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  • Banking in emerging marketsGCC FinTech play 2017

  • 46

    1014

    Foreword

    Executive summary

    The FinTech revolution

    The GCC banking sector’s views on FinTech

    FinTech’s familiarity and its perceived impact

    FinTech’s threats and opportunities

    The GCC banking sector’s organizational readiness

    Hurdles and limitations faced by the GCC banking sector

    Compete or collaborate with FinTech players

    Contents17

    19

    21

    23

    24

  • The case for collaboration among participation banks

    Global FinTech and opportunities for participation banks

    Participation banking sector overview

    Country outlook

    Bahrain

    Saudi Arabia

    Malaysia

    UAE

    Kuwait

    Qatar

    Turkey

    Indonesia

    Pakistan

    2632

    46

    56

    48

    58

    50

    60

    52

    62

    54

    3844

  • Today more than two billion adults still do not have a bank account. There are also

    the center of this disruption.

    innovations.

    Abdulaziz Al-Sowailim

    Foreword

    GCC FinTech play 20174

  • Ashar Nazim

    brand.

    GCC FinTech play 2017 5

  • Executive summary

  • The FinTech revolution

    GCC banks’ views on FinTech

    The case for collaborationWe advocate collaboration between participation banks and

    FinTech opportunities for participation banks

    Participation banking sector overview

    The FinTech revolution

    journey, lower cost of services, increased choice, consumer empowerment, faster transaction speed and a more inclusive

    8 GCC FinTech play 2017

  • GCC bank’s views on FinTechThreats and opportunities:

    offer end customers a noticeably better value proposition.

    Organizational readiness: While there seems to be a

    transformation, practical steps to convert this intent into measureable results do not seem to have been taken.

    Hurdles and limitations:

    in this area.

    Compete or collaborate:

    them as potential business partners to collaborate with, for the

    The case for collaboration

    international norms.

    FinTech opportunities for participation banks

    Participation banking sector overview

    previous years.

    provided in the report.

    Muhammad Muzammil Kasbati

    GCC FinTech play 2017 9

  • The FinTech revolution

  • The FinTech revolution

    market entrants innovate products and services

    services sector.

    FinTech revolution

    Insurance

    Banking

    Asset management

    Wealth management

    Improved consumer journey

    Lower cost

    Increased choice

    Empowered customer

    Faster transaction speed

    FinTech enhances consumer value proposition

    GCC FinTech play 201712

  • services in particular.

    result in shorter transaction chain, reduced operational cost, enhanced resilience of operational processes,

    to increase revenue and improved

    bottom line.

    the transaction cost, increase the choice, improve the transaction speed

    to the customer.

    swathe of less well-off individuals, who

    the “physical” distribution structure and

    GCC FinTech play 2017 13

  • The GCC banking sector’s views on FinTech

  • FinTech in the GCC banking sector

    16 GCC FinTech play 2017

  • Low familiarity Some familiarity

    Very familiar

    E

    Yes

    FinTech familiarity and its perceived impact

    Q:

    Q:

    Familiarity with FinTech innovations is modest in the GCC banking sector.

    How would you rate your familiarity with

    GCC FinTech play 2017 17

    innovations as “low familiarity” or “some familiarity”

    players could cause any noticeable disruption in the

    propositions over those offered by the incumbent

    Survey participants are in doubt if FinTech could disrupt the GCC banking sector in the short term.

  • Ease of use

    Lower cost

    Wider variety or features

    Personalized service

    GCC FinTech play 201718

    Strengths of FinTech innovations are acknowledged by the GCC banking sector.

    innovations offer end customers a noticeably better value proposition, in terms of ease of use, cost, speed

    consumer journey.

    Low

    Q:

  • majority of the survey participants estimated that loss of the

    by 2020.

    very shortly develop a policy stance that actively

    Up to 5% 10%–15%

    43%

    15%–20%

    7%

    5%–10%

    36%

    20% and above

    7%

    7%

    FinTech threats and opportunities

    GCC FinTech play 2017 19

    Estimated loss of business to stand-alone FinTech

    Q:

  • international counterparts, who believe that

    disruption.

    participants believe that funds transfer

    sectors.

    disruption” activity that closely follows

    In a noticeably positive stance toward

    seems to be bullish on the potential of opportunities it offers to incumbent players.

    innovations could help them enhance consumer-centricity and reduce cost.

    why the survey participants believe that their loss of business to stand-alone

    modest compared with their international counterparts.

    from FinTech innovations.

