UK’s IBB is set to become Al Rayan Bank, serving Muslims, non-Muslims alike

By Denise Marray

Gulf Times Correspondent London

The synergy between the Islamic Bank of Britain (IBB) and its parent company Masraf Al Rayan will soon be reflected in the British bank’s name. Customers were informed last week that the new name for IBB to be adopted towards the end of the year will be Al Rayan Bank.

Sultan Choudhury, chief executive officer of IBB, emphasised in the letter he sent out last week informing customers about the name change that the bank remains British regulated with a British board. “We remain Shariah-compliant, our ethos and value set is the same and our people are the same,” he explained.

Customers, he said, will benefit from the close relationship with Masraf Al Rayan. “We are engaging with Masraf Al Rayan across the business; for example in resource planning, synergies in terms of IT and exchanging staff on secondment.”

IBB, the UK’s first wholly Shariah-compliant retail bank, which has pioneered Islamic banking in the UK for a decade, serves both Muslim and non-Muslim customers. Its latest data shows a big surge in non-Muslim customers.

“On fixed term deposits, according to our estimations of the data, between January 1 and August 15 2014, 83% of our customers were non-Muslim. It’s indicative of the wider appeal that the bank now has,” Choudhury observed.

IBB has been recognised as an ethical alternative to conventional banking by the Move Your Money campaign. Launched in 2012, the campaign urges those upset by the high bonuses and dubious business practice exposed during the financial crisis to make an ethics-based banking switch.

There has been impressive growth on the retail side of the business: “Since the end of the financial year up to the end of September 2014 our retail deposits have grown by 29%,” said Choudhury.

The bank has invested heavily in its internet banking capability which has opened up its services to a much broader customer base. “Today you see customers with the bank who would not have been the typical customer in the past. A farmer in Norfolk goes online, opens an account and puts in money in approximately 15 minutes without any paperwork. Seven out of 10 of our prospective customers fly through our checks without having to produce a passport and proof of address manually. Our systems will check electoral rolls and credit bureaus; essentially we do our customer due diligence electronically,” he explained.

A lot of attention has also gone into making the website as informative and user-friendly as possible, especially in giving a clear explanation of Islamic banking principles. “We have over thirty videos and animations and short clips that help explain Islamic banking. It’s proving very popular – we have an average of 50,000 hits per month which is substantially up on previous years where the figure would have been 20,000 plus. Some months you can get 80,000 hits,” Choudhury said.

He sees considerable potential in business that will flow from the GCC in relation to both residential and commercial property.

“The GCC market is one of our growth areas – it is principally Qataris but there are a lot of Saudis as well who come to IBB for home purchase in London – usually a holiday home or an investment. That is an important plank of Al Rayan UK going forward.

“We have a mix of UK customers and Gulf clients buying commercial real estate, not just in London but across England and Wales. Though Gulf clients tend to focus on London and its environs, latterly they have been looking further afield. Yields are now better outside London.

“There is so much opportunity to work with institutions in the GCC to provide their clients with real estate financing opportunities in the UK. Our biggest area of asset growth has been commercial property clients and this year we have, albeit from a relatively small base, seen a 300% increase in this area. It is actually level with our retail Islamic mortgage sales. It’s been a fantastic year for us on commercial property finance,” he said.

The Help to Buy Home Purchase Plan (HPP) is proving especially popular with customers.

“Many people, including professionals who are first-time buyers, can afford to make their monthly payments but can’t afford the big deposits that are required in the UK property market these days. The Government worked with the bank to develop the guidance under the regulations for an Islamic Help to Buy and of the providers of Islamic finance in the UK Al Rayan/IBB are the first to offer this product. That’s the product we get the most enquiries about,” he noted.