Chapter 12 emphasises on ‘socialpreneurship’ is also exemplified by Meezan Bank, which has won the ‘Best Bank of Pakistan for 2018 and 2020’ award by the Pakistan Banking Awards, and which is the 5th largest bank of Pakistan and the largest Islamic Bank, even though it does not rely on religious imagery such as minarets, arches, and the green color. Its vision and strategy are built on two pillars: customer service, and the benefit of Pakistani society. Meezan Bank established a Customer Service Department as early as in 2005 and a Service Board chaired by the President while CEO oversees service quality. The bank uses service evaluation techniques such as Mystery Shopping and Customer Satisfaction Surveys. To add value to society it works with partners primarily in the healthcare and education sectors. The partners include the Alamgir Welfare Trust, the Indus Hospital, the Layton Rahmatullah Benevolent Trust, the Lady Dufferin Hospital, the Citizen Foundation, the LIFE school for special children in Karachi, the Idara Al-Khair Welfare Society, the Aga Khan University Hospital and many more (Dr. Aamir Khan, Case Advisor).
Founded with the vision to “establish Islamic banking as banking of first choice”, Meezan Bank has come a long way since its inception in 2002. Today it is the 5th largest Bank in Pakistan in terms of deposits and the largest Islamic Bank. It has the unique distinction of being a category pioneer and a category leader. Today there are 21 Banks operating in Islamic Banking Industry (5 full-fledged Islamic Banks and 16 Conventional Banks with Islamic Banking Branches/windows). In fact, Meezan Bank’s success not only led to new Islamic banks entering the industry but also persuaded the older banks that were in the industry before Meezan Bank to launch Islamic banking operations. To top all the honors and accolades, Meezan Bank was awarded “The Best Bank of Pakistan for 2018 and 2020” by the Pakistan Banking Awards.
The Vision
Meezan Bank’s vision since its inception has been to ‘establish Islamic banking as banking of first choice’. Islamic Banking is a system of banking that adheres to the principles of Islamic law (Sharia) and its practical application in the field of banking. This Vision was led by the fact that banking is a key element of any economy and Islam strictly prohibits interest-based dealings. Muslims across the world, therefore, need an alternate, Shariah-compliant banking solution. The mission behind the launch of Meezan Bank was to give access to customers to a one-stop shop for innovative value-added products and services within the bounds of Islamic laws. If these customers are also provided top of the line service, automation and innovative banking solutions, Islamic banking will become their only banking choice.
The launch of Islamic Banking and Meezan Bank in Pakistan attracted a large number of non-banking individuals who started their relationship with a vank. In addition, a lot of customers who previously had a banking relationship with a conventional bank also shifted their accounts to Islamic banking. This led to them utilizing Meezan Bank’s services and receiving returns on their investments. Traditionally these customers did not have a relationship with a vank or receive profits as they wanted to stay away from interest due to religious reasons.
Keeping in view the importance of Shariah-compliance as its main USP, Meezan Bank built its brand on this promise. With a highly credible Shariah Supervisory Board, that includes some very well-respected and prominent international Shariah scholars, and a Shariah Compliance Department that oversees and audits all aspects of business and day-to-day workings to ensure that all the Bank’s activities are fully shariah-compliant, Meezan Bank has developed a very high credibility for its Shariah-compliance USP and is the benchmark in the industry.
Disruptive Innovation
Meezan Bank started the disruptive Innovation in the banking industry of Pakistan; it led the launch and success of Islamic Banking in Pakistan in 2002. Nearly two decades later, in 2020, the Islamic Banking Industry (IBI) share stands at 18.3% in terms of deposits of the overall banking industry. Meezan Bank’s share among full-fledged Islamic Banks in Pakistan stands at 62% and in the IB industry as a whole stand at around 37%.