    GCC FinTech play 201720

    Funds transfer and brokerage are viewed to be most likely to be disrupted.

    Deposits

    Low

    Low

    Q:

    Q:

  • GCC banking sector’s organizational readiness

    Senior management support for digital transformation through FinTech innovations.

    Somewhat

    of the initiative, practical steps to convert the intent into results do not seem to have taken place in most of

    A majority of the survey participants do not have a single person in charge of innovation.

    Yes

    In a majority of the survey participant banks, the

    and accountability.

    Q:

    GCC FinTech play 2017 21

    Q:

  • plan ready

    GCC FinTech play 201722

    In addition, two-third of the survey participant banks had either not had any substantive discussions within

    stated that they had an actionable work plan in place to

    Q:

    one option:

    Most GCC banks do not seem to have a credible work plan in place for digital transformation.

  • Hurdles and limitations faced by the GCC banking sector

    Estimated loss of business to stand-alone FinTech

    transformation.

    Low

    Low

    Tech

    nica

    l abi

    lity

    GCC FinTech play 2017 23

    a number of hurdles and limitations

    transformation initiative.

    and limitations was their bleak assessment of the technical ability

    survey participants felt that their

    position, in terms of technical

    Q:

  • GCC banks’ perception of FinTech Likely strategies of the GCC banks

    Build in-houseInvest

    Partner

    Irrelevant

    Survey participants’ views on the banking sector’s evolution toward a digital ecosystem.

    Compete or collaborate with FinTech players

    GCC FinTech play 201724

    The GCC banking sectors’ perception of FinTech and their likely strategies to compete with them

    Q:

    Q:

    view?

  • The need to build “shared-cost FinTech solutions” in the GCC region.

    Potential collaborative shared-cost FinTech solutions in the GCC region.

    Q:

    Q:

    GCC FinTech play 2017 25

    sector-level cost-effectiveness and reduce

    that there is a need to set up shared-cost

    When asked to prioritize a short list of potential

    participants rated authentication and biometrics,

    Behind this top priority list, the survey Smart surveillance systems

    Low

  • Case for collaboration among participation banks

  • The case for collaboration among participation banks

    Network effect

    in order to broaden its adoption and use.in the United States has joined hands with a non-bank small business lender, which

    Joint venture Peer-to-peer platform

    6 Malaysian participation banks

    IAP integrated (owner and operator of

    IAP)

    GCC FinTech play 201728

  • The case for collaboration in the GCC banking sector

    with investment from retail and institutional investors via

    Economies of scale

    conventional banks.

    economies of scale and broad market adoption is the mWallet

    Exploring emerging FinTech innovations

    Key objectives

    GCC FinTech play 2017 29

  • FinTech in the GCC banking sector

    “proof of concept,” and the development of common standards

    investment banks as depicted below. Within one year from its the outset.

    Avoid a two-tier participation banking sector

    commercially viable manner may be out of reach for many small and medium-sized participation banks. This is either because of

    Unless there is a proactive collaboration, there is a risk that we

    innovations, whereas small and medium-sized participation banks may end up as second-tier players with a competitive

    increased to more than institutions — September 2015

    GCC FinTech play 201730

  • GCC FinTech play 2017 31

  • Global FinTech and opportunities for participation banks

  • Global FinTech and opportunities for participation banks

    “Silicon Valley is coming. There are hundreds of start-ups with a lot of brains and money working on various alternatives to traditional banking.”

    some of the most attractive and valuable

    investments to date have been in the

    Private investment in global FinTech companies (US$b)

    Capital deployed in private FinTech companies by business area

    Institutional tools

    Insurance

    Payments

    2 2 2

    GCC FinTech play 201734

  • FinTech overview and opportunities for participation banks

    Potential opportunities for the participation banking sector

    market share.

    in most of the developed countries. Based on their familiarity

    SME lending platform

    company noted: “Working with a FinTech company called OnDeck, we will be piloting a new working capital product. The process will be entirely digital, with approval and funding generally received within one day vs. the current process that can take up to one month or more. The loans will be Chase branded, retained on our balance sheet, and subject to our pricing and risk parameters.”

