Design Management Issues in Developing Sharia Finance Products for a Mainstream UK Market

By

[Name of the Subject]

Acknowledgement

I am most grateful to research team, my instructor and my family without the guidance and support of whom the idea behind this thesis would not have been realized.

DECLARATION

I hereby declare that the contents of this research have not been published before and it represents my own work.

GLOSSARY

Sharia Finance:

Sharia is the law that does not only govern day-to-day activities of Muslims, but also financial activities.

Riba

Interest earned on money that has been extended as loan.

Haram

Activities that are strictly forbidden for Muslims according to Islamic law.

Takaful

Takaful is s type of Islamic insurance in which members contribute money with the purpose to guarantee each other against loss or damage

Usury

The term usury is defined as the activity of providing unethical or immoral monetary loans

Islamic Banking

Banking activity based on principles of sharia law.

Conventional Banking

Banking activity mainly based on debtor-credito relationship.

Global Financial Crisis

Situations in which financial assets lose their nominal value.

Social Justice

Justice exercised within a society.

Sharia Law

Moral code of conduct determined by the Islamic law.

Koran

Exact word revealed by God.

Halal

Action that is permissible according to Islamic law

Branding

Process of given a distinct identity to the product or service

Abstract

With increased Muslim population in the UK there has been an increased need for Sharia compliant products. Therefore, to meet this demand not only Islamic banks, but mainstream commercial banks are also motivated to provide products and services according to the Islamic law. However, these banks have failed to successfully survive in the market. A major reason for this inability to attract customers to invest in Sharia compliant products is failure to market and promote of Islamic banking effectively. As a result of ineffective marketing strategy, customers lack the trust in offerings of Islamic banking. Hence, it is imperative for these banks to develop brand image to gain customer trust. Islamic law encourages social justice; therefore along with Muslims, non-Muslims are also finding Sharia compliant products as an attractive investment. It is Haram for Muslims to charge interest (Riba) on their lending, simultaneously it is also illegal in Christianity to promote Usury. Thus, people are motivated to earn profits on their savings and lending instead of earning interest. There is an increased need for banks offering Sharia compliant products to promote their products and services and create awareness of existence of these products by providing customers with necessary information and knowledge. It is also important to determine the difference between conventional banking and Islamic banking.

Table of Content

ACKNOWLEDGEMENT2

DECLARATION3

GLOSSARY4

Sharia Finance:4

Riba4

Haram4

Takaful4

Usury4

Islamic Banking4

Conventional Banking4

Global Financial Crisis4

Social Justice4

Sharia Law4

Koran5

Halal5

Branding5

ABSTRACT6

TABLE OF CONTENT7

CHAPTER 1: INTRODUCTION10

1.1 Aims10

1.2 Objectives10

1.3 Research Question10

1.4 Relevance to Design Management11

1.5 Issues in Sharia Financing11

1.6 Theoretical Framework13

1.6.1 What is Sharia Finance?13

1.6.2 What market does it currently occupy in the West?14

1.6.3 How are banking offerings changing in the UK, particularly with more financially excluded groups?16

1.6.4 What are the opportunities for mainstreaming Sharia offerings?18

1.6.5 What are the barriers to entry - both regulatory, cultural & market ...