Abdel-Maoula Chaar Sharia’, Finance and Strategy
Abdel-Maoula Chaar Sharia, Finance and Strategy. Strategic Management for IFIs Porter five forces AM Chaar – Introduction – 5 th Islamic banks and financial.
Mar 26, 2015
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Abdel-Maoula Chaar
Sharia’, Finance and Strategy
Field of Finance
Rivalry among firms
New Entrants
Clients
Substitute Products
THREAT
BARGAINING
POWER
THREAT
BARGAINING
POWERSuppliers
Strategic Management for IFIsPorter five forces
AM Chaar – Introduction – 5th Islamic banks and financial institutions conference – Damascus 2010.
Field of Finance
Rivalry among firms
New Entrants
Clients
Substitute Products
THREAT
BARGAINING
POWER
THREAT
BARGAINING
POWERSuppliers
Strategic Management for IFIsPorter five forces
Field of Finance
Rivalry among firms
AM Chaar – Introduction – 5th Islamic banks and financial institutions conference – Damascus 2010.
Strategic Management for IFIsRivalry Among firms
Western Finance
IslamicFinance
IslamicMarket
AM Chaar – Introduction – 5th Islamic banks and financial institutions conference – Damascus 2010.
Field of Finance
Sharia’ compliancy
New Entrants
Clients
Substitute Products
NO
threat
LOW
bargaining
power
NO
threat
HIGHT
bargaining
powerSuppliers
Clients looking exclusively for Sharia’ compliant products
Islamic banks. New entrants contribute to the expansion of the market
- Sharia’ scholars with business knowledge- Banking specialists with Sharia’ knowlege
- Potential market of 1.6 billion people- Concentration of wealth
Field of Finance
Sharia’ compliancy
Porter five forces
Strategic Management for IFIsRivalry among firms
AM Chaar– Introduction – 5th Islamic banks and financial institutions conference – Damascus 2010.
Islamic finance factsThe distribution of IFIs
AM Chaar – Introduction – 5th Islamic banks and financial institutions conference – Damascus 2010.
Islamic finance factsIslamic markets characteristics
951 billions Sharia compliant assets 799 billions banking assets 152 billions under management
1 trillion target expected in 2010
20-30% annual growth rate
AM Chaar – Introduction – 5th Islamic banks and financial institutions conference – Damascus 2010.
Islamic finance factsThe distribution of Islamic assets
AM Chaar – Introduction – 5th Islamic banks and financial institutions conference – Damascus 2010.
Islamic finance factsIslamic markets characteristics
951 billions Sharia compliant assets 799 billions banking assets 152 billions under management
1 trillion target expected in 2010
20-30% annual growth rate
AM Chaar – Introduction – 5th Islamic banks and financial institutions conference – Damascus 2010.
Islamic finance factsIslamic markets characteristics
951 billions Sharia compliant assets 799 billions banking assets 152 billions under management
1 trillion target expected in 2010
20-30% annual growth rate
AM Chaar – Introduction – 5th Islamic banks and financial institutions conference – Damascus 2010.
Islamic finance facts
Growth of Islamic banking assets
AM Chaar – Introduction – 5th Islamic banks and financial institutions conference – Damascus 2010.
Field of Finance
Sharia’ compliancy
New Entrants
Clients
Substitute Products
NO
threat
LOW
bargaining
power
NO
threat
HIGHT
bargaining
powerSuppliers
Clients looking exclusively for Sharia’ compliant products
Islamic banks. New entrants contribute to the expansion of the market
- Sharia’ scholars with business knowledge- Banking specialists with Sharia’ knowlege
- Potential market of 1.6 billion people- Concentration of wealth
Porter five forces
Strategic Management for IFIs
AM Chaar – Introduction – 5th Islamic banks and financial institutions conference – Damascus 2010.
Islamic finance factsIslamic markets characteristics
HNWI and UHNWI on the rise
AM Chaar – Introduction – 5th Islamic banks and financial institutions conference – Damascus 2010.
Islamic finance facts
9,50%
8,50%
7,20%
7,00%
6,10%
4,30%
Middle - East
Asia Pacific
Latin America
North America
Africa
Europe
1% 2% 3% 4% 5% 6% 7% 8% 9% 10%
HNWI expected annual growth (2006-2011)
Islamic markets characteristics
AM Chaar – Introduction – 5th Islamic banks and financial institutions conference – Damascus 2010.
