The Islamic ﬁnance & banking industry has a tremendous opportunity both within the global Muslim community and the non-Muslim community.
Capitalising on this opportunity depends on four critical success factors:
- how well an organisation is able to develop ‘trust’ with its consumers
- how well the employee engagement of the brand is
- understanding people behaviour
- using social media strategically
The market-entry approach for the industry in non-Muslim majority markets would have to be very different from that of Muslim majority markets. Strategically, there is a common point to develop the value proposition and the execution plan. This common point is understanding people behavior.
Given the impact of behavioral changes amongst people that has taken place in the last decade, the Islamic ﬁnance & banking industry needs to factor in insights from people behavior in their business strategy. This affects both customers and employees. It’s amazing how little we focus on the ‘people‘ aspect in business in spite of the fact that it is people who make things happen. An organization exists because of its staff, customers, partners and other stakeholders i.e. ‘people‘. The value proposition is totally dependent on the people involved. Understanding the changes in people behavior and people needs in terms of brand experience provides strong strategic edge in both, establishing itself in a non-Muslim majority country as well as leading to growth.
In strategy development, When we put people as our primary focus, we take into account emotions! The person representing the organisation and the consumer are human beings. Human beings, psychologically, are emotional beings. Thus when two people are interacting, be it for two organizations, or from an organization to a consumer or the other way around, their perceptions, behavior, cultural background all play a very signiﬁcant role in the way they approach the buying decision,the way they interact with the brand and the way the brand is able to engage them.
Summing up how best could Islamic ﬁnance & banking be marketed to non-Muslim majority countries—whilst the regulatory and environmental issues would be key to set up in a non-Muslim market, what would be critical also is understanding the behavior of the consumer and ensuring the employees are truly engaged with the brand in order to be able to provide the desired brand experience as per the value proposition that would be developed.
Strengths and trends
Islamic Finance has come a long way. Today the conventional ﬁnance industry is extremely interested in Islamic Finance, given the systemic and continuous shocks that the global ﬁnancial system has been having. With more and more discussion on Islamic ﬁnance, coupled with the growth of the industry and the increasing interest from both the emerging economies and established ﬁnancial centres, the overall framework is one that is being looked at and discussed. Highly developed and matured markets such as London are in the process of implementing regulatory, educational and processes that would help them gain a piece of the action. Simultaneously there are emerging markets across Asia and Africa that are actively looking at the Islamic ﬁnance framework all the way from an economic monetary policy downwards.
In terms of trends on the retail side, we can clearly see a push from consumers asking for more transparency from the banking industry in terms of the products being offered, cost of those products, and clariﬁcations on how funds are utilized. The Muslim consumer is particularly wary of ‘token-ism‘ that still continues to masquerade in markets by brands as the engagement strategy. Stamping products as Halal or Shari’a compliant is not enough. This consumer is very interested in the authority and provenance of brands and the companies behind them.
Speaking of strengths from a marketing perspective, the interest-free framework of Islamic ﬁnance is the starting point. Followed by having employee engagement and a strong understanding of the customer behavior, in the concerned country, in order to develop and communicate a beneﬁcial value proposition. These strengths are a part of marketing strategy which is fully dependent on the business strategy in place. A business strategy that takes into account the value-beneﬁt to people, and leads to delivering a clearly-understood value proposition will enhance consumer engagement. In turn this would create the much needed platform of trust from where a strong relationship beneﬁting all–the consumer, the employee and the organisation- would come about.
Drawbacks and obstacles
The big question today is ‘What would make non-Muslim majority countries/states implement Islamic ﬁnance?”
Whilst the growth of the global Islamic ﬁnance is phenomenal, when one puts it in perspective with the mainstream global ﬁnancial industry the size is miniscule. Therefore for a non-Muslim country/state to implement Islamic ﬁnance the key question would be—’what’s the beneﬁt?’ Key economic beneﬁts need to be communicated to policy decision makers in order to get an environment that would be conducive to Islamic ﬁnance. Some major obstacles that would need to be overcome are:
- Islamophobia—this is a reality today and one that needs major attention from a public relations and image (of Islam) perspective preferably from the global Islamic ﬁnance and Halal bodies. A possible way to counter and turn this negative perception to a positive one is to have continuous, strong positive news about achievements in Islamic ﬁnance and Halal industries coupled with societal trends and beneﬁts occurring in the global Muslim community. Simultaneously in major global forums industry luminaries should highlight these beneﬁts in their talks. The change will not happen overnight but with persistence and beneﬁcial deliveries’ a change in perception can be brought about.
- Regulatory—a conducive regulatory environment that enables use of international Islamic ﬁnance instruments and fosters development of both Islamic ﬁnance and Halal industries would be needed for organizations to conduct business proﬁtably.
- Human Capital—Academia and industry need to have in place collaborative talent- development programmes that would attract potential students to undertake the academic qualiﬁcations knowing they have a starting job at the end. At the same time, organizations have to contribute by having a clear process of taking in a pool of fresh talent into their payroll and grooming them for the future. In addition to this the local country’s’ educational policy needs to include higher education in Islamic ﬁnance and recognize global standards as the benchmark of quality.
- Executive Education—this can actually be taken as a sub-point to the Human Capital requirement. Executive education or short courses need to be made available for the banking & ﬁnance industry for the people to upskill themselves and understand the business aspects of Islamic ﬁnance including an overview of Shari’a.
