Finance

Abstract
Strategy has been a constant topic of discussion for managers and business owners today. Nevertheless, many people still have the wrong idea on what constitutes as a strategy. For example, if a manager stated that their corporate strategy is to be the best in the business, or to foster continuous growth, than heshe has definitely the wrong idea about strategy. Strategy is not about reaching corporate goals rather it is bout the unique way we intend to achieve that goal with. Managers and business owners cannot expect to excel in their industries by performing the same activities as their competitors.

In retail banking industry, the strategy includes the development of products, the establishment of new outlets, joint marketing with other industries and many others. Once of strategy that current retail bank conducts is to establish the Shariah unit to target the Moslem customers worldwide.
Concerning the banking industry, this paper will discuss about the main concepts of Islamic finance laws (Shariah) and its comparison to the conventional banking practice. In addition, the focus is on the Islamic financial sector in the Middle East, particularly in the largest 3 active markets of United Arab Emirates, Saudi and Kuwait.

Introduction
Therefore strategies are crucial aspects in a competition since strategy is about doing different things or doing the same things differently as means to achieve corporate goals. In banking management, the realm of strategy is as complicated and as challenging as any other industries. There are as many factors and as many issues to consider when devising banking strategies. This includes establishing marketing programs, managing partnership relations, devising customer acquisition strategies, etc.

Over the century, the conventional banking has been evolving in number of banks and assets as they reach remote areas to target large number of customers. Despite the development of conventional banking practices, within the past two decades, the Islamic banking appears to fulfill the demands of Moslem customers that want to be free of Riba (usury or interest) that conventional banking practices. Concerning these underlying reasons, therefore, the research question for this paper is

Is the practice of Islamic banking principle (Shariah law) provides benefits for customers than the conventional banking especially in the credit crunch period

I choose this research statement or question since it may be different from others who only focus on discussing the development of Islamic banking without explaining the benefits of having Islamic banking practice compared to conventional ones especially amidst the credit crunch period. Therefore, instead of discussing the partial discussion on Islamic banking development, I decide to put emphasis on highlighting the benefits of Islamic banking and its development.

Relation to Previous Research
Shariah law
In the Islamic law concerning the life, in addition to the ban of interests, there are also other laws that Moslem cannot infringe such as drinking alcoholic liquor, gambling, eating pork, pornography and anything else in which in Islamic law (Shariah) this actions considered as Haram (unlawful). Moreover, in Islamic financial banking practice, there are some orders characterizing the development. Some of the features as following Islam permits individuals to gather their economic well-being. However, Islam makes a strict guidance between what is Halal (lawful) and what is Haram (forbidden).

Islam justifies the ownership of wealth for individuals but Islam obligates their believers to spend a portion of their wealth for the Needy and prohibit them to squander and waste it.

Surplus that Moslems got from any business activity is justified and they can retain it but Islam rule to reduce the margin of the surplus for the benefits of the community as a whole. This kind of social participation is called Zakat.

Islam also prevents the collection of wealth in few people by ruling its laws of inheritance.
In general, the economic system that Islam practices is back to the social justice principle by preventing any attempts that would cause any injurious impact and individually self-destructive
(Islamic Banking, 2008 HSBC, 2009b)

Principle of Islamic Bank
The basic principle of Islamic bank practice is the prohibition of Riba (Usury or interest). In this manner, it means that Islamic banking outlaws not only riba, a term that describes the concept of usury but also the concept of interest. The underlying reasons behind the prohibition of Riba are based on Islamic moral guidance and common sense, which becomes the foundation of many religions in the world, including Islam (Islamic Banking, 2008).

Instead of giving interest to their customers, Islamic banking practice adopts the concept participation in the enterprise where customers will put the funds at risk on a profit-and- loss-sharing basis. However, unlike the investment in conventional stock market, this kind of Islamic banking practice does not exhibit speculative scheme since this risks can be alleviated by conducting diversification of risks, careful investment policy, and proper management by Islamic banking or financial institutions (Islamic Banking, 2008).

Based on this laws, in Shariah concept, profit and loss sharing basis become one key financial transaction. This fair treatment will then distinguishes good performance from the bad and the mediocre. By adopting this financial practice, Islamic banking is encouraged to have better resource management since Islamic banks are built to have a clear differentiation between shareholders capital and clients deposits in order to have fair and correct profit sharing based in Islamic Law (Shariah) (Islamic Banking, 2008).