Meezan Bank has introduced numerous innovative products and services for the Pakistani market that later become industry standards and gained the attention of other Islamic banks globally. Meezan Bank was the first bank to launch Islamic Housing, Car and Consumer Durables financing, that led to adding new customers who wanted to avail such facilities while avoiding interest. Additionally, Meezan Bank is leading the technological advancements with the launch of free intra Meezan Bank money transfers in 2002, Internet Banking in 2006, Debit Cards in 2009, and Mobile Banking Application in 2014 (which, with a rating of 4.9 is the highest rated Mobile Banking Application in Pakistan) showing Meezan Bank’s commitment to technological innovations that make it easier for customers to conduct banking transactions without the need to visit a branch, supported by other customer-centric innovative add-ons for corporates and the general public that led to high satisfaction levels and brand loyalty.
In addition to being the largest Islamic Bank in Pakistan, Meezan Bank was the 5th largest Bank in the country in terms of Deposits in 2020, and had achieved the fastest growth in the Pakistan’s banking industry. In 2002, Meezan Bank was one of the smallest of the 35 commercial banks operating in the country and by 2020 had risen to be the 5th largest in a period of just 19 years. Meezan Bank recorded a Profit after Tax of Rs. 22.16 billion for the year 2020 which was around 80% of the full-fledged Islamic Banks and around 9% of the overall Banking industry in Pakistan. Meezan Bank’s branch network also increased from a mere 6 branches in 2002 to 815 branches in 2020, which is also one of the fastest growths in the banking industry of Pakistan. Despite being the 7th largest bank in Pakistan in terms of branches, Meezan Bank is 5th largest in terms of deposits and the 4th most profitable bank in the country.
However, despite being the first mover and the market leader in Islamic Banking, Meezan Bank’s marketing effort does not rely on religious imagery to emphasize Shariah compliance. Meezan Bank has thus not used minarets, arches, the color green, etc. to highlight the 'Islamic' angle. As discussed in the following section, Meezan Bank has adopted a two-pronged approach by promising Shariah-compliant banking services and the highest service quality.
Focus on Customer Service
Meezan Bank has adopted a two-pronged approach. Not only are Bank’s offerings Shariah-compliant, the Bank has also placed equal focus on great customer service: the unwavering commitment to excellent customer service and innovation led to positive word of mouth. A major reason for the success of Meezan Bank, in addition to their core USP of Islamic banking and focus on service has been their focus on increasing their branch network and customer touch points. This has been a major focus and during some years Meezan Bank has added more branches to their network than some bank's total branches. This has given them access to more customers and given customers convenience to use Islamic banking. The strength of the Bank’s deposit base is indicated by the fact that top 50 customers of the Bank contribute towards less than 10% of the Bank’s total deposits; the Bank’s deposit base is therefore highly granular indicating a high level of trust of the general population in the Bank’s credibility the presence of an internationally reputed Shariah Supervisory Board to guide the bank as well as a strong and stable management team has helped the bank to strengthen its brand image.
Realizing early that high quality service would be one of the key differentiating factors, Meezan Bank established a Customer Service Department in 2005 to fulfill its Mission to provide high quality service to its customers. A Service Board, chaired by the President and CEO, is responsible for overseeing service quality of the Bank to ensure delivery of a quality banking experience to customers and to drive the continuous improvement process. The Bank uses service evaluation techniques such as Mystery Shopping and Customer Satisfaction Surveys for obtaining feedback from customers for improving its product and services. The Bank has a dedicated Complaint Management team that handles customer complaints and real-time monitoring of Social Media Channels ensures that the Bank is aware of customer concerns, grievances and complaints and that these are resolved on priority. All of this is to ensure effective customer support and to highlight Meezan Bank as a service-driven organization. Customer engagement activities like seminars and workshops help to increase customer understanding of Islamic banking and its book ‘Meezan Bank Guide to Islamic banking’ and other educational material/booklets help answer customer queries about banking as well as other finance related matters. Meezan Bank has the highest following of any Bank in Pakistan which shows the customer and general public's interest in Meezan Bank and engagement. The Bank tries to effectively use this medium for the promotion of Meezan Bank, Islamic banking, and the difference between Islamic and conventional banking.