    To identify innovation characteristics and emerging areas of innovation, EY has developed the following framework:1

    Source: UK FinTech — On the Cutting Edge, An Evaluation of the International FinTech Sector, EY, 2016

    paymentsInsurance investments and

    pensions

    Investment

    and capital markets

    innovations

    P2P payments

    tools

    Smart contractsBlockchain

    Telematics

    Social insurance

    WearablesVisualization tools

    GCC FinTech play 2017 35

  • Peer-to-peer lending platform

    on the current PLS business model.

    The participation bank conducts suitability evaluation of

    and monitors their performance. However, the responsibility to channel funds to ventures of their choice is moved to the investors.

    approach for their PLS account.

    Digital wealth managementhave decided to provide a policy support to set up automated

    participation banks to offer the PLS account holders yet another way to invest their funds in a Sharia-compliant manner.

    Investors

    • Individual, corporate and institutional investors

    Ventures

    • Similar to current

    in innovative and new

    viable projects

    Islamic banks

    Islamic bank, in line with

    on ventures

    • Suitability assessment on investors

    Provide Channel funds to ventures of their choice

    GCC FinTech play 201736

  • Banking and payments

    P2P payments:

    person payment solution to their clients.

    multinational company stated that, “This new P2P solution will securely make real-time funds available through a single consumer-facing brand. Chase and the partner banks represent 60% of all US consumers with mobile banking applications. We intend to keep P2P free for consumers and the network consortium is open for all banks to join.”

    the launch of a similar consortium-based P2P payments

    Digital-only bank for the millennials:

    services to meet the differentiated needs of this customer

    German online bank.

    for participation banks in the due course. There is a case for participation banks to evaluate collaborative ventures with

    countries.

    Multifactor digital authentication:

    driven authentication protocol for their clients.

    the three factors in client authentication. The other two factors

    FinTech in the GCC banking sector

    GCC FinTech play 2017 37

  • Participation banking sector overview

    40 International participation banking assets40 Regional market contributions41 Participation industry footprint42 Participation banking country contributions42 Leading 20 participation banks by capitalization

  • International participation banking assets*

    US$

    b

    13%

    572

    930

    2011 2012 2013 2014 2015

    GCC ASEAN Turkey and ROW South Asia

    385 455 515 606 663

    117 143

    153 159 142

    53 69

    84 89 91

    17 20

    24 28 33

    Share of participation banking assets* International participation banking assets* (US$b)

    Regional market contributions

    2011 2012 2013 2014 2015

    -15%

    -10%

    -5%

    0%

    5%

    10%

    15%

    20%

    25%

    30%

    35%

    GCC ASEAN Turkey and ROW

    South Asia

    Par

    tici

    pati

    on b

    anki

    ng m

    arke

    t sh

    are

    Banking penetrationSize of circle = Participation banking assets

    KSA

    UAE

    Kuwait

    Qatar

    Turkey

    Bahrain

    Indonesia

    Bangladesh

    EgyptPakistan

    Jordan

    0%

    10%

    20%

    30%

    40%

    50%

    60%

    70%

    0% 50% 100% 150% 200%

    Malaysia

    GCC FinTech play 201740

    Islamic

    Regional contribution to growth in 2015

    Growth rate by region Banking penetration and participation asset market share

  • Participation industry footprint Share of markets

    domestic industry.

    Global

    34%

    17%

    9%

    2%

    2%

    54%

    24%

    27%

    3%

    11%

    13%

    9%

    5%

    2%

    22%

    43%

    5%

    29%

    Pakistan

    Saudi Arabia

    UAE

    Qatar

    Indonesia

    Malaysia

    Kuwait

    Turkey

    Bahrain

    GCC FinTech play 2017 41

  • Participation banking country contributions

    Leading 20 participation banks by capitalization

    Country contribution in 2015 (US$b)

    Capitalization of top 20 banks

    Year on year (YoY) growth rate of assets, 2015 (in local currency)

