Interns

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No, these are not the interns you are looking for

Interns are a curious commodity. I found that I am able to ask them to do something and they never question why. They are eager to learn, and remind us of the “beautiful” world that we know many, many years ago. Once in a while, we get interns to help us with our daily work, and I generally find them very useful. I just intend to impart to them some knowledge of Islamic Banking, and hopefully I did not crush their spirits in the process!!!

And recently, a light-bulb turned in my head; why don’t I get insights from these interns and get them to write a minimum 1,000 words musings on whatever they have encountered in the organisation? I guess it will be interesting to get a different point of view. Abuse? Yes… but it is the good kind of abuse where someone benefits. Mostly it is me who benefits.

OK, lets have a read to what they have written. Ratings given are purely based on personal opinion, so don’t be so discouraged to write.

P/s I am not responsible for grammar as I understand the pressure they faced as I keep reminding them of the impending deadline.

Wardah Sakinah

‘A lot of companies have chosen to downsize, and maybe that was the right thing for them. We chose a different path. Our belief was that if we kept putting great products in front of customers, they would continue to open their wallets.’[1]

Steve Jobs (The New York Times June 5, 2007)

The above phrase proves that great products will attract customers to stay as company’s regular consumers. It has been proved that Apple Inc. has maintained a good track record of maintaining its core customer base, with at least 76% of users preferring to stick with their Apple products[2]. Thus, I believe Islamic banks can also do the same or might be better to win customers’ hearts.

The following will explain on how to launch an Islamic product successfully for Islamic banks and what they need to do to launch a product. It also helps readers to see what is involved in the introduction of new products.

[1] Jobs, S. (2007, June 7). Mental reserves keep brain agile. The New York Times. Retrieved from http://www.nytimes.com

[2] Vasanth, R. (2014, April  24). Apple Inc. (AAPL) Sold 43.7 Million iPhones In Q2 2014: Is The iPhone Central To The Apple Universe?.Retrieved from http://www.dazeinfo.com/

From my point of view, Islamic banks should consider having 3 steps to know what they need to do to launch the product to make it successful. The steps are:

Wardah Assgmnt

  • PRE-LAUNCH PERIOD

At this phase, many things need to be done to ensure that it will not cause problems in future. The bank’s product team has to spend some time to study the following.

1)         The team has to look at the preparation made whether they are all ready to launch the product or not. If they are not, do not take any risk. It might cause problems to all employees of the bank later on. Problem such as give wrong information will create misunderstanding which will hurt the bank.

2)         If the product catches the audiences’ eyes, can the team deals with the current demand of the existing products? If they cannot manage this, it will disappoint their existing customers.

3)         The team also has to figure out on the capability of the bank to handle the increased of customers attention. For example, the bank has to entertain customers’ questions and enquiries. Does the bank has enough staffs and facilities to handle it? Do the staffs have adequate knowledge about the new product?

4)         Before launch a new product, they have to evaluate the market. It is a must to know if there is available market to place the new product. Every product created must be based on market and customers demand, not individual ‘light bulb’ idea.

5)         Bank has to evaluate the product itself by conducting an internal pre-launch with its staffs. It will create excitement to the staffs and it can be considered as testing method to ensure that the outcome is consistent before they launch it.

6)         Marketing team has to know and identify the target market to sell the product. For example, in my Bank there is a product named Priority Account. This particular product is made exclusively for highly income customers as according to its features. So, the team has to focus on the targeted group of people to make it a success.

7)         Do some research to determine the competitors. By knowing the bank’s competitors, it would give benefits to the bank as the new product must be made exclusive over others.

8)         Develop marketing strategies. Things such as advertisement, geographical location, time of launching, and others need to be considered too. All elements of marketing must be in line with Shariah principles.

9)         Provide trainings to staffs in branches and head quarters. Not all staffs in Islamic banks have knowledge about Islamic bank products. They need to be trained so that they can explain it to customers later.

