Islamic banks must do more than merely rely on the Muslim faith of potential customers if they are to secure their business, industry experts have warned.
A panel discussion at the World Islamic Retail Banking Conference in Dubai yesterday saw several heavyweights from the industry call on banks to improve everything from services to branding if they want to compete with household names of conventional finance.
Wasim Saifi, global head of Islamic banking at Standard Chartered, said that research showed the majority of Muslims still bank with conventional institutions. And, he added, just advertising services as 'Sharia-compliant' is not going to be enough to make them move to an Islamic bank.
"I think in terms of the distance that we need to cover, there is still a lot more ahead of us. We haven't even come halfway towards the real potential [of Islamic banking]," he said.
Qatar has ordered that conventional banks close the 'Islamic windows' that previously allowed them to offer Sharia-compliant services.
Gary Mond, retail banking adviser to Qatari lender Barwa Bank, said the shake-up has revealed that many customers had been comfortable using both the conventional and Islamic services offered by such mixed institutions.
He said that Islamic banks had taken significant steps to matching the products offered by conventional banks - but while this would help them snare first-time customers, those who already have an account with a Western bank may take some convincing to shift their business.
"Actually making customers move across is the barrier. It's easier to get new customers," he said.
Mohammad Zaqout, an executive vice president at the UAE-headquartered Al Hilal Bank said Islamic banks are still considered more "rigid" than many of their conventional peers - and they should invest in strong branding and modern conveniences for customers to compete.
Islamic retail banks, he said, "need to focus on the retailing, rather than just the banking".