Marketing Islamic Financial Products

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INTRODUCTION
Islamic finance is a fast-growing sector of the global banking industry, and is based on a range of distinctive financial products that are compliant with shariah law. There are many banks that supply Islamic financial products and services around the world, including well-known institutions such as Citigroup, HSBC and Lloyds TSB. But there are very few countries whose financial systems are explicitly and exclusively based on Islamic financial principles: Pakistan, Iran and Sudan are the only countries with fully-compliant banking systems, while only Iran and Sudan have fully-compliant stock markets. Most of the literature on Islamic finance largely focuses on either contrasting the structure and design of financial products with those in the West or on the Islamic banking system. Marketing of Islamic financial services is currently the subject of much deliberation and discussion among the banking community. This no doubt, reflects a shift in focus from product development to other dimensions of marketing. But the approach to marketing remains largely tactical, rather that strategic. While organizations, to some extent, are performing various marketing functions, such as, promotion and advertising marketing as a business philosophy is conspicuous by its near-total absence in this industry. In this study, we attempt to derive insights from valuable empirical evidence from a host of research studies, which might be to relevance for the serious marketer. We also seek to highlight cases of specific marketing strategies tried in the industry - other successful and otherwise, the lessons from empirical research as well as from the case example should help address many issues concerning strategic marketing of Islamic financial services, around which much confusion prevails. ISLAMIC FINANCE AND BANKING

The basis of Islamic Finance that it forbids usury termed as riba (which is the lending of money at high rates) but it doesn’t stop just there. The concept is more accurately that money has no true value – it is only a measure of value, and since money has no value itself, there should be no charge for its use. Therefore, Islamic Finance is said to be asset based as opposed to currency based whereby an investment is structured on exchange or ownership of assets, and money is simply the payment mechanism to effect the transaction. The basic framework of an Islamic Financial System is based on elements of Shariah, which governs Islamic societies. Shariah, the law of Islam, originates from two principal sources: the Quran, the Holy Book of the Muslims and its practices; and the Sunnah, the way of life prescribed as normative in Islam, based on the teachings and practices of Prophet Muhammad (pbuh).

Islamic finance involves structuring financial instruments and financial transactions to satisfy traditional Muslim objection against the payment of interest and against engaging in gambling. It is a field of growing importance for conservative Muslims, especially in the Middle East, who are uncomfortable with Western-style bonds and banking that involve explicit payments of interest. The Islamic Banking System is an important component of Islamic finance, Islamic banking’ is banking or banking activity that is consistent with the principles of sharia law and its practical application through the development of Islamic economics. Sharia prohibits the fixed or floating payment or acceptance of specific interest or fees (known as riba, or usury) for loans of money. Investing in businesses that provide goods or services considered contrary to Islamic principles is also haram ("sinful and prohibited"). Although these principals have been applied in varying degrees by historical Islamic economies due to lack of Islamic practice, only in the late 20th century were a number of Islamic banks formed to apply these principles to private or semi-private commercial institutions within the Muslim community. For more than a quarter century,...
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