The Triple Bottom Line
The Triple Bottom Line incorporates three dimensions of performance: social, environmental and financial. Meezan Bank believes in creating value for its stakeholders and society simultaneously, in a manner that is integrally linked to its own values and the Islamic principle of Ihsan. The Bank recognizes that it is part of the community at large and that there is a strong need to contribute to the society. Throughout the years, the Bank, individually or in partnership with Ihsan Trust, contributed to various charity organizations, primarily in the healthcare and education sectors, to benefit the society. These included Alamgir Welfare Trust, The Indus Hospital (TIH), Layton Rahmatullah Benevolent Trust (LRBT), The Lady Dufferin Hospital, The Citizens Foundation (TCF), LIFE School in Karachi for the special children, Idara Al-Khair Welfare Society, Aga Khan University Hospital (AKUH). This year the coronavirus affected millions of livelihoods in Pakistan. Thousands of daily wage workers were rendered helpless and finding it very challenging to support their families. Meezan Bank created a Relief Fund to support and carry out a ration drive to COVID-19 affected families.
In 2020, Karachi was hit by heavy rainfall and Meezan Bank contributed for distribution of ration, rebuilding huts, provision of basic home essentials and repairing and maintenance of houses in the affected areas. Meezan Bank is an ardent supporter of Ihsan Trust; providing the trust with human resource and other utility-related expenses, including the penalty amount from non-Shariah compliant income received from customers. Ihsan Trust is the largest interest-free loan provider for higher education in Pakistan that reaches out to the under-privileged sector of the society. The Trust also provides Interest free loan facility to students who want to pursue higher education. Meezan Bank has established the Meezan Foundation for which Rs. 400 million have already been contributed for charity related activities in the medical and education sectors and infrastructural development in the below poverty line areas.
Meezan Bank has increased focus on Green Banking through financing of Wind Power Projects and conversion of Meezan Bank Branches and ATMs to Solar energy and switching to energy efficient ATM’s. It has contributed to Eco friendliness through various avenues such as supporting communities through Rural Development Programs like Agriculture Financing, etc. and moving towards paperless environment by facilitating staff in getting approvals for leaves, loans and other requirements through online mediums instead of traditional way of taking approvals on papers.
Questions to stimulate conversation on the case
- What are the factors behind Meezan Banks success as the largest Islamic Bank of Pakistan?
- Has Meezan Bank’s two-pronged approach, shariah compliance and service quality, served it well?
- Write a market-oriented mission statement for Meezan Bank.
- Why does Meezan Bank need to focus on environmental and social factors in addition to financial matters?
- What recommendations would you make to Meezan Bank to further increase its deposit base?
- What could other Islamic banks learn from Meezan Bank?
Links & media
Website: https://www.meezanbank.com/
Haron, S., Ahmad, N., & Planisek, S. L. (1994). Bank patronage factors of Muslim and non‐Muslim customers. International Journal of Bank Marketing.
Rashid, A. G., Usmani, O., Ejaz, L., & Faraz, H. (2017). Meezan Bank: category leader in Islamic banking. Emerald Emerging Markets Case Studies.
Raza Rabbani, M., Rahiman, H. U., Atif, M., Zulfikar, Z., & Naseem, Y. (2021). The Response of Islamic Financial Service to the COVID-19 Pandemic: The Open Social Innovation of the Financial System. Journal of Open Innovation: Technology, Market, and Complexity, 7(1), 85.
Sharif, S., Ahson, S., & Noor, H. (2020). Al Meezan Investment Management Limited: evolution of Sharīʿah-compliant mutual funds. Emerald Emerging Markets Case Studies.
- Haron, S., Ahmad, N., & Planisek, S. L. (1994). Bank patronage factors of Muslim and non‐Muslim customers. International Journal of Bank Marketing.
- Rashid, A. G., Usmani, O., Ejaz, L., & Faraz, H. (2017). Meezan Bank: category leader in Islamic banking. Emerald Emerging Markets Case Studies.
- Raza Rabbani, M., Rahiman, H. U., Atif, M., Zulfikar, Z., & Naseem, Y. (2021). The Response of Islamic Financial Service to the COVID-19 Pandemic: The Open Social Innovation of the Financial System. Journal of Open Innovation: Technology, Market, and Complexity, 7(1), 85.
- Sharif, S., Ahson, S., & Noor, H. (2020). Al Meezan Investment Management Limited: evolution of Sharīʿah-compliant mutual funds. Emerald Emerging Markets Case Studies.