News / Economy

Islamic Banks Rebrand to Attract Foreign, Non-Muslim Customers

A woman walks past a branch of Noor Islamic Bank, which changed its name to Noor Bank in January 2014, in Dubai in 2010.
A woman walks past a branch of Noor Islamic Bank, which changed its name to Noor Bank in January 2014, in Dubai in 2010.
Reuters

Islamic banking is based on core principles of the religion. So it is striking that some banks are removing the word "Islam" from their names - a sign of both the potential of Islamic finance to grow, and the obstacles to it becoming mainstream.

In January, Dubai-based Noor Islamic Bank changed its name to Noor Bank. Abu Dhabi Islamic Bank (ADIB), the emirate's largest sharia-compliant lender, now plans to call itself Abu Dhabi International Bank when operating abroad.

In both cases, the changes are part of the banks' plans to expand. They aim to move well beyond a relatively small group of customers who stress religious permissibility, to a much larger customer base for whom pricing and service quality are key.

This approach could help Islamic banks establish themselves globally, not just in the Muslim-majority regions of the Gulf and southeast Asia, and appeal to larger numbers of non-Muslims as well as Muslims.

But the banks feel that to broaden their appeal and compete directly with conventional institutions for customers, they need to play down their Islamic nature among the general public.

"Rebranding is an essential part of widening the appeal of the industry, whether we call it ethical, alternative or sustainable finance," said Yerlan Baidaulet, a member of the board of executive directors at the Saudi Arabia-based Islamic Development Bank, a multilateral institution. "Our mindset has to be global, we have to think wider in terms of customer appeal. Why monopolise the concept and keep calling it only Islamic?"

Growth

Islamic banks, which follow principles such as bans on interest payments and pure monetary speculation, have been growing rapidly in the Gulf and southeast Asia for a decade.

In the six-country Gulf Cooperation Council they now account for about a quarter of total banking assets.

In the past couple of years growth has slowed in some countries, however, as the banks have largely run out of new customers who are willing to base their choices primarily on an institution's Islamic credentials.

In Qatar, for instance, asset growth rates of Islamic banks have dropped to just above those of their conventional peers, cutting a large lead which the industry previously held. Islamic banking assets in Qatar grew 12.2 percent in 2013, down from 35.1 percent in 2011, central bank data shows.

So to continue expanding, the banks have two options. One is to compete for the mass of consumers - by some estimates, 60 or 70 percent of the population even in a mainly Muslim country - who base their choice of bank on non-religious factors.

ADIB is in the process of acquiring a large number of such customers; in April it said it had agreed to buy the United Arab Emirates retail banking operations of Barclays for an expected price of 650 million dirhams ($177 million).

The Abu Dhabi bank is now trying to persuade roughly 110,000 former Barclays customers to stay with ADIB rather than moving to conventional banks. This involves competing directly on non-religious aspects of its service.

The other growth option for Islamic banks is to move into new markets in Asia, Europe or Africa, in countries which have Muslim minorities but where establishing a profitable presence will require attracting large numbers of non-Muslims.

The banks have no intention of changing the sharia-compliant nature of their products. But removing the word "Islam" from their names is a way of avoiding any perception that Islamic banks focus on religious issues while neglecting aspects such as quality of service.

Islamic Bank of Britain (IBB), which was acquired in January by Qatar's largest Islamic bank Masraf Al Rayan, is studying whether to rebrand itself to appeal to a wider customer base, said IBB chief executive Sultan Choudhury.

"We have to look at branding - sometimes the positioning as an Islamic bank can work against us," he said. "After the takeover we want to look at how we present the bank to customers. We have to consider how to position the brand to be all-inclusive."

IBB, based in Birmingham, offered a savings account promotion last year for which it estimated 55 percent of applications were from non-Muslims. It had similar success in marketing products in Scotland by avoiding any of the Arabic terminology often used to describe Islamic financial products, Choudhury said.

"Ultimately the contracts are sharia-compliant...but this helps in consumer understanding."

Ethical

Tirad Mahmoud, ADIB's chief executive, said Islamic banks had an advantage over conventional banks in being able to stress the moral foundations of their business - a consideration which has become more important since banking abuses fueled the global financial crisis.

For example, Islamic banks reject much of the complex financial engineering used by conventional banks. Returns on Islamic bank accounts are based on investment income rather than on interest payments.

"The real competitive advantage that Islamic banks have is that they are ethically constructed. We need to promote this. The denomination doesn't matter," Mahmoud said.

ADIB says a survey which it commissioned found 1,000 retail customers in the UAE, Egypt, Turkey, Indonesia and Britain believed a lack of ethical principles was the biggest problem in their banking relationships.

However, the survey also showed that while Islamic banks were perceived as treating customers more fairly than conventional institutions, they were seen as lacking best industry practices and failing to deliver a simple banking experience. Rebranding can help to change that.

Name changes can also help Islamic banks expand in markets where regulation limits their branding options: ADIB has plans to enter Turkey, Algeria and Saudi Arabia, all of which restrict the use of religious terms, Mahmoud said.

In Turkey, for example, Islamic banks describe themselves as "participation banks" to comply with staunchly secular legislation.

"In respect of awareness of participation banks, there has not been any problem. Everybody knows they are Islamic banks and operate according to Islamic banking principles," said Osman Nihat Yilmaz, deputy secretary general of the Participation Banks' Association of Turkey."Less religiously-linked branding could be useful for the industry if it wants to attract non-Muslim clients." 

ADIB'S Mahmoud rejected the idea that removing the word "Islam" from banks' names was in any way compromising their Islamic nature. Instead, he said, it could put the focus where it should be: on the quality of banks' services.