    Malaysia

    14%

    KSA

    Kuwait Qatar Turkey

    Indonesia Bahrain Pakistan

    37%

    10% 10% 5%

    2% 2% 2%

    UAE

    18%

    Pakistan

    Bahrain

    Indonesia

    Turkey

    Qatar

    Kuwait

    UAE

    Malaysia

    Saudi Arabia

    CAGR2011–15

    Conventional Islamic

    16%

    13%

    17%

    7%

    17%

    21%

    17%

    4%

    26%

    –10% 0% 10% 20% 30%

    2012 2013–15

    CAR2015

    CAR2014

    Capital Adequacy Ratio (CAR)

    US$b 1 2 3 4 5 6 7 8 9

    10 11 12 13

    21% 16% 23% 17% 14% 15% 19% 20% 47% 16% 17% 16% 16% 17% 16% 14% 14% 22% 16% 14%

    20% 15% 26% 16% 15% 14% 18% 19% 44% 14% 17% 16% 17% 21% 17% 14% 13% 24% 16% 15%

    GCC FinTech play 201742

  • Top 20 participation banks

    assets

    0% 4% 8% 12% 16% 20%

    Average ROE 2011–15

    – 20 40 60 80100

    Total assets 2015US$b

    GCC FinTech play 2017 43

  • Country outlook

  • Total banking assets Total financing assets Total investment accounts

    37

    15

    0

    10

    20

    30

    50

    40

    2011 2012 2013 20152014

    US$

    b

    27% 29%

    21

    13

    0

    10

    20

    30

    50

    40

    2011 2012 2013 20152014

    US$

    b

    32% 38%

    23

    13

    0

    10

    20

    30

    50

    40

    2011 2012 2013 20152014

    US$

    b

    30% 35%

    4% 6%

    –25%

    –5%

    –15%

    5%

    15%

    2012 2013 20152014

    Investment accounts YoY growth* Financing YoY growthAssets YoY growth 4% 1% 4% –3% 8% 1%