Research Method
To be precise, this paper employs qualitative approaches to a research. Furthermore, there are two approaches in qualitative research, interviews and observations, but this paper carries out the observations methods, especially we employ non-participant observation method especially by analyzing qualitative information from journals, books, magazines and many more.

The reason we choose observation method is due to the fact observation is an important research tool in which it allows us to observe other people in a natural setting or in a more artificial experimental situation. Moreover, by using observation method we can collect and gather data in natural settings concerning what is really going on in a real-life situation.

The most important of conducting observation is it provides researchers with an understanding about the perceptions about things or people we observe. However, since observation deals with someones perception, we plan to avoid preconceptions since it would provide this research with some bias.

The method does not involve direct interviews, which will slightly reduce objectivity and the accuracy of information. We are retrieving data from experts analysis, journals and various publications from available media. Using the data resources above, we are hoping to present an independent and objective analysis toward the matter of Islamic banking practice.

Reflection
The Islamic banking industry shows tremendous development within the past two decades. However, some of the basic principle that Islamic banking practices have been adopted by conventional financial institutions over the centuries ago. This is obvious as depicted in Islamic Finance a Euromoney Publication (1997) that reveals although the western media sees the Islamic banking just evolve at presents but in fact the practice has been evolved since seventh centuries.

In addition to the prohibition of interests, Islamic banking institutions also carefully collect funds from customers or investors in which they only allow source of funds from lawful business practices. Figure 1 shows the comparison between Islamic and conventional banking practices

Figure 1 Source of Funds
Source Ariss and Sarieddine, 2007

Due to the benefits of practicing the Islamic banking, many retail banking start offering the Shariah unit of their banking practice. HSBC, for example, have presented a Shariah unit of their bank. According to Iqbal Khan, CEO of HSBC Amanah, Islamic finance becomes a fastest financial service that continues exhibiting the positive growth within the past two decades (Parker, 2006). The reason is clear since Moslem population holds the second largest population in the world (Figure 2).
HSBC Amanah ( HYPERLINK httpwww.hsbcamanah.com www.hsbcamanah.com), for example, also has appetite to expand into foreign markets that have majority of Moslem population. Iqbal Khan, CEO of HSBC Amanah, says that the presence of HSBC Amanah currently exist in Qatar, UAE, Indonesia, Brunei, Bangladesh, Saudi Arabia, Malaysia, UK, US and Turkey and other countries will follow (Parker, 2006).

Figure 2 Potential Markets for Islamic Bank Services
Source httpbiglizards.netGraphicsForegroundPixMajor_religions_2005_pie_large.png

Figure 3 shows, the local office of HSBC at Dubai in which at first the development of Islamic Bank was only existed in several Arab countries. But as the benefits and offering of Islamic Banks are attractive, the phenomenon of Islamic Banking shows tremendous growth not only in Moslem countries but also in other part of the world.

Figure 3 HSBC at Dubai
Source httpwww.daylife.comphoto0gbx5BX6F81fM

For Islamic banks, innovation also becomes significant factors in the development of the banks. This is because in developing products and services for Islamic banks, they should carefully plan the products and discuss it with the government and Council of Ulamas. Ulamas are considered as collective name that become top class of religious officials in Islam that composes of scholars and other Moslem who understand the Islamic law.

Among the services that are common in Islamic Bank is for personal and business. For personal services, the offering usually covers personal loans, home and vehicle financing, and also investments. Meanwhile, for corporate accounts, the services include investments, trade services etc. Figure 4 shows many kinds of personal and business services that HSBC Amanah offers to customers.

Figure 4 HSBC Amanah Website
Source  HYPERLINK httpwww.hsbcamanah.com12hsbc-amanah httpwww.hsbcamanah.com12hsbc-amanah

Conclusion
Islamic banking is viewed as way out in managing the crisis as the nature of the Islamic banking practice. Concerning the issue, this paper has elaborated about the main concepts of Islamic finance laws (Shariah) and its comparison to the conventional banking practice. In addition, the focus is on the Islamic financial sector in the Middle East, particularly in the largest 3 active markets of United Arab Emirates, Saudi and Kuwait. The success practice is performed by HSBC that open their Sharia unit called HSBC Amanah.