"Some Islamic banks are unfairly using their Islamic label in Muslim communities," he said. "It is an emotional label that is very powerful in these communities, but are we leveraging on emotions?"

You May Like

Will Cuba Follow the Southeast Asia Model?

Decision to restore ties between US and Cuba has some debating whether it will lead to enhancement or regression of democracy for Communist island nation More

Kenyan Designer Finds Her Niche in Fashion Industry

‘Made in China’ fabrics underlie her success More

Report: CIA, Israel's Mossad Killed Senior Hezbollah Commander

The Washington Post story says Imad Mughniyah was killed instantly by a bomb "triggered remotely" from Tel Aviv by Mossad agents More

This forum has been closed.
Comments
     
There are no comments in this forum. Be first and add one

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Jefferson's Library Continues to Impress, 200 Years Lateri
X
Deborah Block
January 31, 2015 12:12 AM
Two hundred years after the U.S. Congress purchased a huge collection of books belonging to former President Thomas Jefferson, it remains one of America’s greatest literal treasures and has become the centerpiece of Washington’s Library of Congress. VOA’s Deborah Block reports.
Video

Video Jefferson's Library Continues to Impress, 200 Years Later

Two hundred years after the U.S. Congress purchased a huge collection of books belonging to former President Thomas Jefferson, it remains one of America’s greatest literal treasures and has become the centerpiece of Washington’s Library of Congress. VOA’s Deborah Block reports.
Video

Video Egypt's Suez Canal Dreams Tempered by Continued Unrest

Egypt plans to expand the Suez Canal, raising hopes that the end of its economic crisis may be in sight. But some analysts say they expect the project may cost too much and take too long to make life better for everyday Egyptians. VOA's Heather Murdock reports.
Video

Video Threat of Creeping Lava Has Hawaiians on Edge

Residents of the small town of Pahoa on the Big Island of Hawaii face an advancing threat from the Kilauea volcano. Local residents are keeping a watchful eye on creeping lava. Mike O’Sullivan reports.
Video

Video Pro-Kremlin Youth Group Creatively Promotes 'Patriotic' Propaganda

As Russia's President Vladimir Putin faces international pressure over Ukraine and a failing economy, unofficial domestic groups are rallying to his support. One such youth organization, CET, or Network, uses creative multimedia to appeal to Russia's urban youth with patriotic propaganda. VOA's Daniel Schearf reports.
Video

Video Filmmakers Produce Hand-Painted Documentary on Van Gogh

The troubled life of the famous 19th century Dutch painter Vincent van Gogh has been told through many books and films, but never in the way a group of filmmakers now intends to do. "Loving Vincent " will be the first ever feature-length film made of animated hand-painted images, done in the style of the late artist. VOA’s George Putic reports.
Video

Video Issues or Ethnicity? Question Divides Nigeria

As Nigeria goes to the polls next month, many expect the two top presidential contenders to gain much of their support from constituencies organized along ethnic or religious lines. But are faith and regional blocs really what political power in Nigeria is about? Chris Stein reports.
Video

Video Rock-Consuming Organisms Alter Views of Life Processes

Scientists thought they knew much about how life works, until a discovery more than two decades ago challenged conventional beliefs. Scientists found that there are organisms that breathe rocks. And it is only recently that the scientific community is accepting that there are organisms that could get energy out of rocks. Correspondent Elizabeth Lee reports.
Video

Video Paris Attacks Highlight Global Weapons Black Market

As law enforcement officials piece together how the Paris and Belgian terror cells carried out their recent attacks, questions are being asked about how they obtained military grade assault weapons - which are illegal in the European Union. As VOA's Jeff Swicord reports, experts say there is a very active worldwide black market for these weapons, and criminals and terrorists are buying.
Video

Video Activists Accuse China of Targeting Religious Freedom

The U.S.-based Chinese religious rights group ChinaAid says 2014 was the worst year for religious freedom in China since the end of the Cultural Revolution. As Ye Fan reports, activists say Beijing has been tightening religious controls ever since Chinese leader Xi Jinping came to office. Hu Wei narrates.
Video

Video Theologians Cast Doubt on Morality of Drone Strikes

In 2006, stirred by photos of U.S. soldiers mistreating Iraqi prisoners, a group of American faith leaders and academics launched the National Religious Campaign Against Torture. It played an important role in getting Congress to investigate, and the president to ban, torture. VOA's Jerome Socolovsky reports.
Video

Video Former Sudan 'Lost Boy' Becomes Chess Master in NYC

In the mid-1980’s, thousands of Sudanese boys escaped the country's civil war by walking for weeks, then months and finally for more than a year, up to 1,500 kilometers across three countries. The so-called Lost Boys of the Sudan had little time for games. But one of them later mastered the game of chess, and now teaches it to children in the New York area. VOA’s Bernard Shusman in New York has his story.
Video

Video NASA Monitors Earth’s Vital Signs From Space

The U.S. space agency, NASA, is wrapping up its busiest 12-month period in more than a decade, with three missions launched in 2014 and two this month, one in early January and the fifth scheduled for January 29. As VOA’s Rosanne Skirble reports, the instruments being lifted into orbit are focused on Earth’s vital life support systems and how they are responding to a warmer planet.

Circumventing Censorship

An Internet Primer for Healthy Web Habits

As surveillance and censoring technologies advance, so, too, do new tools for your computer or mobile device that help protect your privacy and break through Internet censorship.
More

All About America

AppleAndroid

World Currencies

EUR
USD
0.8845
JPY
USD
117.71
GBP
USD
0.6643
CAD
USD
1.2669
INR
USD
62.019

Rates may not be current.