    4% 5%

    –25%

    –5%

    –15%

    5%

    15%

    2012 2013 20152014

    3%0%

    –25%

    –5%

    –15%

    5%

    15%

    2012 2013 20152014

    Participation bankingConventional banking

    Conventional banking CAGR 2011–15

    Participation banking share

    Participation banking CAGR 2011–15

    %

    Participation banking penetration in Bahrain Bahrain

    GCC FinTech play 201746

  • Return on assets Return on equity Cost to income ratio

    1.2%

    1.1%

    –1.0%

    0.0%

    2.0%

    1.0%

    2011 2012 2013 20152014

    9%

    9%

    –5%

    0%

    15%

    10%

    5%

    2011 2012 2013 20152014

    56%

    39%

    0%

    20%

    100%

    40%

    60%

    80%

    2011 2012 2013 20152014

    7.77.7

    2011 2012 2013 20152014

    6%

    3%

    0%

    4%

    2%

    6%

    8%

    10%

    0

    4

    2

    6

    8

    10

    2011 2012 2013 20152014

    35%29%

    0%

    40%

    20%

    60%

    80%

    100%

    2011 2012 2013 20152014

    Participation bankingConventional banking

    Share of global market* Share of participation banking growth in 2015

    GCC FinTech play 2017 47

  • Total banking assets Total financing assets Total investment accounts

    273316

    0

    100

    200

    300

    500

    400

    2011 2012 2013 20152014

    US$

    b

    43% 54%

    179

    269

    0

    100

    200

    300

    500

    400

    2011 2012 2013 20152014

    US$

    b

    50% 60%

    428

    0

    100

    200

    300

    500

    400

    2011 2012 2013 20152014

    US$

    b

    10%

    –2%–10%

    10%

    0%

    20%

    30%

    2012 2013 20152014

    Investment accounts YoY growth* Financing YoY growthAssets YoY growth

    Total banking sector CAGR 2011–15

    16% 4% 17% 5% 10%

    8%

    -2%–10%

    10%

    0%

    20%

    30%

    2012 2013 20152014

    2%

    10%

    10%

    0%

    20%

    30%

    2012 2013 20152014

    Participation bankingConventional banking

    Conventional banking CAGR 2011–15

    Participation banking share

    Participation banking CAGR 2011–15

    Total banking sector

    %

    Participation banking penetration in Saudi ArabiaSaudi Arabia

    GCC FinTech play 201748

  • Return on assets Return on equity Cost to income ratio

    2.0%

    1.8%

    0.0%

    1.0%

    4.0%

    2.0%

    3.0%

    2011 2012 2013 20152014

    13%

    12%

    0%

    10%

    40%

    30%

    20%

    2011 2012 2013 20152014

    48%

    35%

    0%

    20%

    100%

    40%

    60%

    80%

    2011 2012 2013 20152014

    6.9

    6.6

    2011 2012 2013 20152014

    4% 4%

    0%

    4%

    2%

    6%

    8%

    10%

    2011 2012 2013 20152014

    32%33%

    0%

    40%

    20%

    60%

    80%

    100%

    2011 2012 2013 20152014

    Participation bankingConventional banking

    0

    4

    2

    6

    8

    10

    Share of global market* Share of participation banking growth in 2015

    GCC FinTech play 2017 49

  • Total banking assets Total financing assets Total investment accounts

    296

    93

    0

    100

    200

    300

    600

    500

    400

    2011 2012 2013 20152014

    US$

    b

    20% 24%

    426

    123

    0

    100

    200

    300

    600

    500

    400

    2011 2012 2013 20152014

    US$

    b

    18% 22%

    242

    89

    0

    100

    200

    300

    600

    500

    400

    2011 2012 2013 20152014

    US$

    b

    20% 27%

    –5%–14%

    –40%

    0%

    –20%

    20%

    40%

    2012 2013 20152014

    Investment accounts YoY growth* Financing YoY growthAssets YoY growth 5% –1% 10% 0% 3% –2%

    –11%–16%

    –40%

    0%

    –20%

    20%

    40%

    2012 2013 20152014

    –18%–17%

    –40%

    0%

    –20%

    20%

    40%

    2012 2013 20152014

    Participation bankingConventional banking

    Conventional banking CAGR 2011–15

    Participation banking share

    Participation banking CAGR 2011–15

    %

    Participation banking penetration in MalaysiaMalaysia

    GCC FinTech play 201750

  • Share of global market* Share of participation banking growth in 2015

    Return on assets Return on equity Cost to income ratio

    1.2%

    0.9%

    0.0%

    1.0%

    4.0%

    2.0%

    3.0%

    2011 2012 2013 20152014

    13%

    11%

    0%

    10%

    40%

    30%

    20%

    2011 2012 2013 20152014

    53%

    41%

    0%

    20%

    100%

    40%

    60%

    80%

    2011 2012 2013 20152014

    12.3

    10.9

    2011 2012 2013 20152014

    3%4%

    0%

    4%

    2%

    6%

    8%

    10%

    2011 2012 2013 20152014

    13%

    34%

    0%

    40%

    20%

    60%

    80%

    100%

    2011 2012 2013 20152014

    Participation bankingConventional banking

    0

    8

    4

    12

    16

    20

    GCC FinTech play 2017 51

  • Total banking assets Total financing assets Total investment accounts

    270

    131

    0

    100

    200

    300

    600

    500

    400

    2011 2012 2013 20152014

    US$

    b

    24% 33%

    516

    159

    0

    100

    200

    300

    600

    500

    400

    2011 2012 2013 20152014

    US$

    b

    18% 24%

    243

    134

    0

    100

    200

    300

    600

    500

    400

    2011 2012 2013 20152014

    US$

    b

    30% 36%

    15%5%

    –40%

    0%

    –20%

    20%

    40%

    2012 2013 20152014

    Investment accounts YoY growth* Financing YoY growthAssets YoY growth 17% 9% 14% 6% 17% 5%

