embodies a digital-first strategy that redefines banking by seamlessly providing futuristic Islamic finance
An exclusive interview with Shahzad Khokhar, Head of Islamic Banking, Mashreq Pakistan
PAGE: As Mashreq prepares to launch its Islamic banking operations in Pakistan, what unique value proposition do you believe we can offer to the Pakistani market?
Shahzad Khokhar: As Mashreq prepares to launch its Islamic banking operations in Pakistan, we are uniquely positioned to offer significant value in a market where both digital and Islamic banking are burgeoning. This growth is driven by increasing consumer demand and a regulatory landscape that favors innovative banking solutions.
Our entry into the Pakistani market is underpinned by a rich history of experience in the region, enhanced by a challenger bank mindset that has established us as leaders in both digital and Islamic banking sectors. Mashreq Al Islami, our Islamic banking franchise, has been recognized with prestigious accolades such as the ‘Most Innovative Islamic Banking Window’ and ‘Best Islamic Digital Bank.’ These awards attest to our commitment to excellence and innovation in delivering Shariah-compliant solutions.
What truly sets us apart is our capability to integrate state-of-the-art digital platforms, making Islamic banking products and services easily accessible beyond traditional brick-and-mortar confines. This approach not only brings convenience but also aligns modern banking practices with the values held by customers who adhere to Islamic financial principles.
Our roots in the Middle East enable us to resonate deeply with the Pakistani populace, bridging both business and personal banking needs. Our inherent cultural values are in harmony with Islamic banking principles, positioning us as not merely a service provider but a partner attuned to and respectful of local traditions.
Mashreq is set to deliver a unique blend of technological innovation, expert Islamic banking, and deep cultural affinity. This powerful combination will cater to the evolving needs of Pakistani customers who desire a banking experience that marries religious fidelity with contemporary convenience. We are committed to fulfilling these needs and setting a new standard in the Pakistani banking sector.
PAGE: How does Mashreq plan to leverage its international experience in Islamic banking to address the specific needs and challenges of the Pakistani financial sector?
Shahzad Khokhar: Mashreq is set to bring its robust international experience in Islamic banking to effectively address the unique needs and challenges of the Pakistani financial sector. With over two decades of success in the UAE, our Islamic Banking division has evolved into a major player recognized for its excellence and innovation.
We plan to leverage this extensive background by customizing our offerings to meet the specific preferences and requirements of Pakistani customers. This approach ensures that our solutions are both relevant and impactful, adapting our proven Islamic banking framework rather than merely transplanting it.
In response to the pressing challenge of financial access in Pakistan, we are merging our Islamic banking expertise with advanced digital technologies. This strategic integration will enable us to offer Shariah-compliant digital banking solutions that enhance accessibility, dismantle geographical barriers, and foster financial inclusion.
Our experience across various customer segments allows us to introduce a comprehensive portfolio of Islamic banking products and services tailored to the diverse needs of Pakistan’s populace. From everyday banking to intricate financial solutions, we aim to cater to all segments, ensuring a broad appeal and high utility.
At Mashreq, we believe that successful banking is about understanding and meeting the real needs of people and businesses. By applying our international insights to local challenges, we aim to be a true partner in Pakistan’s financial growth and development.
PAGE: With the growing interest in ethical and sustainable finance globally, how do you see Islamic banking principles aligning with and contributing to these trends in Pakistan?
Shahzad Khokhar: Islamic banking principles align seamlessly with the growing global interest in ethical and sustainable finance, presenting a significant opportunity for Mashreq to lead these trends in Pakistan. Islamic banking, inherently based on values of ethics, responsibility, and social well-being, naturally complements the Environmental, Social, and Governance (ESG) criteria that are central to modern financial systems.
There is a profound synergy between Islamic finance and ESG initiatives, both advocating for responsibility towards environmental and social welfare. This alignment enables financial institutions like Mashreq to integrate Islamic banking products with sustainable finance practices effectively. In Pakistan, this could include the development of green sukuks and investments in environmentally friendly projects, aligning with both Islamic principles and ESG objectives.
