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Islamic Banking

Experience- a guideline for


Takaful
by
Muhammad Imran
Head of Islamic Banking
Standard Chartered Bank
Pakistan

This presentation elaborates the success story of


Standard Chartered Islamic Banking and highlights
the key areas through which the same success
can be replicated in the Takaful Industry.
The Story begins in March 2005..
Having started Islamic Banking Operations in June
2004, SCBs top management put in a fresh team in
place in March 05 to turn around SCBs Islamic
Banking Business in Pakistan.
The team had to face the Myths related to Pakistans
Islamic Banking Industry regarding the Islamic banking
Operations of a conventional bank
Lets take a look at the Myths of the industry..
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5 Myths of Pakistans Islamic Banking Industry


Myth #1: A Conventional Bank should operate its Islamic Banking
Operations in a passive manner.
Myth #2: Product Innovation will be done by full fledged Islamic
Banks
Myth #3: Customers are indifferent regarding Islamic and
conventional products when the product is offered by a renowned
bank.
Myth #4: A conventional bank should never aggressively Market
its Islamic Products as it will create a negative impact on its
conventional products.
Myth #5: Increasing customers awareness and managing
consumer perception about Islamic Banking is the responsibility of
full fledged Islamic Banks

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Challenge: Conventional Interest based transactions looks similar to


Islamic Sale/Purchase based transactions
Guidance from Quran..

Those who devour Riba shall rise up before Allah like men whom Shaitan has
demented by his touch; for they claim that trading is like usury. But Allah has
permitted trading and forbidden usury. He that receives an admonition from his
Rabb and mends his ways may keep what he has already earned; his faith is in
the hand of Allah. But he that pays no heed shall be among the people of fire and
shall remain in it forever. Al Baqarah 275 (Fourth Revelation)
Guidance from Rules of Islamic Jurisprudence- Rule of Positive Approach:
Everything in this world is Halal except that which is declared as Haram

After Developing the key concepts we took a look at the


Global Scenario.

284 Islamic Financial Institutions in 38 countries


managing US$ 378.5Bln
Out of these US$ 200 Bln (53%) are managed by Islamic
Banking Operations of Islamic Banks
Source: IFSB Report 2006

And then we looked at the Pakistani scenario now

Year

2003

2004

Meezan Bank
Al Baraka
MCB

Meezan Bank
Al Baraka
MCB
Alfalah

2005

2006

Meezan Bank
Al Baraka

MCB
Alfalah
Bank of Khyber
SCB
Habib Ag Zurich
Bank Al Habib
Metropolitan

6 Islamic Banks
15 Islamic Banking Divisions

2007

11

Meezan Bank
Al Baraka

MCB
Alfalah
SCB
Bank AlHabib
Habib AG Zur.
Metropolitan
Bank of Khyber
Soneri Bank
Habib Bank

Taking into consideration the global scenario


the team decided to challenge the Myths of
Pakistans Islamic Banking Industry.

21
Meezan Bank
Al Baraka
MCB
Alfalah
SCB
Bank AlHabib
Habib AG Zur.
Metropolitan
Bank of Khyber
Soneri Bank
HBL
Bank Islami
DIB
Emirates Global
NBP
ABN AMRO
UBL
Askari
PICCIC
Crescent
Dawood Islamic

Unique Concept through Unique approach.


Managing Consumer Perception and breaking established myths
is not easy. It takes a lot of courage and hard work to do so and
most importantly it needs a unique approach to reach to the
unique concept.

Adopt
Unique Approach
towards
Islamic Banking

To lead to.. Unique Concept

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The Unique Approach


The unique approach was unique to the Islamic Banking industry
in particular but not unique for the overall Industry in general.

It was the

KYC Approach
towards
Islamic Banking

In order to implement the KYC approach, we needed


to answer the million dollar question, which was .
How do we define the Islamic Banking Customer?
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The Islamic Banking Customer


Based on our Research and experience we came up with
Islamic Banking Customers Profile:

People who dont want to compromise on their principles,


but
they want Top Quality, High Standard Shariah Compliant
Products/Services from Institutions that care for
the community as a whole.

On the basis of the above customer profile, we developed


Standard Chartereds Islamic Brand Identity along with the Tag
Line

The
Islamic
Brand Identity
and Tag Line

The 4Ps approach-this approach is equally applicable to Takaful.


4 Ps of Islamic Banking.

Once we developed the Brand Identity , in order to change consumer


perception we went ahead with implementing the Marketing Concept based
upon the :

4 Ps of Islamic Banking
Product: To be Shariah Compliant, innovative ,customer friendly yet
profitable
Price: To be competitive with the market and definitely not expensive
than the relevant conventional product of the Bank- No COBM!
Place: The Islamic Branch should be at a central location and its
outlook should reflect Banks commitment towards the Islamic
Banking initiative.

The
Islamic
Branch

Community Work Project

The 4th P
Promotion: The promotional strategy should be aggressive and should
have the following features:

1-Campaign should be in line with the modern day promotional


campaigns. But should be Shariah Compliant as well.
2-The campaign should create awareness about Islamic Banking
Concepts and remove the misconceptions and confusions about Islamic
Banking.
3-Educating the masses about the global growth of Islamic bankingGlobal Islamic banking Video.

The Myths were Broken and Consumer Perceptions


became positive

The Strategy was implemented with Precision as a result the


common Myths about Conventional Banks doing Islamic Banking
were broken and SCB emerged as a leading player in the Islamic
Banking Industry.

We can learn a lot from our Islamic Banking Experience to


replicate the success in Takaful.

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Takaful Journey has just Begun


The Takaful journey has just begun. Yes! there will be a lot of
Challenges and a lot of Cynicism. But this happens with every
new venture.
Takaful Institutions need to focus on SUSTAINABLE GROWTH.
For that to happen they need to do concerted efforts in the
following key focus areas:

Product Innovation- Ensuring innovative Shariah compliant products that


cater to the needs of the customers and capitalize a huge un tapped market.

Aggressive Marketing- to create awareness about Takaful through focused


marketing approach.

Service Differentiation- Trained staff to provide top quality service to ensure


that service standards of Takaful Institutions are at par with conventional
Insurance companies

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Thank
You !