    5%

    –40%

    0%

    –20%

    20%

    40%

    2012 2013 20152014

    15%

    –1%

    –40%

    0%

    –20%

    20%

    40%

    2012 2013 20152014

    Participation bankingConventional banking

    Conventional banking CAGR 2011–15

    Participation banking share

    Participation banking CAGR 2011–15

    17%

    %

    Participation banking penetration in the UAEUAE

    GCC FinTech play 201752

  • Share of global market* Share of participation banking growth in 2015

    Return on assets Return on equity Cost to income ratio

    1.7%1.7%

    0.0%

    1.0%

    4.0%

    2.0%

    3.0%

    2011 2012 2013 20152014

    13%

    12%

    0%

    10%

    40%

    30%

    20%

    2011 2012 2013 20152014

    39%

    31%

    0%

    20%

    100%

    40%

    60%

    80%

    2011 2012 2013 20152014

    8.0

    7.1

    2011 2012 2013 20152014

    4%3%

    0%

    4%

    2%

    6%

    8%

    10%

    2011 2012 2013 20152014

    28%31%

    0%

    40%

    20%

    60%

    80%

    100%

    2011 2012 2013 20152014

    Participation bankingConventional banking

    0

    8

    4

    12

    16

    20

    GCC FinTech play 2017 53

  • Total banking assets Total financing assets Total investment accounts

    54

    74

    0

    20

    40

    60

    120

    100

    80

    2011 2012 2013 20152014

    US$

    b

    50% 58%110

    84

    0

    20

    40

    60

    120

    100

    80

    2011 2012 2013 20152014

    US$

    b

    43% 43%

    5258

    0

    20

    40

    60

    120

    100

    80

    2011 2012 2013 20152014

    US$

    b

    64% 53%

    –18%

    33%

    –40%

    0%

    –20%

    20%

    40%

    2012 2013 20152014

    Investment accounts YoY growth* Financing YoY growthAssets YoY growth 5% 5% –1% 12% 8% 0%

    1%

    –40%

    0%

    –20%

    20%

    40%

    2012 2013 20152014

    –6% –2%

    –40%

    0%

    –20%

    20%

    40%

    2012 2013 20152014

    Participation bankingConventional banking

    Conventional banking CAGR 2011–15

    Participation banking share

    Participation banking CAGR 2011–15

    –6%

    %

    Participation banking penetration in KuwaitKuwait

    GCC FinTech play 201754

  • Share of global market* Share of participation banking growth in 2015

    Return on assets Return on equity Cost to income ratio

    1.1%

    1.1%

    0.0%

    1.0%

    4.0%

    2.0%

    3.0%

    2011 2012 2013 20152014

    10%

    8%

    0%

    10%

    40%

    30%

    20%

    2011 2012 2013 20152014

    45%

    34%

    0%

    20%

    100%

    40%

    60%

    80%

    2011 2012 2013 20152014

    8.6

    7.5

    2011 2012 2013 20152014

    5%

    3%

    0%

    4%

    2%

    6%

    8%

    10%

    2011 2012 2013 20152014

    24%29%

    0%

    40%

    20%

    60%

    80%

    100%

    2011 2012 2013 20152014

    Participation bankingConventional banking

    0

    8

    4

    12

    16

    20

    GCC FinTech play 2017 55

  • Total banking assets Total financing assets Total investment accounts

    125

    54

    0

    50

    100

    150

    300

    250

    200

    2011 2012 2013 20152014

    US$

    b

    24% 30%

    222

    84

    0

    50

    100

    150

    300

    250

    200

    2011 2012 2013 20152014

    US$

    b

    23% 27%

    147

    59

    0

    50

    100

    150

    300

    250

    200

    2011 2012 2013 20152014

    US$

    b

    22% 29%

    24%

    11%

    –40%

    0%

    –20%

    20%

    40%

    2012 2013 20152014

    Investment accounts YoY growth* Financing YoY growthAssets YoY growth 17% 11% 25% 14% 22% 13%

