Sherif Mustafa – Islamic Banking and Finance

Tag: Islamic Financial Institutions

Web Traffic Generation Strategies for Islamic Financial Institutions

Website traffic is not just important for the popularity of the business but it is an opportunity for growth for Islamic financial institutions. You don’t need an impressive amount of visitors to your website to boast it to your competitors but to increase the number of your potential customers. Website traffic is important to share the message of your brand, to leave a good impression and to build long lasting relationships. Website traffic is also an important part of quality lead generation. Furthermore, it is a way to solve the problems of a customer and sell your product or service.

Impact of Website Traffic

  • A large number of website visitors prove the credibility and reliability of your business
  • Ensure that your website is generating quality leads and not bad traffic. Every visitor is not a part of good traffic and bad traffic can bring your business down
  • Quality lead generation helps to increase your website conversion rate. Increasing website traffic gives you a better chance to convert customer curiosity into customer purchase.

Islamic Financial institutions like Islamic banks, Islamic finance companies and Takaful can also benefit from increased website traffic. Selling financial products and services is a bit harder than other normal products. It is common knowledge how difficult it is to get customers interested in insurance. Therefore, it is time that financial institutions start optimising their websites. Website traffic for financial institutions can be divided further into time spent on the website, website stickiness and mobile visits. Below is an illustration of most common traffic generation techniques for websites:

1. Pay Per View (PPV) vs. Pay Per Click (PPC)

PPV is a type of advertisement that displays only for a few seconds and you only pay when someone actually views it. They are used to create ad impressions to the website visitors. On the other hand, PPC is the advertisement for which you pay when someone clicks on them such as Google AdWords, Yahoo and Bing. Both PPV and PPC are good ways to interest your visitors.

2. Social Media

Social media is all the hype among people nowadays and that is a great opportunity for financial institutions to engage customers with their websites. You can promote yourself over social platforms like Facebook and Twitter and link back to your original website.

3. Display Ads

Display advertising includes banners and videos. These ads appear as sections on a website. They can be used as backlinks to your website to bring in a potential customer.

4.Content Ads

These are a type of text advertisement. You can display them beside relevant content that matches your website. This way you can target the right market and potential customers can find you easily.

5. Contextual Ads

Contextual ads can generate quality leads as they bring in customers that have a high chance to be interested in your service. These ads are showed to users according to their search history as they browse the internet and can be considered one of the best lead generation techniques for Islamic financial institutions.

Learn about Shariah Compliant Call Centers – Lessons For The Frontliners

Tags:

Shariah Compliance Challenges in Islamic Banking Windows

The considerable growth of Islamic Finance in the emerging markets as legitimate alternative to conventional products has triggered the interest of most of conventional financial institutions to adopt a dual-banking system and undertake Islamic financial activities to meet the demands of its clients seeking Shariah compliant products/services under the form of Islamic Windows.

Islamic Windows are operating under conventional banking umbrella and they offer Shariah compliant products and services. A typical Islamic-window “Islamic Windows” approach is a form of operating structure in a conventional bank which offers Islamic banking products and services through its conventional branches by dedicated team equipped with sufficient knowledge of Shariah aspects.

The framework of operational activities should be in-line with the rules and principles of Shariah as stated by the Shariah Supervisory Board. Such approach requires full segregation of accounts and operations, funds collected from depositors must be invested in Shariah-compliant transactions, liquidity management policy of funds should comply with Shariah law and staff employed under the Islamic-window should adhere to Islamic code of ethical conduct and should refrain from performing any roles towards conventional banking operations.

Taking into consideration that strict adherence to SSB guidelines and the standards of other regulatory bodies such as Accounting and Auditing Organization for Islamic Financial Institutions “AAOIFI” and Islamic Financial Services Board “IFSB” have a significant impact on how clients approach banking, the inadequate segregation of operations/accounts of conventional and Islamic activities, absence of Standard Operating Procedures from Shariah perspective and lack of Shariah trained staff to execute Islamic transactions create the following challenges for Islamic windows:

  • Lack of clients confidence that their funds may be co-mingled with funds in the conventional interest based transaction books
  • Efforts made for the innovation of investment products that meets desire of Muslims’ clients towards diversification of investments are always below expectations compared to wide-range of conventional products.
  • Non-disclosure of earnings from interest-based activities and its subsequent treatment in the financial statements.
  • Increase in the outstanding amount of the financed product/service against postponement of installment or rescheduling of outstanding debts.
  • Cross-selling of alternative conventional products in-case of shortfall in the sale of the Islamic products.
  • Utilization of conventional accounts which are subject to pre-determined interest charges as a recovery accounts of installment of Islamic finance products.
  • Auto-payment option on conventional credit cards for recovery of Takaful Premium and Zakat payment.
  • Acceptance of conventional insurance policies in Murabaha and Ijarah instead of Takaful policies.

From Muslim client’s perspective, failure to comply with Shariah principles is a deliberate violation of the Divine law as revealed in the Quranic injunctions and Sunnah. Thus, clients may feel guilty and sinful due to non-compliance to obligations towards the creator (Allah SWT) and subsequently ends-up the relationship with the bank. That’s why many customers do not believe in Islamic windows.

Learn about Money Laundering in Shariah

 

Tags: , , , ,