10)       Prepare a budget for launching session. Allocate certain amount of money for launching purpose as it is a part of creating a new product

  • LAUNCH PERIOD

This is a very important phase because it pictures bank’s reputation and determine whether it attracts customers or not during the presentation.

  • Determine the target audience

Decide a suitable location to launch the new product. Age, social and economic background, and income of the audience are important. This is because these people will receive the most attention once the bank launches a new product.

  • Implement a unique slogan

By having a unique slogan, it will help customers to remember the product. The slogan should consist of simple language to make it more memorable. During the launching, customers will focus more on voices and pictures. This is a perfect time to introduce them with something new.

  • Design attractive brochure

Brochure that will be received by consumers and audiences must be attractive and full of information. All of the details must be true and correct so that customers will not get confused. Pictures used must not be contradict with Shariah as it is a part of Islamic products.

  • Press conference

Every questions answered during the press conference must be consistent and true at all times. The one who answers it must know every single thing about the new and existing products. If he knows nothing about the bank’s products, then customers will lost confidence in the bank.

  •  Launch an official website

The official website must include all information of the new product. This will help customers to decide and make decision. The team has to include user testimonials, user feedback, product comparisons, and promotional offers for buyers’ view. The design of the website must be professional and creative so that customers will not be boring when they open it.

  • Launch the new product in internal website

Besides official website, I believe that every Islamic banks must also own an internal website. This website is for all staffs to update any information, promotions, and details of all products. All details of the new product must be specific so that it will be easy for the staffs to understand and apply. The arrangement must be simple, easy to access, and updated from time to time. During the launch time, the new product must exist and ready to be launched too.

  • POST LAUNCH PERIOD

The final stage is after the launch period which is post-launch period. At this time, any decision made by bank or its staffs are considered as a part of bank’s decision. Everybody must be very careful in deciding and solving problems because it might affect other parties too.

  • Update the Internal Website

In my Bank, it has a special website called Knowledge One Malaysia. In the website, it is compulsary to upload the latest version of forms and documents for staffs’ references. The only problem with the internal website is that when the staffs upload the latest documents or forms, they did not delete the previous ones. It will create a chaos later as the staffs who refer to the website will choose the wrong ones.

  • Get customer’s feedback and comment

After certain period of time, it is recommended for the bank and its staffs (at bank’s branches) to ask for customers’ feedback. Additional comments and opinions are welcomed because it might help the bank to improve the existing services and product.

  • Update the official website

If there is any changes made regarding the new product, they also have to change it as in the website. They have to ensure that all details of the product is up-to-date for customer’s view. Every link attached must be easy to find and access. If there is error, it must be edited quickly to protect from public’s disappointment.

  • Advertisements and promotions

Advertisements and promotions are a part of marketing strategies. Bank has to allocate such amount of money for advertising such as creating billboards, and newspaper advertisement. This idea might be great to tell public that the bank is now having a new product and it is now available to be purchased.

  • Development of the new product

Every product must be developed after certain time. It can be based on customers’ feedback, errors made by bank or bank’s team, system breakdown or else. The product team has to figure out the problems and discuss on how to fix it. It can be called as development of the product. Development process is a must for every product to make them remain to be sold on shelf.

  •  Training and education

Errors made by staffs especially those who work at branches might hurt the product’s demand. Customers find it hard to go back to the specific branch where they first do the transaction to correct mistakes made by the staffs. Therefore, I suggest bank to carry out training and education slot to selected staffs who make mistakes. This is exactly what had happened to my Bank  where a number of Bank staffs did not know how to process customers’ application for Term Deposit-i product. Training was made to explain on steps to complete customers’ application.

  • Immediate sales incentives

This method might boost staffs’ spirit to continue selling and promoting the new product. The bank has to offer incentives to staffs who reach certain target of customers or certain amount of income. This will help in pushing others to work hard too to reach bank’s targets.

  • What is involved in the introduction of new products?