    8%

    –40%

    0%

    –20%

    20%

    40%

    2012 2013 20152014

    13%6%

    –40%

    0%

    –20%

    20%

    40%

    2012 2013 20152014

    Participation bankingConventional banking

    Conventional banking CAGR 2011–15

    Participation banking share

    Participation banking CAGR 2011–15

    17%

    %

    Participation banking penetration in QatarQatar

    GCC FinTech play 201756

  • Share of global market* Share of participation banking growth in 2015

    Return on assets Return on equity Cost to income ratio

    1.9%

    1.6%

    0.0%

    1.0%

    4.0%

    2.0%

    3.0%

    2011 2012 2013 20152014

    14%

    13%

    0%

    10%

    40%

    30%

    20%

    2011 2012 2013 20152014

    29%

    27%

    0%

    20%

    100%

    40%

    60%

    80%

    2011 2012 2013 20152014

    8.1

    7.1

    2011 2012 2013 20152014

    3%3%

    0%

    4%

    2%

    6%

    8%

    10%

    2011 2012 2013 20152014

    18%24%

    0%

    40%

    20%

    60%

    80%

    100%

    2011 2012 2013 20152014

    Participation bankingConventional banking

    0

    8

    4

    12

    16

    20

    GCC FinTech play 2017 57

  • Total banking assets Total financing assets Total investment accounts

    402

    250

    300

    600

    1,500

    1,200

    900

    2011 2012 2013 20152014

    US$

    b

    6% 6%

    737

    420

    300

    600

    1,500

    1,200

    900

    2011 2012 2013 20152014

    US$

    b

    5% 5%

    1,219

    380

    300

    600

    1,500

    1,200

    900

    2011 2012 2013 20152014

    US$

    b

    6% 3%

    15%

    123%

    0%

    80%

    40%

    120%

    160%

    2012 2013 20152014

    Investment accounts YoY growth* Financing YoY growthAssets YoY growth 9% 6% 16% 40% 4% 4%

    –5%

    –40%

    0%

    –20%

    20%

    40%

    2012 2013 20152014

    –11%–6%

    –40%

    0%

    –20%

    20%

    40%

    2012 2013 20152014

    Participation bankingConventional banking

    Conventional banking CAGR 2011–15

    Participation banking share

    Participation banking CAGR 2011–15

    –8%

    %

    Participation banking penetration in TurkeyTurkey

    GCC FinTech play 201758

  • Share of global market* Share of participation banking growth in 2015

    Return on assets Return on equity Cost to income ratio

    1.1%

    0.3%

    0.0%

    1.0%

    4.0%

    2.0%

    3.0%

    2011 2012 2013 20152014

    11%

    3%

    0%

    10%

    40%

    30%

    20%

    2011 2012 2013 20152014

    54%

    49%

    0%

    20%

    100%

    40%

    60%

    80%

    2011 2012 2013 20152014

    11.6

    9.3

    2011 2012 2013 20152014

    5%5%

    0%

    4%

    2%

    6%

    8%

    10%

    2011 2012 2013 20152014

    29%28%

    0%

    40%

    20%

    60%

    80%

    100%

    2011 2012 2013 20152014

    Participation bankingConventional banking

    0

    8

    4

    12

    16

    20

    GCC FinTech play 2017 59

  • Total banking assets Total financing assets Total investment accounts

    421

    160

    100

    200

    300

    600

    500

    400

    2011 2012 2013 20152014

    US$

    b

    565

    200

    100

    200

    300

    600

    500

    400

    2011 2012 2013 20152014

    US$

    b 373

    150

    100

    200

    300

    600

    500

    400

    2011 2012 2013 20152014

    US$

    b

    3% 4%3% 3% 3% 4%

    –7% –4%

    –40%

    0%

    –20%

    20%

    40%

    2012 2013 20152014

    Investment accounts YoY growth* Financing YoY growthAssets YoY growth 5% 4% 7% 4% 5% 1%

