Under the five-year transformation plan, the strategy is to grow “a bank within a bank,'' that is, to have income streams from both wholesale and retail banking.
Its universal banking licence allows KFH Malaysia to offer the full suite of Islamic banking products and services.
However, for all that to happen, certain processes need to be put in place or refined.
“One of the key ingredients of success for the bank is the ability to create a conducive environment for all employees to achieve their maximum potential. We have been working diligently behind the scene to strengthen our organisational structure,'' CEO Jamelah Jamaluddin tells StarBizWeek.
Under the previous organisational structure, she had found:
Too much direct reporting;
A large span of control which affected delivery and turnaround time;
Lack of strategic direction; and
Accountabilities not proportionately allocated to the heads of divisions.
A more refined organisational structure was introduced, effective January this year. Several improvements were targeted to:
Optimise performance (cost control management) and streamline business processes;
Align the business and operating models;
Manage the quality of assets and credit better;
Have more effective customers' interface;
Grow and sustain business; maximise the profitability of the business opportunities;
Focus on regional expansion; and
Assign accountabilities that commensurate with responsibilities.
Realising that the bank is primarily known in the wholesale area, she is steering it into the retail arena to bring in a new income stream and make use full use of its universal banking licence.
At this stage, her efforts are viewed positively by the industry. “KFH Malaysia's direction to go into retail business is a wise move after the fall of their corporate endeavour,'' says an industry player, referring to the RM800mil debts it had incurred earlier. “The present stewardship is hitting the right note with its new gold savings product which is its darling product now. It will probably gain the retail market in due course. The CEO is trying hard and putting big money into above the line adertisements.''
“Respecting that KFH is our competitor, it would not be appropriate for us to comment on their revamping initiatives. Nevertheless, we wish them all the best for this positive exercise, which will definitely benefit the industry and consumer at large,” says a source from Bank Islam.
KFH Malaysia's initial foray into corporate and wholesale banking had, to a certain extent, helped in brand positioning.
In fact, it has come up with some innovative structures for financing, for the:
RM500mil sukuk ijarah for AirAsia Bhd in May 2008;
RM720mil serial sukuk musharakah for Kuala Lumpur Sentral Sdn Bhd in April 2007;
RM69mil musharakah mutanaqisah for Sunway South Quay Bhd in August 2006; and
Ijarah rental swap, which is a treasury solution for customers with ijarah financing arrangements, in October 2006.
But for the new thrust into the mass market to be successful, more efforts in branding and marketing are required. Realising that, Jamelah has placed more priority on marketing and corporate communications in her new organisational structure.
“We want to be known to the masses not just as one of the Islamic banks but the preferred Islamic bank,'' she says, adding that microfinance will be among the new line-up of products.
“We are part of a bigger group worldwide, and that helps us,'' she says, unfazed by the competition and rapid expansion in the sector.” KFH is the second largest Islamic bank in the world. Set up in 1977, it has learned the loop,'' she says.
For instance, in introducing the its gold savings account, KFH Malaysia had leveraged on the experience of its sister company, KFH Turkey, which had mastered the product.
“We can develop products by making use of existing ones and adapting to the local market,'' she says, adding that asset and liability products will be upcoming.
Apart from the three in the market mortgages, personal financing and hire purchase there are variations, for example, personal financing for haj and umrah or the purchase of gold.
KFH Malaysia has 600 staff with different capabilities, experienes and levels of education. “We want to improve the quality of the staff to run an Islamic bank. We need to train them in Islamic banking products and be syariah compliant,'' says Jamelah.
A lot of time and resources are spent to train the staff on syariah-related aspects. technical skills and competency.
Jamelah is eyeing the rich experience of the senior management and how she can tap further into it. “We are thinking of how to make use of the 500 years of experience this group has accumulated and how to transfer some of that to the people below.
“We hold interactive sessions with the Generation Y, spend time with them and get their buy-in,'' she says. “This can act as an agent of change.''
Jamelah is confident that once the new direction, processes and culture shift are in place, the numbers will come.
KFH Malaysia, which has 10 branches, returned to the black in the fourth quarter ended Dec 31, 2010 with a profit of RM13mil from a net loss of RM35.5mil in the previous corresponding quarter but reported a full year (FY10) net loss of RM75.6mil which more than double its net loss the year before.
So far, more than RM100mil out of debts of RM792mil has been recovered or restructured.
The bank is working towards a culture that is open-minded and progressive.
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