Featured case: Tradition-based Innovation for Strategic Change
in Banking: Bank Muscat, a Bank in Movement

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The case

Who – the protagonists

The inaugural winner of the Bank Muscat prize for innovative solutions, Alia Al Zadjali, plus members of the management team, including CEO Abdul Razak Ali Issa, Chief Operating Officer, Ahmed Al Abri, and Group General Manager for Corporate Services, Waleed Al Hashar.


Bank Muscat grew from being one of the smallest banks on Oman in 1993, to the largest in 2013, with a 40% market share. It has over 1.4 million customers. At the end of 2013, there were 3,266 employees, 44% of whom were women at various levels of seniority. The bank actively works to attract and retain talented young Omanis. It has assets of over USD 27 billion and pioneered sharia-compliant financial structures in Oman.


AuthorsThe bank recognised that banking had changed significantly over the past decade, shifting from a transactional to a more customer service oriented industry. The environment had become more aggressive with fierce competition for revenue. Bank Muscat needed to explore new ways to sustain its growth.This included creating innovative new businesses, such as Meethaq, and encouraging a culture of innovation among employees – one that is rooted in tradition but also open to ‘blue sky’ thinking.


Bank Muscat was set up in 1993 as a public joint stock company by the merger of two established banks in Oman, Bank Muscat and Al Bank Al Ahli Al Omani, which had been operating in the region since 1982 and 1976 respectively.


Bank Muscat operates in Oman and is listed on the Muscat Securities Market and the London Stock Exchange. It has branches in Saudi Arabia and Kuwait and representative offices in Dubai and Singapore. It owns a 97% stake in Muscat Capital LLC, a brokerage and investment bank in Saudi Arabia.

Key quote

‘Everyone is not only encouraged, but is expected, to think outside the box; it’s how we work.’ – Ahmed Al Abri, Chief Operating Officer, Bank Muscat.

What next?

Oman’s banking sector is relatively young and its banks are among the fastest growing in the region. There are huge possibilities for growth, but also a number of potential challenges to negotiate, including:

  • The reliance on domestic operations, mainly lending, makes banks such as Bank Muscat vulnerable to problems including credit risk concentration.
  • Foreign banks in Oman represent a major potential threat – they are technically advanced and have a global presence.
  • The lack of sharia-compliant liquidity management tools is a particular challenge for the Islamic banking industry.
Interested in finding out more?

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Tradition-based Innovation for Strategic Change in Banking: Bank Muscat, A Bank in Movement
Ref 115-064-1
Teaching note
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The authors

Salvador Aragon, Celia de Anca and Khalid Al Hamdani

The authors discuss their case and why culture plays such an important role in business success – not only in the world of banking, but across many different industries

Big transformation

Alt text

Oman is a country that is going through a big transformation, and yet they are really eager to maintain their cultural traditions. Furthermore, the country has recently approved an Islamic banking law, so this was a unique occasion to analyse how the largest bank in the country transformed itself to accommodate the new law.

We were lucky as one of our alumni, Abbas Al Lawati, worked at the bank and we were able to make contact with the management and our protagonists through him.

AuthorsLearning objectives

This case will help students develop a clear understanding about the role of tradition as a catalyst for innovation and the need to question the creative destruction paradigm. It also explores how the rules and conventions of Islamic finance represent a business opportunity in the world of conventional banking.

The role of internal innovation within the innovation process is also covered in this case, as well as the significance of market-driven innovation.

Wider relevance

We wanted to demonstrate that innovation does not always mean new things: new ways of operating and running a business can be equally effective and important. This case also offers the wider lesson that innovation springs from both modern ideas and sound tradition mixed with the latest technologies. This is particularly relevant for countries with strong cultural traditions, as in the Arab states. These observations apply not only to banking but to most other industries too.  

New models

This case explores the significance of culture in the Arab world. Most emerging countries are racing to implement all the latest models of management. However, if they neglect their cultural traditions, particularly in Arab countries, this can lead to problems, setbacks and inefficiencies, regardless of how good the new management model is.

About the author

Salvador Aragon is Professor of Information Systems at IE Business School
tw @salvadoraragon

Celia de Anca is Professor Islamic Finance and Director of Scief at IE Business School.
tw @sciefnews

Dr Khalid Al Hamdani is Head of HR Development at Bank Muscat.


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