By Shan Saeed---Excerpt from the study group discussion
I landed up in a strange place along with my Russian classmates from Chicago to Boston where I was swamped by Islamic scholars deliberating upon the growth opportunities in the Islamic banking. I thought, I might be an alien to the erudite gathering and odd man out. But, never realized after we had finished that how much knowledge and wisdom I had gained from those convert Americans and other people at this small workshop at Harvard Business School [I studied from Uni. Of Chicago, Booth School of Business for my 2nd MBA and not from Harvard. Please don’t get me wrong here….]
The topic was clearly an eye catching one, defining the scope of Islamic banking in the foreseeable future and its potential growth. But what are the challenges that this sector is confronting as we navigate through turbulent times
1. Interpretation of Islamic Banking
2. Trained Personnel
3. Positioning strategy of Islamic banking and its products.
Asset Base of Islamic Banking
The market value of Islamic banking industry currently stands at $987 billion. The growth rate is projected to be around 17%
Major Western banks involved in promoting Islamic banking
There are quite a few banks in the west who are working extensively in this area to provide an alternative to the clients as the global economy goes through the financial slump. Few banks to mention over here.
Major Islamic banks in the world
These banks are actually projecting Islamic banking in true letter and spirits. The major banks are
Dubai Islamic Bank
Kuwait Finance house
Bahrain Islamic Bank
Bank Muamalat Indonesia,
Al Rajhi Bank
Islamic Banking in Pakistan
Islamic banking has not really taken off in Pakistan because of confused positioning strategy followed by Islamic Banks. In Pakistan, there are 4 banks which are following Islamic banking structurally…
1. Meezan Bank
2. Dubai Islamic Bank
3. Al-Baraka Islamic Bank
4. Dawood Islamic Bank
There are around 529,000 Islamic banking clients amounting to 5.17% of the market share. The challenge remains to be seen since banks have not fully catered to the huge untapped potential in the market with the right strategic move. They need to have harmonious Islamic banking laws across for all banks so that there is no ambiguity in following the system. People should be properly trained with in-depth knowledge and analysis of Islamic banking. Last but not least, banks need to capture the mind share of the clients in order to give boost to the market share of the Islamic banking sector in the country. With right positioning strategy in place, banks can get lot of clients who are willing to invest their funds in Islamic banking products. Capture the mind share in order to get the market share. Simple.