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
experiences 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
banking 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.