Product

This is the main element in the introduction of new products. The products must be in line with Shariah principles to be named as Islamic products. The products must be exist at that time, can be delivery, and valuable. Without the presence of the new products, how possible it is to introducte the new products?

Well-trained Staffs

Staffs is the asset of an organization. Well-trained staffs are needed in the introduction of the new products. This is because it will bring the product to another level which customers are attracted to buy. Staffs with limited knowledge about the product will make that product sounds terrible, hard to understand, and might not be as attractive as it should be.

Shariah Approval from Shariah committees

The idea of having new products must be in the observation of Shariah committees. This is to make sure that the products are still in the circle of Shariah. If it is not, then we cannot put it as Islamic products. Discussions between Shariah team and Shariah committees must be made to get the approval before the introduction of new products. It might take some time to get the approval.

Allocation of money

In business, money is too important. A brain without money will bring you to nowhere because we cannot invent the ideas without having any cash. Therefore, a correct allocation of money will help the Islamic bank to introduce the new product to the market.

  •  Conclusion

This writing is based on my own ideas,experiences and research made before I put it into words. I hope that it will give some information to the readers and myself as well. I have learnt that to launch a new product is not that easy. We have to be patient because it will take some time and we also have to listen to other people’s ideas in order to develop the new product. If a person decides to launch it immediately, that person has to think of the consequences that everyone will receive. It is not about self-centred, it is all about teamwork.

Thank you.

My Comments : Overall a good write up, demonstrating a good understanding of the process of launching an Islamic Banking product. There is emphasis to ensure Sharia compliance when a product is designed and developed. The only shortfall that I feel is perhaps one of the key steps to launch a product is to evaluate the support functions to ensure that the infrastructure is suitable for the product, as well as the resources required. For example, IT development and testing, processing support, back-office capability and pre-launch evaluation and dry run. Also, for significant core products, a “soft-launch” period is advised to ensure the end-to-end processing meets the Sharia compliance requirements as well as identifying potential issues that customers may come across. Overall rating 7/10. Good job

Aimi Abd Ghani

Malaysia has developed Islamic banking over 30 years since 1983 and started with selling Islamic product through conventional banks and slowly turned into full-fledged Islamic bank. However nowadays there are many speculations about does Malaysia really practice the right Islamic banking model and what are the differences with Middle East country. Islamic banking products is not only restricted to Muslims only, but all people including non-muslims also can use Islamic banking.

There are many scope that we can see when it comes to a matter does Islamic banks in Malaysia really practice the right Islamic banking model or not. Things that we can see, what is the procedure of carrying out the contract for example to selling one product, we have to review the documentation whether they using the correct terms and all the details in the contract is correct and complete to ensure the completeness of aqad. This is one of the requirements that need to fulfill in order to follow the right principle in syariah. From my point of view, efforts that have been made by Bank Negara Malaysia shows a good works to ensure all Islamic banks in Malaysia really trying to compliance with syariah principle and standardized in Malaysia. Thus, it is not fair to judge Islamic bank in Malaysia does not practice the right model of Islamic banking. All Islamic banks in Malaysia have to comply with all the regulations that have been set up by central bank of Malaysia. In my opinion it is all depends on individuals understanding about Islamic banking on how it is works. Based on my experience, many people do not really understand how Islamic banks work and do not aware with the regulation in Islamic banks. The most important part is the salespeople that sells Islamic banking product also do not really understand how Islamic banks work. Thus, they cannot deliver a good explanation to convince the customer about the benefits of using Islamic banking.

Middle East country has started in Islamic banking more than 40 years and they are well developed in the sector of Islamic banking because Islamic banking in middle east country do separate entity between conventional and Islamic banking to ensure it is syariah compliance. It is easy for Syariah Board to monitor the progress of the development of Islamic banking without intervention from conventional banking part. From my understanding, between Malaysia and Middle East there is not much different for the model of Islamic banking because they refer to the same principle and regulation according to syariah. Basically there is not much difference but to apply into the model it has to be flexible according to country because different country has different way in delivering the business transaction because it has to fit with the requirement needs by the customers.

