The Idea of Islamic Banking is still
hot these days in Pakistan. Either completely new Islamic institute are
being emerged or recent traditional banks are opening additional
branches focusing in Shariah-based Financing products/services. But
still consumers doubt that how much are they Islamic? Three years back,
Fazal Ahmed, chief financial officer of the Islamic Investment Bank
quoted that “Pakistan followed Malaysia and Bahrain considered the role
models of Islamic banking while it formulated its regulations, now
Pakistan has the best possible framework for Islamic banking that it
can”. But, at the end of the day, government institutions and
authorities cannot judge whether they have proved themselves or not
while consumers do.

Now, according to the average
consumer of the Islamic banks in Pakistan they still have doubt in
their mind from the scratch to the main services provided by Islamic
Banks.

Consumers would be open to the
thought of acquire Islamic banking products and services given that the
organization that is offering the service is renowned, and better
customer service features such as ATM access, phone banking and so on,
are offered. This provides a great prospect for Islamic financial
organizations in a market that already have many other competitive
existing commercial banks. If Islamic financial organizations can make
on their understanding and status in the monetary world, and can offer
Islamic banking products/services in non Islamic markets such as
Singapore, United Kingdom, Australia, they can plan to increase an
emergent consumer base of the local residents in Pakistan, some of who
may have beforehand excused themselves from dealing with the usual
financial organizations because of the use of interest. The consumers
still also believe on the fact the lack of consciousness about some
basic concepts and philosophy of Islamic banking. In Pakistan, a number
of consumers would not adopt halal banking products because they feel
insecure that what will happen if credit facilities were taken away. In
the Islamic monetary structure money is not lent out, as an alternative
it is an asset-backed scheme where monetary organizations invest in
projects. Consequently, financial organizations deal in equity, not
debt. To counter this inadequacy, some banks have started issuing
‘debit’ cards. These cards are alike to the credit cards excluding the
actuality that they use the consumers own funds as an alternative of
trust on any credit. Another concern is that of sharing profits and not
losses. A lot of consumers who have been using the Islamic banking
services were not educated about the loss sharing concept earlier. This
would designate that some economic organizations have been assuring
profits. In fact, it breaches the fundamental law of Islamic financing
structure that is, relating compensations to risk. Any kind of money
earned on investment without risk is simply interest more willingly
than profit.

So, it reveals the fact that, in
order to recognize how the Islamic structure makes a distinction
between profit and interest, they have to look at the dissimilarities
in financial beliefs. Because past experiances have already shown that
the rationale of ‘monetary and financial standing’ is very important
for a consumer to select a particular bank. In capitalist theory,
capital and entrepreneurs are taken care of as two separate identities
of production where the first identity acquires interest and the second
identity is permitted to get the profit. It is implicit that interest
is a fixed return to offer capital, and profit can simply be produced
after allocating the fixed return to land, labor and capital. On the
contrary, the Islamic monetary system does not regard as capital and
entrepreneurs as separate identities of production. It accepts as true
that each individual who puts in capital in the figure of money to a
business enterprise assumes the risk of loss and as a result is
permitted to a proportional share in the actual profit. The system is
caring of the entrepreneur, who in a capitalist economy would have to
make fixed interest repayments even when the venture is making a loss.
Capital has a fundamental aspect of entrepreneurship, until now as the
risk of the industry is apprehensive and for that reason, rather than a
fixed return as interest, it develops profit. So, as much profit one
earn of the business, the more return on capital. The profit would be
privileged if there are no fixed interest repayments. In this fashion
the profits produced by the money-making activities in the public are
uniformly dispersed among those who have given capital to the
organization. In this way, an integration of social responsibility and
extra Islamic values in rewarding consumers’ needs to be worthy of
ultimate consideration as it signifies an excellent and basic
discrimination between Islamic and conventional banking systems, and
potentially competent to push Islamic banking to better pinnacle in
securing consumers’ gratefulness and response.

Top researchers in the area of
Islamic Finance have affirmed that assurance made by organizations that
consumers will take delivery of a set rate of return without having to
acquire losses are prohibited and immoral. Thus far, not only are
financial organizations enduring the practice but government societies
in Muslim nations are also contributing venture openings with certain
income. Taking into consideration, that the Muslim administration is
accountable for overseeing the structure in order to battle the
prohibited practices of monetary institutes, by giving definite
returns; the governments are seen to be overlooking the performance of
the monetary organizations. Even though these proceedings may assist
Islamic Banks develop in the short run, but in the long run overall
cost will prevail over the profit in shape of damage to the repute and
legitimacy. Such progress also offer ammunition to the detractors of
the system who are previously questioning whether the structure is
nothing more than an interest based system operating under the guise of
profit.

The most essential information
discovered by the past behaviors is that consumer satisfaction over and
over again is directly related to the quality of services that Islamic
banks offer. The excellence of services comprises of factors like
taking care of consumers with politeness and admiration; workforce
capability to put across faith and self-assurance; effectiveness and
efficacy in managing any operation; and well-informed and attentiveness
in offering clarifications and answers relating to the products and
services of an Islamic bank.

As a result, Islamic bankers can no
more rely only at marketing strategy of pulling religious and holy
consumers towards them who might only worry about Islamicity of banking
services. Some significant insights acknowledged on the bases of
different thoughts of consumer baking selection criterion entails the
requirement for Islamic banks to improve its quality of services which
is at the present measured as an important success factor that have an
effect on an institute’s competitiveness. With respect to the standing
of a variety of bank selection criterion, some of these would
undoubtedly revolutionize accordingly of people having turn out to be
extra conscious of the culture of Islamic banking. For instance, media
advertising would be probable to have an extreme good impact on
Muslims. The aspiration by Muslims to be compensated a high rate of
interest have to decrease. In case of non- Muslims, media advertising
may turn out to be well rated accordingly of being uncovered to
revealing bank promotion.

Besides this, an additional
considerable subject, which needs awareness, is the need to strengthen
community learning and understanding towards the distinguishing
features of Islamic banks and how it may beneficially go with the
concern of consumers in their economic transactions. Islamic banks have
latent of being advertised to different sectors of consumers who are
worried with the legality of the ability from Islamic viewpoint and
those who try to find for service value, handiness and well-organized
business. Customer learning programs are for that reason vital if they
are to amplify the level of customer consciousness about the
distinctive features of Islamic banking and the range of services and
products offered by it.

On the whole, after consumers have
been uncovered to the ethnicity of Islamic banking, it would be
anticipated that consumer’s knowledge of what Islamic banking engages
would enhance and their thoughts towards this type of banking should
vary. The change would be estimated to be much bigger in local
consumers. Similarly with the standing of the different banking
selection criterion. Shifts would be likely, extra predominant with
banking customers throughout the country.