Islamic Finance gif
Shariah-Compliant Islamic Branding Islamic financial institutions are required to adhere to the principles of Shariah-compli- ant financing, and to ensure that the prod- ucts and services they launch are branded and marketing in a manner that complies with Islamic finance. This is a crucial proc- ess which can often be a difficult balancing act for Islamic financial institutions, as they struggle to effectively sell and market their products without compromising the princi- ples set out by the Shariah law.
Islamic financial experts, scholars and pro- fessionals know that Islamic financial invest- ments are forbidden diversify into non-Halal investments, such as gambling, alcohol, or any other sector which is not considered to adhere to the principles of Islam.
For this reason, Islamic banks and financial institutions must carefully select projects, investments and advertising which does not endorse any of the prohibited investments mentioned above. Conventional banks, how- ever, may use these industries to endorse their products, and may obtain revenue partly or solely from non-Shariah-compliant avenues. Islamic finance follows the princi- ples of Islam, and in order for the investment
to be Shariah-compliant, it should finance a ‘pure’ and Halal project. Firstly, we will inves- tigate the marketing structure for Shariah- compliant Islamic financial products, using examples of Halal investment products as outlined in Figure 1:
Figure 1 shows the various Islamic brands by religion, origin, destination and other fac- tors, with either a Muslim or non-Muslim de- sired target audience. Islamic brands which cater for an international, outbound market of both Muslims and non-Muslims have prospects of substantial growth, due to their introduction outside the traditional market. Islamic branding should be carried out in a Halal manner, without endorsing any item, idea or image which does not comply with the principles of Shariah-compliant financ- ing. In addition, all branding should be done following the principles set out in Figure 2:
As outlined in Figure 2, companies must adhere to a number of principles in order to successfully launch a Shariah-compliant product or service.
Regulatory Approval of Islamic Products and Services In all almost all Islamic financial hubs, a
Shariah board exists in order to ensure that Islamic financial transactions and projects are Shariah-compliant and abide by the rules of Islam. Each Islamic financial institu- tion must ensure that it carries out Shariah- compliant models of business, which are consistent with the standards of the current Shariah law bodies such as the AAOIFI.
The Role of the Shariah Advisory Board in Regulating Islamic Finance The Shariah advisory board of each country plays an important role in the Islamic finan- cial industry, and is at the heart of any Is- lamic financial institution. The main respon- sibilities of the Shariah advisory board are outlined in Figure 3:
As outlined in Figure 3, the Shariah advisory board is of great importance in reviewing which practices are deemed Shariah-compli- ant in relation to transactions and products. It also plays an extended role of participation within the involvement of Shariah reports for annual investors, in addition to developing new financial procedures and programmes. Therefore, the Shariah advisory board forms a pivotal presence within the scheme of any existing or newly-established Islamic financial institution, as the board has the
Figure 1:
Outbound Islamic Markets Example: Islamic Finance and Hospitality Target Market: Non Muslims and Muslims Abroad Market Size: Rest of the World Market Potential: Substantial growth due to the introduction outside the traditional Muslim market Marketing Focus: Purity and human- ity emphasised, not halal, in order not to raise religious sensitivities True Islamic Brands Example: Al Islami in UAE Target Market: Muslims Market Size: Same as inbound Market Potential: Same as inbound Marketing Focus: Emphasize halal and patriotism
Islamic Branding by Religion
Outbound IB
True IB
Islamic Branding by Destination
Traditional IB
Islamic Branding by Destination
Inbound IB
Inbound Islamic Brands Example: Nestle and KFC Target Market: Muslims Market Size: 1.5- 1.8 Billion Consum- ers Market Potential: Substantial growth. The Muslim Population is the fastest growing in the world Marketing Focus: Halal and Reputed quality of international brands empha- sized
Traditional Islamic Brands Example: traditional local brands Target Market: Muslims Market Size: same as inbound Market Potential: same as inbound Marketing Focus: emphasize patriotism more than halal, although halal is assumed
Source: Emerald Insight 2012 May Global Islamic Finance 29
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