Due to that, to standardize the framework between Middle East and Malaysia will face many challenges because of the differences in culture and understanding. For example, in conservative country may tend to take less interest compared with liberal country tend to more interest.  It is not possible to have a single Islamic banking model but takes more time to revise all the things that all banks has to take into account what are the things that needs to be change and must suit with the needs for each country. It is important to have a standardized framework because to convince people to invest in Islamic banking, the regulations must be the same to avoid confusion among them like people will compare between Malaysian and middle east for example they found out that there is difference in terms of rates between both country and start question on the differences.

Other than that, each country has their own syariah advisory board and they have their own view and arguments and it is not necessarily all board agrees all the time because they have different interpretation and acceptability. For example, in delivering a concept of ijarah where some people might think that financial lease is more save and give benefit to both but some might think operational lease is more accordance with syariah principle. If they cannot agree each other it may lead to the difficulties to decide which part to be implemented although both of that are according to syariah.

Each country has their own way to cater the customer because different customer will be different way because it is depends on the culture and environment for each country. Population in Middle East country consists of 99.9 % Muslim and they do have large population compared to Malaysia and it is easy for them to develop Islamic banking in that country because most of the citizens already aware with importance of using Islamic banking. One of the advantages is that people already aware the important of Islamic banking which we have to compliance with syariah to ensure our money comes from trusted and permissible.  Compared to Malaysia’s population consists of various races like Malay, Chinese and Indian and it is quite tough to educate people the importance of Islamic banking product. It is because they have a perception where Islamic banking product is more likely conventional product and they just change the terms. Other than that, they also claim that Islamic banking product is more expensive and there are many charges upon each transaction made. However, nowadays people including non-muslims become interested in Islamic banking product due to the product that offer by Islamic banks is more transparent and more convincing that is why they confidence with Islamic banking products. Middle East country is a wealthy country and they have many products to export such as oil and gas, leather products, agriculture and many more. It is part of the biggest contributors to the capital development in Middle East country and provide more capital to the increasing the business transaction in Middle East country using Islamic bank and they able to gain more profit.

As a conclusion, Malaysian has made an effort to develop Islamic banking to ensure that the all the terms, flow of the transaction according to syariah and follow the right Islamic banking model. We can see the effort from all the regulations, concept paper given by central bank of Malaysia for all Islamic banks in Malaysia as a guideline for them to follow. It is important to know that Islamic banks are still a profit-based organization, not a charity organization except the fact that it follows syariah guidelines.

“The volume of Islamic Finance has now reached approximately RM 500 billion and we are witnessing an annual growth of about 10%.”

I agreed with this statement because as for now, Malaysia is pioneer towards the development in Islamic banking after Middle East country compared to other countries. But, Islamic bank in Malaysian still need to revise their products and services from time to time to ensure the effectiveness and improve their services to attract more customers.

My Comments : Overall a decent write-up. There is an understanding about the Malaysian market and what’s available in the Middle East. Two points to highlight though; in the Middle East, many entities are still an Islamic branch of a conventional bank,  or a subsidiary of the conventional bank. Secondly, I do not believe the Middle East are more advanced in offering, but they have gone through a more rigorous process of Sharia review for whatever products offered. Most of the structures are based on simple contracts, and used cautiously and takes time to properly develop. Malaysia, on the other hand, greatly practice replication of existing conventional product, resulting in some “interesting” structures, which the Central Bank keeps a very tight leash on. Overall Ratting : 6/10

