1. Business islamica MagazineIslamic MANAGEMENT
Shari’ah-based Islamic finance:
from copycats
to research-based
F
or businesses today, having
a competitive advantage is
critical, in terms of business
operations. More and more
brands have moved into having a
‘service- based’ advantage in order
to differentiate the ‘brand offer’. To
do this across many categories, this
is at times tough to put in place.
Tough, as it’s hard to identify or pin
down the significant service offering
or delivery which is unique to that
brand itself and is sustainable
enough for it not to be copied.
Studying a few categories that the
Ummah uses on a daily basis, one
industry that emerges with a strong
opportunity for developing a truly
sustainable competitive advantage
is the Islamic Finance Industry (IFI).
From what I’ve been able to study in
the retail industry, it seems that the
operating principles have, primarily,
been to re-package conventional
financial products and make them
‘Shari’ah compliant’. There could
be many reasons for this, but that’s
not the purpose of this post. Across
Islamic countries, the products IFIs
offer also do not have much variation
and all are tied up in a labyrinth of
Shari’ah compliance, conformity,
and confounding jargon.
But with a growing global Ummah
which has strong disposable
income and a penchant for utilizing
their liquidity for ‘value for money’
products across markets, this
simplicity and, leading from it,
a clear brand identity in Islamic
finance product development and
44 www.islamica-me.com www.islamica-me.com 45
One industry that
emerges with a strong
opportunity for developing
a truly sustainable competi-
tive advantage is the Islamic
Finance Industry (IFI).
By Joy Abdullah
Retooling Islamic Retail banking
The Islamic Finance Industry (IFI) has been developing their products
and services by mimicking conventional finance and dressing them with a
Shari’ahgarb.TheIFIthatwillmeettheconsumerandinvestorexpectations
is one based on behavioral and market studies. That essential part of
conventional finance has so far evaded Shari’ah scholars.

2. Business islamica MagazineIslamic MANAGEMENT
46 www.islamica-me.com
marketing seems to be sorely
lacking, when it could actually
provide the industry (as a whole)
huge growth possibilities. Again, this
could be due to the fact that finance
(as an industry) was primarily a
B2B (business to business) function
and from the realm of this sector
emerged Islamic Finance as an
alternative channel of finance and
ultimately did not actually develop
as a retail product for clients of the
conventional financial institutions,
i.e. non-Muslim world.
However, now, with the convergence
of Islamic finance into mainstream
finance, the renewed interest in
Islamic finance globally, and the
resurgence of the Ummah, these
factors appear to present both the
Islamic finance Institutions as well
as the corporations (in this sector)
a unique scenario of developing a
strong competitive advantage.
But in order to develop this
advantage a re-evaluation of merely
the product make- up or marketing
communications would not do. In
order to create and deliver such a
competitive advantage, the entire
operational process of the business
would need to be reviewed. This
review is necessary so as to ensure
that the end result in terms of the
product and brand delivery match
up to what the market needs, wants
and can bear.
This becomes the starting point, in
order to build such a competitive
advantage. The CONSUMERS!
By understanding what are the
perceptions, awareness and
comprehension levels of consumers
for Islamic Finance and related
product categories are, either
the industry (as a body) or the
businesses (that make up the
industry) can develop products
that are truly what the Ummah
needs. Having this vital amount of
information would allow the industry
and the businesses to:
A. Implement marketing programs
which would increase the
understanding of the benefits of
Islamic financial products amongst
the consumers and thereby
increase acceptance (within the
Muslim community as well as the
non-Muslim community).
B. Assist in new product
development, which would
automatically provide benefits that
the consumer wants. Thereby the
acceptance would be better.
C. Re-develop/ re-design its
operating standards and guidelines
utilizing the original and true basis
of Islamic finance and thereby be
“Shari’ah-based”.
By virtue of this, as an industry the IFIs
would be operating their businesses
not on the conventional “profit making
form of disguised interest” platform
but on the “benefit to society”
platform. And yet the businesses
will be profitable by virtue of having
consumer acceptance and higher
comprehension of Islamic Finance.
The question now is who’s going to
takethatfirstbigstepandinvestinthe
required qualitative and quantitative
consumer research? Without this vital
piece of information and knowledge,
we will, at best be making educated
guesses. And educated guesses,
cannot replace, strong insights where
marketing is concerned.
Joy abdullah is an ENABLER who
has dual expertise in strategic
business planning and brand
marketing. Such synthesis of
strategic planning enables Joy
to aid brands in having a strong
reputation, clear image, and
efficient delivery. By using ethics,
values, governance requirements
and desired brand objectives in
corporate planning, Joy minimizes
potential risks a brand may face,
in developing the brand strategy
and delivering the desired
experience(toitsstakeholders).He
has strong knowledge of ASEAN
& India markets. His articles
focus on the importance of ethical
brand marketing encompassing
brand reputation management,
employee-brand relationship and
CSR. Comments and queries
can be directed to joyabdullah@
dailybaraka.eu
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