Islamic Bancassurance and Wealth Management

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Islamic Bancassurance and Wealth Management

• Azman Ismail
• azmanwong_at_yahoo.com
• www.iifin.com

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What is Bancassurance?

• Bankassurance
• Merge between banking and insurance
• Allfinanz
• All financial services under one roof
• Financial supermarket

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What lead to the growth?

• Main reason
• Regulatory barriers between banking and insurance
  have diminished
• Results in more friendly environment

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Other reasons

• Banks gtone method to increase deposits
• Insurers gt alternative modes of distribution due
  to high agency costs
• Insurers own and control relationships with
  customers.
• Low expense ratio
• Cross selling of services

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Regulation Market Leaders

• USA
• Financial Services Modernization Act of 1999
• Citigroup
• UK
• Financial Services Act
• HSBC
• France
• most significant development
• Credit Agricole
• Malaysia
• BAFIA 1989 gt banking, finance company, merchant
  banking, discount house and money-broking
  businesses
• Maybank

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USA

• Citigroup 100 million customers 100 countries
• Total assets of 800 Billion and total revenues
  of 90 Billion
• 15 contributed by the insurance
• 16 of income thru insurance.

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Citigroups subsidiaries

• Citi Bank
• Salomon Smith Barney (CitiFinancial)
• SSB Citi Asset Management Group
• Salomon Brothers Asset Management,
• Smith Barney Asset Management
• Citibank Global Asset Management.
• Travelers Property Casualty and Travelers Life
  Annuity

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Travelers

• Total assets gt 50 Billion
• Total annual revenue gt 10 Billion
• Net annual profit gt 1 Billion.
• Travelers contribute 15 of Citigroup net profit

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UK

• HSBC Group
• gt 5,500 offices in 80 Countries
• Insurance comprises 8 of group profits
• HSBC Insurance Holdings gt back office operation
• administration, underwriting, product
  development, sales training and compliance

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HSBC Insurance Holdings

• General Insurance Underwriting
• Life and Pensions Insurance Underwriting
• General Insurance Broking
• Personal Financial Services Advisory and
  Consultancy
• Medical Insurance Underwriting
• Insurance Agency
• Risk Management services, (including captive
  insurance management).

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France
70 of new business 60 of total premiums
Sogecap (Societe Generale)
Predica (Credit Agricole)
Natio Vie (BNP)
Credit Mutuel
1970
1980
1990
2000
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Credit Agricole

• leading retail bank
• one family out of three
• 25 market share of mortgage lending,
• 21 market share of banking savings collection,
• 11 market share of life insurance.
• Assets gt500 billion

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Predica

• Total assets gt 60 Billion in 1999
• Gross premiums gt 12 billion
• Shareholders funds gt 2 billion.
• Net income gt 150 million.
• Expense ratio lt 5 (compared with 25-30)
• Distribution channel - 12,000 bank employees
• Policies gt 5 million,
• Policyholders gt 3.5 million.

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Malaysia

• Maybank
• From Bancassurance to Islamic Financial
  Supermarket
• Wealth Management

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Flashback
WEALTH MANAGEMENT/ FINANCIAL PLANNING
Product -Separated Premium

• Channel
• Banks
• Financial
• Planners

Market -Sophisticated
PROTECTION SAVINGS
Product -Fused Premium
Channel - Agency
Market -Fairly Simple
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Bancassurance ? BanksAgency ? Financial Planners
Banks

• Channel
• Banks
• Financial
• Planners

Financial Planners
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Between Bancassurance and Agency System
WEALTH MANAGEMENT
Banks
FINANCIAL PLANNING
Financial Planners
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From Transactional Banking To Wealth Management
Private Wealth Management
Private Banking
Preferred/Priority Banking
Transactional Banking
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Trends

• In the year 2000 alone, the figure hit 13.6
  trillion, and is currently still growing at a
  rate of 30 percent per year. In fact, there is
  now an emerging consensus in the banking world
  that, in order for top banks to stay lean, they
  must beef up their private banking portfolio
• Citibank, Chase Manhattan and Merrill Lynch are
  currently managing more than 100 billion each.

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• Wealth management has evolved rapidly over the
  past three years. Transparency, globalization and
  the growth of an entre- preneurial culture have
  led high net-worth clients to demand a new type
  of private bank. Such a bank needs a global
  presence, innovative investment ideas and strong
  investment banking capabilities. - EUROMONEY

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EUROMONEY DEC 2006

• Private banks have never had it so good. Every
  region in the world offers a growth opportunity.
  Clients want an ever-increasing array of products
  and services. This leads to intense competition,
  evident in Euromoneys latest annual private
  banking survey. But is further consolidation
  inevitable?

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Whos Who In Wealth Management
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Back To Maybank
Insurance, Trustee Services, etc
Client
Banking Services, Investment Services etc
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Bankatakaful Model
BANK
INSU- RER
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From Banka To IWM
OTHER
OTHER
BANK
INSURER
OTHER
OTHER
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Client-based model
INVEST MENT
ZAKAT /TAX
CLIENT
LEISURE FAMILY ETC
BUSINESS MGMT
TRUSTEE SERVICES
LOAN/ OD/ CARD
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IWM Tools
BACK OFFICE
CLIENT
PRO- DUCTS
ISLAMIC WEALTH MGR
CLIENT
SOFT WARE
CLIENT
INFO NEWS
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Islamic Concept of Wealth
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Islamic Concept of Wealth Management
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The Software
CALCULATORS
INTEGRATION
ITERATION
GENERATION
ANALYSIS
FARAID
FARAID
HAJ
HAJ
EDU.
EDU.
RETIRE.
RETIRE.
ZAKAT
ZAKAT
TAX
TAX
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The Future Model?
INVEST MENT
ZAKAT /TAX
TAKAFUL
BROKING
ASSET MGMT
TRUSTEE SERVICES
BANKING
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Wassalam