Shariah-compliant banking takes centre stage
With Islamic banking business growing faster than more conventional financial services, competition to provide new products is heating up.
NATIONAL COMMERCIAL BANK (NCB) and Saudi American Bank (Samba) recently became involved in a minor spat over which of them had introduced the first Islamic credit card into Saudi Arabia. Their cards were issued on virtually the same day and each bank insists that it was ahead of the competition.
This illustrates how keenly the banks are looking to expand Shariah-compliant banking, the fastest-growing part of the kingdom's financial system, and suggests that there will be intense competition to win market share.
Al Rajhi Banking and Investment Corporation, which offers only Shariah-compliant products, until recently dominated the market. But it has now been joined by Bank Al-Jazira, which has converted from being a conventional bank. All the other banks are busy developing products, ranging from credit cards to Shariah-compliant alternatives to time deposits, which are being delivered through a mix of conventional outlets and specially designated Islamic branches.
"We have seen an increased demand for Islamic products and we have spent a significant amount of time trying to develop solutions for our clients who want to use Shariah-compliant products. In relative terms, sales of these products and service are growing faster than other parts of the business," says Mike de Graffenried, Samba's managing director.