Six Factors Driving the Future of Islamic Banking (Part I)
During the last few decades, the Islamic Banking industry witnessed a sustained growth that resulted the total asset size exceeding over two trillion dollars. Now the Islamic Banking is no longer an alien in the global financial industry.
Besides the forerunner countries, such as Malaysia, UAE, Iran, Saudi Arabia, Kuwait and Bahrain, many Non-Muslim cities are becoming increasingly popular as an Islamic Banking hub. Despite such increasing visibility globally, there is a need for self-check for the Islamic Bankers in order to sustain such growth in the future.
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In this five part article series, Mabroor Mahmood presents six factors that will be instrumental in shaping the future of Islamic Banking. Today the first Factor is described.
Factor 1: Believing the Principle
It is imperative for any industry that its people driving it should believe its core mission and objectives. For Islamic Banking, since the industry has grown bigger, many people have joined the industry from diverse backgrounds during the last couple of decades. Many have conventional banking experience; many don’t have adequate exposure on the historical perspectives of Islamic Banking; many rejoin conventional banking industry even after spending years in Islamic Banking.
As a result, absence of belief in the core mission and purpose of Islamic Banking is relatively common in the industry and such ignorance might act as a deterrent for its sustainable growth in the future.
Any product to survive in a very competitive industry needs to find its target market, design its marketing strategy and differentiate itself from other competing products. Global banking industry has hundreds of years of history and the competition in this ever-evolving industry is fierce.
So in order to survive in this competitive arena, the people behind any new product should know clearly what their objectives are and how to achieve those objectives. Otherwise, the product will eventually perish.
Islamic Banking is providing relatively new sets of products for supporting entrepreneurs to grow their business and depositors to diversify their savings. Thus just like any other product, Islamic Banking should also differentiate itself from its counterpart conventional products as much as possible in order to gain the market share. So unless the people behind it firmly believe in the mission of Islamic Banking, the growth opportunities through innovation and creativity will not continue.
In order to resolve this problem, all Islamic Bankers need to be taught the core principles of Islamic Banking and they should all be aware of the premise why Islamic Banking exists today.
(To be Continued)
The views expressed in this article are the author's own and do not necessarily reflect the views of the institution where he works.