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Kuwait bank overhauls IT to go Islamic

Kuwait Real Estate Bank overhauls its IT systems to enable it to move from traditional banking to Islamic banking within the next six months.

A Kuwait bank has overhauled its IT systems to enable it to move from traditional banking to Islamic banking within the next six months.

In an unusual move, Kuwait Real Estate Bank will become fully Islamic later this year, as soon as it receives approval from the Central Bank. It has had to put entirely new systems in place to handle the new services, which will cover its six branches and head office.

“We were looking for a proven Islamic banking application that is already deployed in existing Islamic banks,” said Lamya Al-Tabtebai, executive manager, IT department, Kuwait Real Estate Bank.

“We were also looking at flexibility and scalability of the system and the ability for us to roll out products with a short lifecycle.”

New IT systems have been in place since 2004 and are currently running in parallel with existing banking systems so that staff can become familiarised and any flaws can be ironed out. When the change to Islamic banking is approved, the bank will simply switch off the old system and continue with the new ones, called Phoenix, Mosaic, Tradewind, and Corona.

“For the IT department now, it’s as if we’re running two banks,” said Al-Tabtebai. “The new systems are running on their own new servers.”

The bank has deployed 15 new servers to run its new systems. They will take over running the core banking systems, but the existing servers will be assigned to other duties.

“They are not replacing them, they are all working together,” said Al-Tabtebai. “However, when we switch completely to Islamic [banking] we will be utilising the existing servers for other functions or applications like MIS and reporting systems.”

“This is different from establishing a new Islamic bank from scratch where you don’t have any existing portfolios,” she said.

“With our case we had huge existing loans, accounts and deposits which we had to convert to the new system and take them with us into a new software, maintaining all the financial and non-financial attributes, yet we also needed to Islamise the products themselves.”

International Turnkey Solutions carried out the implementation, which took place between September 2003 and April 2004.

Hany Ramadan, banking implementation manager at ITS, said: “This was a big challenge for us. You will not find a lot of cases like this in the Middle East: an Islamic translation of a traditional bank.”

Kuwait Real Estate Bank is also planning to implement internet banking, self-service branches and other new technology following the change to Islamic banking. It will change its name to Kuwait International Bank when the move is approved, which is expected to be later this year.

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