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
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
TemenosCaseStudy03
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
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
TEMENOS™,TEMENOS™,TEMENOST24™and™areregisteredtrademarksofTemenosHeadquartersSA
©2012TemenosHeadquartersSA-allrightsreserved.
Warning:Thisdocumentisprotectedbycopyrightlawandinternationaltreaties.Unauthorisedreproductionofthisdocument,oranyportionofit,mayresultinsevereandcriminalpenalties,andwillbeprosecutedtothemaximumextentpossibleunderlaw.
201212003
“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