Mashreq is committed to leveraging this alignment to enhance our product offerings and operational practices. We are actively incorporating ESG principles into our initiatives, such as the innovative Nature Savings Account offered in the UAE, which reflects our commitment to environmental consciousness and sustainability.
As Islamic banking continues to evolve, it will undoubtedly play a pivotal role in promoting ethical and sustainable finance in Pakistan. By delivering Shariah-compliant financial solutions that also uphold ESG values, Mashreq is positioned to meet the changing needs of our customers and contribute to a more sustainable future.
PAGE: What role do you envision for digital innovation in Mashreq’s Islamic banking offerings, and how might this differentiate us in the Pakistani market?
Shahzad Khokhar: Mashreq is poised to redefine Islamic banking in Pakistan through our commitment to digital innovation, centering around our customer-first approach. We are revolutionizing the banking experience by integrating state-of-the-art technologies such as AI, blockchain, and cloud computing, which underpin our digital-first solutions like Mashreq NEO, NEOBiz, NEOPAY, and NEO NXT. These platforms have not only streamlined banking operations but also enhanced customer interactions by providing secure, transparent, and efficient financial services.
Our digital innovations will differentiate us in the Pakistani market by making Islamic banking more accessible and convenient. Customers will benefit from the ability to manage their finances anytime and anywhere, without the need for physical bank branches. This flexibility is complemented by rapid account openings that transform the process from a matter of days to mere minutes, respecting our customers’ time and simplifying access to Islamic banking.
Our commitment to paperless processes aligns with environmental sustainability, resonating with the values of our customers and reinforcing the ethical foundation of Islamic banking. Mashreq’s integration into Pakistan’s growing digital ecosystem aims to make daily financial transactions effortless, supporting everything from bill payments to Shariah-compliant money management.
By leveraging our proven track record in digital banking, recognized repeatedly as the Best Digital Bank, we are not just participating in the market—we are leading it. Our goal is to empower the people and businesses of Pakistan with the best in banking innovation, ensuring that our solutions are not only technologically advanced but also culturally and ethically attuned to the needs of our customers.
PAGE: Given Pakistan’s diverse economic landscape, how does Mashreq intend to tailor its Islamic banking products to serve both urban and rural communities effectively?
Shahzad Khokhar: Pakistan’s digital landscape is ripe with opportunity. With over 77% mobile phone penetration, more than 60% smartphone usage, and over 60% of the adult population accessing formal banking services, the foundation for digital Islamic banking solutions is strong. The KAP Study by SBP and the Department of International Development UK found that 74% of the banked population is open to switching to Islamic Banking, showing a clear desire for accessible Shariah-compliant services.
Our strategy taps into this digital readiness to bridge the urban-rural divide. By focusing on seamless digital onboarding and user-friendly platforms, we aim to make Islamic banking accessible to everyone, regardless of location. This approach helps reach rural communities with limited access to physical banks while also serving the tech-savvy urban population.
We’re not just offering products; we’re providing a banking experience that aligns with people’s values and practical needs. Our digital-first approach ensures that whether you’re in a city or a remote village, you can easily access Shariah-compliant financial services.
By blending technological innovation with Islamic banking principles, we’re creating a more inclusive financial ecosystem in Pakistan. Our goal is to ensure that everyone, , can engage with banking services that respect their faith and enhance their financial well-being.
PAGE: As a new entrant in Pakistan’s Islamic banking sector, what strategies will Mashreq employ to build trust and credibility among potential customers?
Shahzad Khokhar: Mashreq’s carries a formidable international reputation; the Fastest-Growing Financial Services Brand in the Middle East, with a 200% growth in brand value since 2021, Mashreq has proven its adaptability and excellence across 14 countries.
The bank’s strategy to build trust in Pakistan rests on three pillars: its global brand strength, extensive Islamic banking expertise, and unwavering commitment to Shariah governance. To tailor its services, Mashreq plans to form a distinguished local Shariah board, blending international know-how with insights from respected Pakistani scholars.
