Imagine this conversation at a local bank near you. Customer walks into the Bank, with RM20,000 to open a new account. He walks up to the Relationship Manager (RM) that’s typing away at his keyboard. He looks very busy.

Customer : Good morning

RM : Good morning sir, please have a seat.

Customer : Thank you. I want to open an account. I want to deposit RM20,000 but I want the flexibility to withdraw my money anytime. It’s for my day to day use.

RM : Do you want to earn a return on your deposit?

Customer : Yes I do. I’m looking for at least 2.00% return on my deposit.

RM : Why don’t you open an Investment Account with us. It’s new and we can potentially pay more more that your expected 2.00%. Of course it depends on the performance of the market. There is always a risk because it is an investment.

Customer : You mean, there is a risk I won’t get any returns?

RM : Sir because it is an investment product based on profit/loss sharing, there could be a risk that the returns can also be lower, or there is a loss, by which your principal amount will be affected.

Customer : You mean I could lose my initial deposit? Isn’t it covered by PIDM?

RM : No PIDM generally does not cover loss of returns. PIDM covers your principal amount if the Bank fails. Besides, they only cover a deposit product, not an Investment product.

Customer: What?? Do you have a product where my initial deposit is guaranteed? 

RM: Yes we have a deposit product under protection by PIDM. It is not an investment product.

Customer: Great!!! As long as my principal is guaranteed. What is the returns that you are able to give? Will it be more than 2.0% per annum?

RM: I’m sorry sir. This product we cannot promise any returns up-front. We can only give a return based on our discretion as a gift.

Customer: Will I get this gift every month end? 

RM: No I cannot promise you will get anything, and if you do, I cannot promise you can get it every month.

Customer: Can you give me an indicative rate?

RM: No I am sorry I cannot give anything in black and white

Customer: Have you paid some returns before?

RM: Yes we have, based on our discretion

Customer: Can I see the historical returns you have paid before? Just for my reference.

RM: No you can’t. We cannot show you what we have paid before.

Customer: Then how will I know if I can get any returns on my RM20,000?? What returns can I get?

RM: Sorry sir. It’s a secret.

It could happen here. How does one complete a decision without all the information to make that decision? Are we being too secretive? For deposits (or investments for that matter), it seems that the Bank have the ultimate control of the customer’s money and its return.

When the Banks have moved toward transparency and over-disclosure, Islamic Banking could be taking the other way for its deposits product; sole discretion and uncommitted returns, based on actual performance. Good and bad, but it will definitely produce more questions than answers, more confusion than clarity, and hopefully not, more conversion than growth.

We are only talking about opening Current Accounts and Savings Account options here.

The issue is not because I have an issue with complying with the Investment Account / Mudharabah guidelines or the proposed drafts for Wadiah, Qard and Hibah, more importantly I am imagining how a conversation would be like in an Islamic branch. It would not be so bad if it only a dedicated Islamic branch, but a shared branch where both Islamic and conventional operates side by side, the above conversation will be deemed ridiculous and a challenge to even seasoned bankers. In the era of deposit building, it seems Islamic Banks were given the same asks but with one hand (or both hands) tied behind their backs.

Exciting way forward. A serious shift is required in the way we think about Current Account and Savings Account.