Is Strategic Planning Necessary in Islamic Finance?

Innovation in service… The Competitive Advantage

"There's another way..."

For businesses today, having a sustainable strategy which provides a strong competitive advantage, is critical.

More and more businesses have moved into having a ‘service based’ advantage in order to differentiate its’ ‘brand offer’. Across many categories this, at times, is 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.

Reviewing a few product categories that the global Muslim community (as a important target group use), one category that emerges with a very strong opportunity of developing a truly sustainable competitive advantage is the Islamic Finance Industry (IFI).

From the little I’ve been able to study (publicly available consumer awareness and population penetration figures are quite low) the retail Islamic finance industry, it seems the operating principles have, primarily, been to re-package conventional financial products and make them sharia compliant. Across markets, the products IFI’s offer also do not have much variation (vis-a-vis conventional financial products) and all are tied up in a labyrinth of sharia compliance, conformity and confounding jargon. There are many reasons for this, but that’s not the purpose of this post.

This post looks at the strategic opportunity available to the retail Islamic finance industry.

Within the core consumer segment–Global Muslim Community–With a growing global ummah, that has strong disposable income and a penchant for utilising their money for ‘value for money’ products across markets, the lack of simplicity, and clarity of  brand benefit of the Islamic finance retail products seems to be the key reason for the low acceptance (and maybe usage) of the products.

Having simplicity and ensuring comprehension (by the targeted Muslim community, as starters,) can, actually, provide the industry huge growth possibilities. Perhaps the lack of clarity can be attributed to the fact that finance was (or is that still is?) a B2B (business to business) function and from the realm of this sector emerged Islamic Finance as an alternative channel of financing and thus, the retail sector of Islamic Finance did not, actually, develop as an additional revenue source for the financial institutions.

Today, with the emergence of Islamic Finance into mainstream finance and the renewed interest in Islamic Finance globally coupled with the rising resurgence of the global Muslim community, it seems to present the Islamic Finance Industry a unique opportunity to develop a strong consumer centric sustainable competitive advantage.

In order to develop this advantage, a re-look at just the product make up or marketing communications or operational standards would not do.

To create and deliver a sustainable competitive advantage the entire process of business planning and operations would need to be reviewed. Such a review is necessary so as to ensure identification of key operational efficiency areas coupled with strategic development that begins with identifying the brand value benefit that the market needs, wants and can bear.

The starting point is outside the glass walls of the corporate office. It’s on ground with the Consumers.


By understanding what are the perceptions, awareness and comprehension levels of consumers for Islamic Finance products and services are, either the industry (as a body) or the businesses (that make up the industry)can develop products that are truly what the consumers need.

Having this vital information would allow the business to:

  1. Implement marketing programs which would increase the understanding of the benefits of Islamic Finance products amongst the consumers and thereby increase acceptance
  2. Assist in new product development as the development would be based on consumer needs. Thereby acceptance, of the new product, would be there thus guaranteeing revenue returns to the business.
  3. Re-design OR bring in innovation (through benchmarking using cross-industry practice) in its service parameters so as to fulfil the ‘expectations of the target consumer’

If the corporates making up the Islamic Finance industry, undertake this paradigm shift, a fundamental rule of the game would change:

–>Instead of operating their businesses on the current “stakeholder based profit- making” platform they would move on to the “consumer value oriented profit making” platform and (the surprising part is), many of the IFI’s, if they are transparent and up-front and communicate this business objective to the consumer, they will have consumer acceptance and develop strong life-time relationships which will enable them to generate profits.

The question now is whose going to take that Strategic Bet and step out of the “standard-operating-process” and invest in long term strategic planning?