Farah Nadia Shamsul Anwar

Islamic banking is simply a system of banking just like conventional but they are governed by Syariah laws or Islamic law. Islamic law are diverse in Muslim life and it is applicable to not only the ibadat of a Muslim but also comprises of how a Muslim lead their daily life, their daily transaction. People which in this case are Muslims are always thinking that they are already a good Muslim by following the 5 pillar of Islam and believe in the 6 pillar of faith and also avoid all sinful acts such as stealing, backbiting, and also other sinful acts. They are also focusing on their daily transaction that must be in HALAL way and also HALAL source. The source must come from Halal source or Halal income and they will always spent their money in a halal way such as halal food, good entertainment, and many more. But they are forgetting about their daily transaction that are involving other counter part or other party which in this case is Banking sector. People are dealing with the bank to safekeeping their money, their salary. They are also dealing with the bank when they are looking for financial aid in term of buying house, car or any permanent assets. Simply said that bank are always be part of a person life in order to lead a comfortable life in such having a car, a house and many more. Conventional banking is the banking system that are governed by Bank Negara Law and also Acts in Malaysia but they are not governed by any religious law. Conventional banking practises interest as their profit part. Interest simply said and simply define as riba.

In Surah Al- Baqarah , verse 275 ,“God has permitted trade and has forbidden riba”.

Islamic banking nowadays had emerged as one of the banking sector that moving in the fast lane. In Malaysia, there is top to bottom system where the government are the one that pushing and keep supporting the emergence and growing of Islamic Banking and finance in Malaysia. Starting from 1983 government of Malaysia had played their role in the existence and emergence of Islamic Banking in Malaysia by setting up the first full pledge Islamic Banking in Malaysia which is Bank Islam. The stages of Islamic Banking in Malaysia keep growing as it received full support from government in order to make Malaysia as one of the Islamic Financial Hub in Asia.

From my very own perspective as a student, Islamic Banking (IB) nowadays in Malaysia especially is very growing tremendously in the banking industry as there is push factor from the authority of Malaysia to make Malaysia as one of the Islamic Banking hub. Malaysian Law governing Islamic Banking in Malaysia which are acts and rules that IB must comply with such as Islamic Financial Services Act 2013 (IFSA 2013), Central Bank Act, and also Central Banks Guidelines, are one of the strictest rules and laws that governed IB. IFSA 2013 comprises of Islamic Banking and Finance, Insurance and also Takaful, and also Payment System. In my view,  the new and updated version of act that govern IB that give specific, detailed and improved features and acts are one of the steps taken by the authority to govern IB and make it more reliable, transparent and accountability as they are clear focus on Syariah rules and governance and there are also impact for the non-compliance IB which they might be fined up to 25 Million MYR and imprisoned. These are one of the push factor or incentive taken by the Central Bank ever since the launch of the first full pledge Islamic Banking in Malaysia, Bank Islam in 1983.

The stages of IB from back then are always from top to bottom which held authority as the top and push factor that makes IB emerge. The first ten years starting from 1983 are the given to Bank Islam in order to sell IB products without any competitors at all. Then, Central Bank granted licensed for Conventional Banks in Malaysia to open up an Islamic Banking windows that known as ‘Skim Perbankan Tanpa Faedah’. From my personal opinion, this step had been taken by Central Bank in order to make customers comfortable with Islamic Banking System and get introduced to it without have to change their current or preferable banks that they are currently with. This due to during that time most of banks in Malaysia, are conventional banks and all customers are already using conventional banks in their entire life. They had been loyal to the banks and they would not want to take the risk of changing banks. Thus, the same conventional banks may open Islamic banking windows with granted licence from Central Bank. This step had been one of the great step as this put the customer in confidence as they do not necessarily change their banks in order to subscribe to Islamic Banking products. Next, Central Bank had given out licence to conventional banks to open up a subsidiary of Islamic Banking as we had now such as Standard Chartered Saadiq, Maybank Islamic, HSBC Amanah, Hong Leong Islamic and many more. This shows that customer’s confidence and understanding on IB had raise through Islamic Banking windows in conventional banks which they had already believed in since from their ancestors.