The marketing function has undergone tremendous changes in the past decade. Today the marketing function involves technology, engagement and most importantly creating and delivering an authentic brand experience from the employees’ and consumers’ perspective. Brand values, in monetary terms as an asset, is now dependent on this brand experience.
Personally having had the experience of developing and managing brands and business units a cross industries and across multiple geographic locations, I believe, today it’s important for organizations and their boards to understand that brands are nothing without the people who represent them and without the people who buy and use them.
Businesses spend millions on research, intelligence, technical competencies of their human resource, product & process innovations, all for growth. But what’s really required is effective integration of both soft & hard skills that result in internal and external efﬁciencies of a business. Ensuring this integration comes from a peoples’ perspective, is now an absolute must in terms of marketing of Islamic ﬁnance.
Whilst the Islamic ﬁnance industry is focused on technical competencies and on ﬁnancial instruments that would help business there needs to be a key shift in their business thinking so that their most valuable asset—people- will be at the top of their priorities. Without this change in focus the industry would not be able to have the much required integration of soft and hard skills and develop required leadership with beneﬁcial value-propositions that would appeal to both the non-Muslim as well as the Muslim majority markets.
People are what marketing today is all about. Classic marketing had B2B (business to business) and B2C (business to consumer). Today it’s all about the experience two people go through when interacting! Marketers call this brand experience. It’s an emotional feeling resulting in driving our behavior including purchase of the brand.
Organizations, whose business strategy is based on delivering a particular brand experience, can create a competitive advantage that would be next-to-impossible to replicate as this type of competitive advantage is no longer dependent on product or service innovations but is purely focused on the qualitative experience delivered. Technology and process become tools in ensuring such deliveries.
Let’s look at the technology available and how it helps in marketing and in business process. For instance let us consider the rise of Social media. Post the global ﬁnancial crisis and the resultant recession, marketers across the globe, are unanimous in acknowledging that consumers have had signiﬁcant behavioral changes. These changes have impacted on the way they engage, interact and participate in the brand experience.
A key factor for this behavioral change is the rise of social-media and interest based community networks. This change has blurred the geographical borders of communication and has impacted heavily on business strategies. Brands, across industry categories, are moving into having well deﬁned brand experiences in order to differentiate their offer. Islamic ﬁnance cannot opt to be impervious to this behavioral change if its wants to be a signiﬁcant part of the mainstream ﬁnance industry.
Role of social-media
Social media has empowered the individual. The power to deﬁne and control has shifted from organizations to the individuals who form virtual communities. Today social media has brought this global community together through the common interest groups and sharing of brand experiences in a click. Social media is a critical tool that helps an organization in engaging internally with employees as well as externally with consumers and other interested stakeholders of the brand in developing a strong and positive relationship. Strategically planned social media activity would enable the brand to communicate with the consumers in their own language and interest areas thus drawing them to view the information and start to have a better understanding of what Islamic ﬁnance is all about.
Brand experience has a far greater impact on business success than advertising the brand does. Getting your employees to live your brand values will improve your customers’ brand experience and, therefore, your business. Employees as the heart of the brand gives an organization a common cause that all can align with. Knowing their contributions can have an impact is a huge emotional driver for people. It creates conversation points through which engagement occurs and a positive experience is delivered to all stakeholders of the brand leading to increased revenue.
Given the information overload we all face today, as consumers we are in a mode of automatically tuning out paid exposure or advertising. Instead, given the increasing usage of social media, we see a plethora of interest-based groups where the impact of word-of-mouth recommendation on a brand carries tremendous weight. Whilst paid brand exposure is required from a basic awareness and proposition communication perspective, more importantly, it is absolutely a must to identity the key values and develop an authentic brand story that delivers a clearly felt value-beneﬁt in order to generate brand advocacy. Without this brand advocacy, the sustainability of the brand would be in question. The route to brand advocacy is a long-term one. It’s not a tactic that shows results within a ﬁscal year and it’s not a marketing gimmick that can be created. Celebrity advertising or testimonial advertising is not brand advocacy. That’s ‘paid exposure’. The route to developing brand advocacy is through relationship marketing. The brand has to have a very clearly identiﬁed objective, target audience, value-proposition and an overall brand experience environment that would allow for a positive experience where the consumer is concerned.
Banking and ﬁnance is a category that’s of, both, high interest & unknown territory, to the man-on- the-street. Coupled with this there exists, amongst consumers, subliminal prejudices and biases about how banks operate and are only interested in maximizing stakeholder proﬁt. Couple this with the sketchy ﬁnancial planning awareness and a rising tide of mistrust amongst consumers, given all the negative news about the global banking industry, and you have an ideal recipe for ‘blocked reception’ to any advertising put out. Islamic banking is no different. In fact, the prejudices against an Islamic banking brand is higher as comprehension of the difference between Islamic banking products vis-à-vis conventional banking products has not really been well communicated. This makes relationship marketing that much more important for an Islamic ﬁnance brand. Thus it becomes critical for a brand, to create a strong relationship marketing program that would develop brand advocates from within its fan or customer base in order to have a third-party voice recommending the brand.
Joy Abdullah, Marketing Head – Connecting the dots between Leadership, Strategy, Engagement & Communication
*This article was originally published on Islamic Finance Today Magazine. Republished with the permission of the author.