Al Zayani said the app will allow customers in Bahrain and eventually in the rest of the GCC (Saudi Arabia, Kuwait, the United Arab Emirates, Qatar and Oman) to open a savings account based on Islamic finance and to access transactional and other facilities. He said the app is part of KFH’s consumer acquisition strategy and is targeted primarily at millennials and tech-savvy users. Al Zayani added that the app meets all industry standards.
Tarifica’s Take
Islamic banking is a system of finance that uses various innovative arrangements to comply with Islamic law—which generally the charging of interest to be usury and therefore forbidden—while still conducting modern banking. It is very popular in Muslim countries, including affluent ones such as the GCC states. Young and tech-savvy users are interested in having Islamic bank accounts and in doing financial transactions via their smartphones, which are integral to their way of life, so a purpose-built app from an Islamic bank is likely to find quite a few takers.
We think that mobile operators have an excellent opportunity here. While KFH-Bahrain’s app is operator-agnostic, MNOs in Bahrain and eventually elsewhere in the GCC could benefit from partnering with the bank to promote the service to their users and to bring in customers for KFH. In return, they could get a share of the revenue on a commission structure, or derive revenue from some other arrangement. Co-branding would likely be a win-win, and the first operator to the table could get an exclusive.
With the trend toward greater use of mobile money and smartphone-based banking in general, operators in markets with high Muslim populations should seek out partnerships with Islamic banking entities, which have a strong niche appeal that could benefit operators.