Then, foreign Islamic banks had entered Malaysia’s Islamic Banking Sector as competitors to all existing Malaysian IB players. From all the stages involved up until now, what I noticed that Central Bank and authority are the only push factor for the successful of IB in Malaysia. There is lack of demand or pull factor from the customer especially Muslim for the IB products that compliance with Syariah and stop from subscribing conventional banking products and services either deposit or financing based. Apparently, it is known that conventional banking is practicing interest based transaction simply said, Riba and riba’ is prohibited in Islam.

Muslims should be thinking of shifting their banking preference to IB but this is not actually happened in Malaysia. They are actually thinking of shifting from conventional to Islamic banking, but they are not well-educated on what is IB how it can be said Islamic and Halal. In my very own humble yet inexperienced view, one of the reason this is happening is that there are still lack of awareness in Muslims about IB as a whole. They always misunderstanding IB as in their own view, IB should not have the profit rate same level as conventional as this is not Islamic. Islamic banks should observe Maqasid Al- Syariah as it govern human interest but does not mean IB must bear losses. This way of thinking had made IB are not well accepted by customers especially Muslims in Malaysia. This shown that there are still lack of marketing and promotional parts as it maybe takes different style or approaches to make people understand and at least have the basic knowledge on what is IB, how it is differentiated with conventional banks, what are the products and why it is called Islamic. People does not know how IB works and the flows and processes involved in developing, and structuring the IB products that make it Syariah compliance.

In my opinion, if they knew what actually IB and it is Islamic and Syariah compliant, they might shift their banking preferences to IB as they could not say anymore that ‘I don’t know about IB’, ‘IB is the same as conventional’ and so on. An intensive and long-term campaign should be done for this purpose as of not only when the products are about to launch but also throughout the time and not only focused to one products but to focus on overall IB. This campaign should aim towards youngsters  which are from high school and also university students as they are the future IB’s customers and they should know well about IB right before they become a bank’s customers in the future, and also they are the future of Islamic Banking sector in Malaysia. If to ask is IB move towards the right way in the industry right now, the answer would be it should be from two ways or two direction and it is not only from top to bottom. In order to uplifting IB in Malaysia and make it more reliable and transparent, in order to boost customer confidence, yes, IB is in the right way but the one and only reason why Islamic Banking was introduced is that we want Muslims to practise riba free transaction and this is not yet fully happened. The general misperception is directly goes back to the customer of banking system.

Criticisms that I had been heard since I am taking Islamic Finance is that people, apparently, students in my own university, they does not really know IB products but they do know IB but not intensively. Back then, I had always think that BBA  is one of the products that does not really Syariah compliance and even we had once make a presentation on the criticisms of BBA. We are also seriously does not really know how to say to people when they asked me “ what are the differences between IB and conventional”. The way I look at IB as the way I learned it from my lecturers which are focusing on each subjects and not IB as a whole. When I am now in the industry, I learnt that Islamic Banking and Finance is not only named as Islamic and not only changing the term interest to profit, but there are the process flows in making and designing a product of Islamic Banking and these steps, these flows, are  the reasons why it is Islamic and Syariah compliance. It is not by charging lower profit rate but it is the way we are handling the process right from the creating, planning, and execution of the products. It does not stop there as there is monitoring of  all the processes such as forms used, the aqad processes and many more. At the end, it is not about the profit rate charged that customer should be eyed on when they are choosing their banks, but also the system and process that as a Muslim we must undertake halal transactions.

As a whole, I am hoping that there will be the pull factor from customers and make IB in Malaysia as demanding as the Middle East but also with support from our regulatory authority. InsyaALLAH, IB in Malaysia will produce some of the leading banks in the world.

My Comments : Overall a decent write up. There were comments on the criticisms that were leveled towards Islamic Banking, but I do not feel it conveyed the effects of the criticisms to me. There are some good suggestions such as educating the young on Islamic Banking, and as they grow up it will be a natural, informed choice for them. I just feel there is not enough criticisms put in and there is a “softening” of argument on those criticisms that you do make.  Overall Ratting : 6/10

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