Islamic Financial Products and Services: Opportunities in Dubai, Case Study Example

The company of interest is a bank based in Saudi Arabia that offers Islamic financial products, services, and contracts. These types of financial items may be easily marketed in Arab countries, such as the United Arab Emirates, but there may be more restrictions or less interest in Asian countries, such as China or Vietnam. Knowing this, the logical choice is to open a branch in Dubai. This document contains a SWOT analysis to justify this decision.

Strengths

One of the most telling strengths is the Dubai Factor, which is essentially the idea that Dubai is the future Islamic banking capital of the world. Moreover, Dubai has a strategic location, which can be taken advantage of to increase the bank’s market base. Expanding the bank’s presence to Dubai would also provide control over strategic global assets as the bank becomes more established and begins working with notable clients in the Dubai area, as well as other clients. Dubai would provide the bank the opportunity to obtain OIC membership. As Dubai is politically stable, political leadership will be a powerful asset for the bank in achieving its objectives and serving clients. At the same time, the bank will enjoy regional acceptance because Islamic banking is already becoming accepted within Dubai. There is also the opportunity to capitalize on competitive advantages to make room for new sectors. For example, when Islamic financial products, services, and contracts are offered, other Islamic-based industries may enter the market and use the bank for their needs. This means that Halal food may become a new sector within Dubai and lead to a competitive advantage for the bank as it provides for the sector’s financial needs, as well as contributing to opportunities to develop standards in the industry. In the world of Islamic banking, there are stand-alone regulations, and insurance companies often flock to Islamic banks to have their needs met, providing another competitive advantage for a growing industry. With Dubai International Airport, a global alliance is enhanced as a result of international travel, leading to the provision of Muslim-friendly travel services, as well as the adoption of favored technologies. With these strengths, the bank will have the opportunity to capitalize on many different opportunities that Dubai will face within the next few years that require the use of Islamic banking. By taking advantage of the strengths of the bank, as well as the needs of Dubai and the international hub that exists there, it will be possible for the bank to capitalize on the need for Islamic banking within the area. Not only is Dubai an international hub, but it is also a regional hub. Therefore, there will be even more opportunities for growth within the bank itself, as well as the industry. This can also lead to economic growth for Dubai and the United Arab Emirates, which will better position the country to welcome more Islamic banks, including more services through investing opportunities, leading to increased growth and better economic standing. Not only can domestic companies take advantage of these opportunities, but so can foreign investors, which leads to an increased standing within the country for all individuals and businesses.

Weaknesses

Despite the many strengths, there is a lack of a unified set of standards and benchmarks for Islamic banking in Dubai. Since the concept is still new in Dubai, there is a lack of key skills and creative talent in relation to the Islamic banking industry. This also means that there is no efficient scale of production in several IE sectors, which can lead to slowdowns in the need for Islamic banking services. Again, as Islamic banking is new in Dubai, there is a lack of trained management and staff. This can be remedied through educational opportunities. Not only within the new industry, but also within the general population, there is insufficient knowledge and awareness of Islamic banking. The proposed expansion of the bank to Dubai can be used to provide this education by promoting services and products and showing the differences in the banking systems, as well as why Islamic banking may be a better fit for the needs of potential clients. Moreover, since training and education is so limited regarding Islamic banking, the proposed bank would do well to offer apprenticeships to train new professionals in the field.

Opportunities

There are numerous opportunities for the Islamic banking industry in Dubai. For example, the bank can take advantage of the regional access hub in the form of the international airport located in Dubai to capitalize on the needs of multiple people. This could lead to further growth within the industry and increased awareness of how best to serve the market. Other opportunities might involve the ability to increase financial banking knowledge, not just among professionals in the industry, but in the community as well. This could lead to increased interest in the products and services offered. These opportunities capitalize on the strengths found within the industry, as well as the adoption of a new location, leading to an increased market base. In the future, as Islamic banking becomes more mainstream, as is predicted to occur, the bank will be positioned within the market in a secure way that will allow for immense growth.

Threats

As Islamic banking is considered innovative, there is little knowledge within Dubai about the services offered. As a result, there may be difficulties in obtaining clients. However, with increased education, this is expected to improve. Other threats may come from traditional banks. These banks may be easier to obtain products and services from, but do not follow the Islamic banking regulations. This could be problematic for some individuals. As a result, this threat can be transformed into an opportunity to provide appropriate services for an increasing number of people within the area.

It is expected that the bank will have greater opportunities in Dubai than it would in Asian countries. This is because of the different belief systems. However, at the same time, it is also acknowledged that there is an increased opportunity for Islamic banking to grow around the world, and it is, in fact, growing in popularity. This may lead to increased opportunities, but it will be important to focus on promoting awareness, providing education, and offering services in regional and international hubs that cater to a wide variety of individuals.