    –3%

    –40%

    0%

    –20%

    20%

    40%

    2012 2013 20152014

    –11%–5%

    –40%

    0%

    –20%

    20%

    40%

    2012 2013 20152014

    Participation bankingConventional banking

    Conventional banking CAGR 2011–15

    Participation banking share

    Participation banking CAGR 2011–15

    –9%

    %

    Participation banking penetration in IndonesiaIndonesia

    GCC FinTech play 201760

  • Share of global market* Share of participation banking growth in 2015

    Return on assets Return on equity Cost to income ratio

    3.4%

    1.3%

    0.0%

    1.0%

    4.0%

    2.0%

    3.0%

    2011 2012 2013 20152014

    25%

    16%

    0%

    10%

    40%

    30%

    20%

    2011 2012 2013 20152014

    72%

    45%

    0%

    20%

    100%

    40%

    60%

    80%

    2011 2012 2013 20152014

    12.1

    7.2

    2011 2012 2013 20152014

    8%

    10%

    0%

    4%

    2%

    6%

    8%

    10%

    2011 2012 2013 20152014

    18%24%

    0%

    40%

    20%

    60%

    80%

    100%

    2011 2012 2013 20152014

    Participation bankingConventional banking

    0

    8

    4

    12

    16

    20

    GCC FinTech play 2017 61

  • Total banking assets Total financing assets Total investment accounts

    92

    80

    30

    60

    90

    150

    120

    2011 2012 2013 20152014

    US$

    b

    121

    16

    0

    30

    60

    90

    150

    120

    2011 2012 2013 20152014

    US$

    b

    40

    60

    30

    60

    90

    150

    120

    2011 2012 2013 20152014

    US$

    b

    8% 8%8% 11% 6% 13%

    –40%

    0%

    –20%

    20%

    40%

    80%

    60%

    80%

    60%

    2012 2013 20152014

    Investment accounts YoY growth* Financing YoY growthAssets YoY growth 29% 3% 9% 10%

    12%

    –40%

    0%

    –20%

    20%

    80%

    60%

    40%

    2012 2013 20152014–22%

    13%

    –40%

    0%

    –20%

    20%

    40%

    2012 2013 20152014

    Participation bankingConventional banking

    Conventional banking CAGR 2011–15

    Participation banking share

    Participation banking CAGR 2011–15

    24%

    %

    53%

    Participation banking penetration in PakistanPakistan

    GCC FinTech play 201762

  • Share of global market* Share of participation banking growth in 2015

    Return on assets Return on equity Cost to income ratio

    1.7%

    0.5%

    0.0%

    1.0%

    4.0%

    2.0%

    3.0%

    2011 2012 2013 20152014

    16%

    10%

    0%

    10%

    40%

    30%

    20%

    2011 2012 2013 20152014

    76%

    43%

    0%

    20%

    100%

    40%

    60%

    80%

    2011 2012 2013 20152014

    17.5

    9.1

    2011 2012 2013 20152014

    4%

    6%

    0%

    4%

    2%

    6%

    8%

    10%

    2011 2012 2013 20152014

    18%30%

    0%

    40%

    20%

    60%

    80%

    100%

    2011 2012 2013 20152014

    Participation bankingConventional banking

    0

    8

    4

    12

    16

    20

    GCC FinTech play 2017 63

  • EY leadership team

    Our industry awards

    Best Islamic Advisory

    Firm, 2014

    Euromoney Islamic

    Best Islamic Advisory

    Firm, 2013, 2011, 2010,

    2009

    London

    WIBC Leading Islamic

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    World Islamic

    Bahrain

    Best Islamic Finance

    Advisory Firm, 2009, 2008,

    2007

    World Islamic

    Bahrain

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    3rd International Takaful Summit,

    London

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    Firm, 2014

    8th International Takaful Summit

    ADIB — Appreciation Award, 2013

    Islamic Economy Summit, Dubai

    Thought Leadership

    Award, 2013

    Ashar Nazim

    Gordon Bennie

    64 GCC FinTech play 2017

  • proprietary, based on sample and is not meant to be fully

    markets.

    and industry observers, to identify key trends, risks and priorities.

    factor.

    • and Turkey

    • input on the report.

    GCC FinTech play 2017 65

  • Fawad Laique (Bahrain/KSA)

    Ashar Nazim [email protected] twitter.com/@asharnazim

    Muhammad Muzammil Kasbati [email protected]

    Nader Rahimi(Bahrain)

    Imitiaz Ibrahim(Qatar)

    Muhammad Syarizal(Malaysia)

    Wajih Ahmed(Bahrain)

    Jahanzaib Mukhtiar (Bahrain)

    Ken Eglinton (UK)

    Khurram Siddiqui (UAE)

    Merisha Kassie (South Africa)

    Syed Hassan Sagheer (UAE)

    Yasir Yasir (Indonesia)

    Shoaib A Qureshi (Saudi Arabia)

    Anthony O’Sullivan (UAE)

    Selim Elhadef (Turkey)

    Muzammil Kasbati (Bahrain)

    Rashid Al Rashoud (KSA)

    GCC FinTech play 201766

  • EY

    About EY

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