Leadership gif


port, the rating agency draws a comparative analysis of 23 leading Islamic banks operat- ing in the GCC, seven of which are rated by Moody’s. Together, these banks account for total assets in excess of $125bn or 25% of Shariah-compliant banking assets globally.


As well as determining the three distinct Is- lamic banking business models, the report concludes that Islamic banks’ ratings in the Gulf are usually driven by robust financial fundamentals, and benefit from high levels of external support.


Moody’s also identifies the maturing oper- ating environments and imperfect risk po- sitioning as factors that tend to weigh on Is- lamic banks’ risk profiles, and ultimately on their stand-alone credit ratings (AME Info).


It had also been reported that Islamic bank- ing institutions need to diversify their busi- ness models away from deal making fees in order to cater for the constraints from liquidity.


It could be worth noting that when drawing up your busi- ness model for your individual company you have to take im- portant factors about liquidity into consid- eration.


“Islamic financial institutions need to build diversified sources of revenue, relying not only on placement and per- formance fees, but also on the steady stream of income generated by such unglamorous but es- sential activities as advisory services, asset management and providing finan- cial services to retail clients,” governor


Rasheed al-Maraj said. Islamic investment firms in the Gulf Arab region thrived during a five-year long oil and property boom by earn- ing fees on money they raised for private eq- uity and real estate projects (Reuters).


Weighing Up the Competition for an Opti- mal Business Model Through the second edition of Islamic Bank- ing series on Competition and building a successful business model we have looked at the ways in which to evaluate your com- petition.


Ensuring that you know how many Islamic fi- nancial institutions offer the same services and what you can do to make your company differentiate and have the edge over other like minded businesses. Establishing a Sha- riah compliant business model framework and applying it to your chosen ideas can help to structure the key business model.


Having the right qualified staff and knowl- edge of Islamic financial products on the market and its most successful competi-


Business Model of a Conventional bank Creditor/Depositor


• Corporates • FI’s


• SME’s • Public Sector


Interest is used from funds lent up to the mode of credit


Business Model of an Islamic bank


Investment Account Holders


• Individuals • Corporates • FI’S


• SME’S • Public Sector


Mode of Deposit & Funding


• PLS Saving Account • COII • Equity


Islamic Banking Institution


• Mudaraba Shariah compliant pool managed by the bank


Islamic Banking Business


• Murahaba • Musharaka • Sukuk • Ijarah


Mode of Credit


• PLS Saving Account • Term Deposit • Equity


Conventional Bank


• Interest based pool managed by investors


tors can help you to gain an edge over your customer base. It would also be beneficial to develop a niche market and offer Islamic financial products that have not yet been made readily available. Many Islamic finan- cial products cater for customers who are high earners and the customers who do not fall into that category are not left with many options.


Perhaps catering for those who are less well off and providing Shariah compliant options for them could be the best possible start and will enable Muslims who want to follow Shariah compliant financing to do so with- out falling heavily into debt elsewhere.


Islamic financial products cater for both Muslims and Non Muslims who prefer the idea of Shariah complaint financing as ap- posed to conventional banking.


Targeting your market and thorough re- search can help to build on your customer base and help you to identify the three key points of call which have been discussed in the article and identi- fied as Product devel- opment, distribution and operational excel- lence.


Funds Lent • Debtor


With these three tar- gets in mind you can be one step away from achieving your goals for your compa- ny. In the final part of the Islamic banking series Global Islamic finance magazine will show you how to improve on busi- ness performance and strategies for business perform- ance will be covered in detail so that you can be one step away from Islamic financial success.


gif


References and Further Reading


• P. Vayonas, Competing Successfully in Islamic Banking (2009) Booz & Co Retrieved from: http://www.booz.com/media/uploads/Competing-Success- full-Islamic-Banking.pdf


• S. Fox, Islamic Banking Industry (2009) Slideshow Retrieved from: http://www.slideshare.net/jayzee/ibi-1342816


• AME Info, Comparative analysis of GCC Islamic banks reveals three distinct banking business models (2008) Retrieved from: http://www.ameinfo. com/149613.html


• F Richter, Islamic banks need to diversify - Bahrain c.banker, (2010) Reuters Article Retrieved from http://www.reuters.com/article/idUSLDE6AM0- GP20101123


2011 February Global Islamic Finance 63


Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16  |  Page 17  |  Page 18  |  Page 19  |  Page 20  |  Page 21  |  Page 22  |  Page 23  |  Page 24  |  Page 25  |  Page 26  |  Page 27  |  Page 28  |  Page 29  |  Page 30  |  Page 31  |  Page 32  |  Page 33  |  Page 34  |  Page 35  |  Page 36  |  Page 37  |  Page 38  |  Page 39  |  Page 40  |  Page 41  |  Page 42  |  Page 43  |  Page 44  |  Page 45  |  Page 46  |  Page 47  |  Page 48  |  Page 49  |  Page 50  |  Page 51  |  Page 52  |  Page 53  |  Page 54  |  Page 55  |  Page 56  |  Page 57  |  Page 58  |  Page 59  |  Page 60  |  Page 61  |  Page 62  |  Page 63  |  Page 64  |  Page 65  |  Page 66  |  Page 67  |  Page 68  |  Page 69  |  Page 70  |  Page 71  |  Page 72  |  Page 73  |  Page 74  |  Page 75  |  Page 76  |  Page 77  |  Page 78  |  Page 79  |  Page 80  |  Page 81  |  Page 82  |  Page 83  |  Page 84  |  Page 85  |  Page 86  |  Page 87  |  Page 88