterrecoveryandbusinesscontinuityissues.”

MeezanBankiscurrentlyusingT24Release8andtheITdepartment’snextbigprojectisanupgradetoT24Release12onthenewTemenosEnterpriseFrameworksArchitecture(TEFA)platform.Ahmadadvisesthatthenewhardwarehasalreadybeenorderedforthebank’shighperformancepurpose-builtdatacentreinKarachi.

InPakistansome95-96%ofthepopulationareMuslims,andtheydon’twanttousebankingservicesthatarebasedonriba(interest),andwhichthereforebreakthelawsoftheirreligion.Thesenumbersaresmall,comparedtoothercountriesinthesameregion,currentlyusingmainstreambankingservices.

“Whenpeoplehaveanoptiontobankwithaninstitutionwhichoffersbankinginlinewiththeirbeliefs,they’lldomorebanking.It’sthemainreason,Ibelieve,thatMeezanBankisgrowingsoquickly,”saysFarhanUsmani,VicePresidentforproductdevelopmentandShariahcomplianceintheShariahadvisorydivision.

MeezanBankoffersitsbranchcustomersawiderangeoffinancialproducts,allofwhichgothroughano-compromiseShariah-complianceaudit.Asimilarprocesstakesplaceontheopeningofabranch.AShariahSupervisoryBoard–whichiscompletelyseparatefromthebank’soperations–overseescomplianceandthebankmeetswithitsbusinesscustomersandreviewstheirprocessesinordertoofferShariah-compliantfinancingsolutions.

“Thiskindofbankingisbasedonadifferentmindset,”explainsUsmani.“WheneveryoudoatransactioninIslamicbanking,whetherit’satradingtransactionoranequitytransaction,youdon’tlendorborrowmoney.Overmanyyearswe’vedevelopedvariousstructuresthatconformtothismindset,tocovertrading,deposit,rentalandservices.IbelieveitrequiressometimeforITdeveloperstounderstandthisdifferentmindset.”

Usmani’sexperienceisthatcompliancewithShariahlawisnotaconstraintbutadisciplinewhichcanprovidebetterresults:“SomemayconsiderbankinginanIslamicmannercomplicatedandthereforeahindrancebutweviewitasanopportunity.Ifyouinvestinagoodproductdevelopmentwingandinresearch,itimprovesyourbusinessrange.We’vereactedtothechallengethatwemightnotcompetewithconventionalbanksandhavebeenabletooffermoreproductsthanourconventionalcounterparts.”

Inretailbanking,consumerscanopendepositaccounts,makepaymentsandtakeadvantageoffinanceproductstohelpbuyahouse,acaroralaptop.“WehavethelargestproductrangeofanybankinPakistan,includingourconventionalrivals,”saysUsmani.MeezanBankalsocompetesinallchannels,offeringitscustomersSMSalerts,internetbankingandacallcentre.

Supporting Growth Islamic Banking

“We evaluated a number of applications and chose T24 because of its ability to support this ambitious growth from a single integrated platform.”IqbalAhmad-ExecutiveVicePresident-MeezanBank

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TheITdepartment’scoreroleisasaninternalserviceprovidertothebank’sbusinessfunctions,withtheaimofbecomingabusinessenablerratherthanacostcentre.“Ourshort-termgoalistorunversion12oraboveofT24ontheTemenosEnterpriseFrameworksArchitecturewithinthenext12months,”saysAhmad.“That’sournextmajormilestone.”

MeezanBankfirstranT24Release5in2006toacquirethetreasuryfunctionality.HavingsignedanagreementwithTemenosinMarch2007,thebankimplementedT24Release8forcorebanking.“WeconductedabusinessreviewandproduceddocumentationandbeganworkingwiththelocalimplementationpartnerNDC,”explainsAhmad.“Weutilisedthemodelbankapproach.Wedidourbesttouseasmuchaswecouldandthengotintovigoroustesting.”

“Ouremphasisatthebeginningwasontestingandusertrainingratherthanonrequestsformajorcustomisations,”remembersAhmad.“ThatwasakeysuccessfactorandwewereabletoimplementT24retailandtradefinancemodulesacrossthebranchnetwork.”

ThefirstbranchwentliveinMay2009andastagedroll-outfollowed,whichtooktwoyearstocomplete.Mostbrancheswereconnectedbytheendof2011andafinal23brancheshavebeenrolledoutin2012.Thebankhastwotypesofbranches.Thefirstoffersafullrangeofservices,tradefinance,treasury,financingandretail.Thesecondservicesthedepositproductalone.Anewconcept,thesmartbranch,isalsobeingtrialled.“Thesmartbranchwillhavealeanstaffteaminthefrontofficeandwillbeequippedwithverysmarttechnologysolutionssuchasinteractivekiosks,”explainsAhmad.

Initialperformanceissuesencounteredbythebankduringtheinitialphaseoftheroll-outprocesswereresolvedinclosecoordinationwithNDCandTemenos’help-deskteams.“Followingacontinuousimprovementprocess,T24hasnowbecomequitestableandperformsuptoexpectations,”saysAhmad.HeislookingforwardtotheimpendingimplementationofRelease12onnewhardwaretofurtherimproveperformance.

Branch Service

“TheIslamicBankingmoduleisgreatbutthereisalwaysopportunityforfurtherimprovement,”saysAhmad.MeezanBankisworkingwithTemenos’productdeveloperstocomeupwitharoadmapandtodevelopapplicationssuchasForextosuitIslamicbanking.HebelievesthattheTEFAplatformisanopportunityforTemenostodevelopgenericfunctionalityforIslamicbanking.

“The implementation of TEMENOS T24 is a major milestone for Meezan Bank. We are confident that this will enable us to meet the demands of our rapidly growing branch network and also provide a stable and efficient technology platform to meet the challenges of a very competitive banking industry in Pakistan.”Mr.ArifulIslam-COO-MeezanBank

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www.temenos.com

MeezanBankhasworkedwithNDCandTemenostodevelopShariah-compliantfinancialproducts,includinglong-termcapital,commercialandstructuralforlargecorporationsand

government,whichwerenotavailableintheIslamicbankingmodule.

“It’safascinatingchallenge.We’vebeensuccessfulincreatingawiderangeofIslamicbankingfinancialproducts,”saysUsmani.“We’vedevelopedtheskillsetstooffertheseproductsandmanyscholarsputusasmarketleaders.”Usmani,amemberofthePakistanChamberofCommerce,keepsintouchwiththebusinesscommunitytounderstanditsissuesandhelpituseprocessesthatareShariah-compliant.

MeezanBank’sdedicationtoIslamicbankinghasmadeitaleaderanditisbeingcalledupontoprovideconsultingservicesinternationally.ItisalsoenteringintopartnershipswithbanksinothercountriesthatsharethesamevisionofestablishingaviableIslamicbankingsystem.

Centre Of Excellence

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“Information Technology is an integral part of every bank’s day-to-day operations, and core banking forms the life blood of the bank. Keeping this in vision we have named our T24 implementation project in Meezan Bank as “Project AORTA”. Aorta is the largest artery in the human body providing oxygenated blood to all parts of the body in the systemic circulation. Similarly with the help of T24 we were able to harness people, process and technology across MBL business and back office units.”FaizurRehman-CIO-MeezanBank