Mashreq’s track record in innovation makes it an ideal contender to introduce cutting-edge, Shariah-compliant solutions in Pakistan. The bank aims to simplify financial journeys for individuals and businesses alike, leveraging its experience in creating inclusive banking experiences.
As it expands its footprint, Mashreq seeks to replicate its international success, offering world-class Islamic banking solutions while contributing to Pakistan’s economic progress. This approach reflects Mashreq’s core mission: uplifting customers and communities through innovation, trust, and global reach.
PAGE: With the State Bank of Pakistan’s recent initiatives to promote Islamic finance, how does Mashreq plan to collaborate with regulatory bodies to further develop the Islamic banking ecosystem in the country?
Shahzad Khokhar: Mashreq plans to work closely with the State Bank of Pakistan (SBP) to enhance the Islamic banking ecosystem in Pakistan. Their strategy focuses on three main areas:
First, Mashreq will support capacity-building by participating in training programs to boost awareness and expertise among professionals, Shariah scholars, and academics. This aligns with initiatives like those by the National Institute of Banking and Finance (NIBAF).
Second, the bank aims to develop a unique talent pool skilled in both digital banking and Islamic finance, addressing market needs and supporting the SBP’s growth agenda.
Lastly, Mashreq intends to make Shariah-compliant financial services more accessible through innovative products and a digital-first approach, aiming to increase Islamic banking’s market share in Pakistan.
By aligning with the SBP’s vision, Mashreq seeks to help create a more robust, inclusive, and tech-savvy Islamic banking ecosystem, contributing to the future of Islamic finance in Pakistan.
PAGE: What potential do you see for Islamic banking in supporting Pakistan’s key economic sectors, such as agriculture, SMEs, and infrastructure development?
Shahzad Khokhar: Islamic banking has significant potential to boost Pakistan’s key economic sectors, especially agriculture, SMEs, and infrastructure development. Core Islamic banking principles of ethical financing and real economic activity are well-suited to these areas, often neglected by conventional banking.
For agriculture, Islamic finance tools like Salam contracts for crop financing and Ijarah for equipment leasing can provide essential financial support while adhering to Shariah principles. This can modernize the agricultural sector, enhancing productivity and food security.
In the SME sector, Islamic banking can drive financial inclusion through profit-and-loss sharing and financing arrangements like ‘Musharakah’ and Íjarah’. These can supply small businesses with the capital needed for expansion, job creation, and economic growth.
For infrastructure, long-term Islamic financing instruments like Sukuk can fund large-scale projects crucial for development, such as energy and transportation networks.
The ethical and transparent nature of Islamic banking can build trust and encourage greater participation in the formal financial sector, fostering economic growth across all sectors. In essence, Islamic banking is a potent tool for sustainable economic development in Pakistan, aligning financial practices with ethical principles and real economic activity.
PAGE: Looking ahead, what are your aspirations for Mashreq’s Islamic banking division in Pakistan over the next five years, and how do you plan to measure its success and impact?
Shahzad Khokhar: Over the next five years, Mashreq’s Islamic banking division in Pakistan aims to lead with an ‘Islamic first’ approach, making our Shariah-compliant financial solutions available for clients through advanced digital platforms. We plan to make these services accessible to all segments of society, contributing to financial inclusion across Pakistan.
Talent development is another key focus. Mashreq intends to cultivate a pool of professionals skilled in both digital and Islamic banking, bolstering Pakistan’s financial sector expertise.
Success will be measured beyond traditional financial metrics. Customer satisfaction and loyalty will be crucial indicators, as will the bank’s impact on Pakistan’s economic prosperity. This includes supporting small businesses and facilitating ethical investments that drive growth.
Our goal is not just to expand as a bank, but to grow alongside Pakistan. We’re committed to enhancing the country’s financial ecosystem and overall economic wellbeing by blending Islamic banking principles with cutting-edge technology.