Islamic finance factsIslamic markets characteristics
HNWI and UHNWI on the rise
Affluent Segment: Young, active, optimistic
Financial markets and financial services underdeveloped
AM Chaar – Introduction – 5th Islamic banks and financial institutions conference – Damascus 2010.
1. Citi-Islamic - 2. HSBC Amanah - 3. Noriba (UBS) 4. BNP Paribas Najmah - 5. Calyon Islamic Window
1998
2
2003
4
2002
3
2004
5
19
95
20
00
20
05
1996
1
Islamic finance factsConventional banks’ Islamic vehicles
AM Chaar – Introduction – 5th Islamic banks and financial institutions conference – Damascus 2010.
Window Models Used by banks to carry out altogether Islamic
and conventional financial operations
Branches Dedicated delivery channels for Islamic finance
products
Subsidiaries Separate legal entities used to offer Islamic finance products
Islamic finance factsConventional banks’ Islamic vehicles
Strategic Management for IFIs
The dynamic of Islamic and western financial fields
Western Finance
IslamicFinance
IslamicMarket
AM Chaar – Introduction – 5th Islamic banks and financial institutions conference – Damascus 2010.
Western FinanceIslamicFinance
IslamicMarket
Strategic Management for IFIs
The dynamic of Islamic and western financial fields
AM Chaar – Introduction – 5th Islamic banks and financial institutions conference – Damascus 2010.
Strategic Management for IFIs
AM Chaar – Introduction – 5th Islamic banks and financial institutions conference – Damascus 2010.
Porter five forces
Only Islamic – 20%Sacrifice returns/service for full Sharia’ complianceLooks for pure Islamic players
Islamic if equal performance – 40%Will not sacrifice returns/service for Sharia’ complianceSharia’ compliance is a bonus
Value-Seekers – 30%Looks for the best performance regardless the
bank identity
Only conventional – 10%
Strategic Management for IFIsDifference in Islamic sensitivity
Ernst & Young (2008). The Islamic funds and investments report.
Strategic Management for IFIs
The dynamic of Islamic and western financial fields
AM Chaar – Introduction – 5th Islamic banks and financial institutions conference – Damascus 2010.
Western FinanceIslamicFinance
IslamicMarketFinance
IslamiqueIslamicMarket
WesternFinance
Fiqh alMouamalat
Ijtihad
I nt e
r pre
t at i
on
Sharia
QuranSunna
So
ur c
es
Operations(Techniques)
Organization(Sharia Boards) Mindset
Applications
TAWHID (Quran / Sunna)
STEWARDSHIP(Sharia)
MASLAHA(Fiqh et Ijtihad)
The Islamic Finance ParadigmThe specificities of the Sharia’
The Islamic Finance Paradigm
Sharia’
Stewardship(Stakeholders primacy)
Quran / Sunna
Tawhid
Maslaha
Optimizingstakeholders benefits
Islamic Finance
The Paradigm
The Islamic Finance ParadigmThe specificities of the Sharia’
Letter of the Sharia’
Spirit of the Sharia’
The Islamic Finance ParadigmThe specificities of the Sharia’
Strategic Management for IFIsThe dynamic of Islamic and western
financial fields
AM Chaar – Introduction – 5th Islamic banks and financial institutions conference – Damascus 2010.
IslamicFinance
Ethics & Social Responsability
IslamicFinance
Research and Development
IslamicFinance
Ethics & Social Responsability
New Entrants
Clients
Substitute Products
Low
Threat
No
powerplaySuppliers
Ethical banks
- Sharia’ scholars with business knowledge- Banking specialists with Sharia’ knowledge- Universities and business schools
No
powerplay
Low
Threat
Strategic Management for IFIs
Porter five forces
AM Chaar – Introduction – 5th Islamic banks and financial institutions conference – Damascus 2010.
Strategic Management for IFIsThe dynamic of Islamic and western
financial fields
AM Chaar – Introduction – 5th Islamic banks and financial institutions conference – Damascus 2010.
Eth
ics
CS
R IslamicFinance
WesternFinance
Modern Finance
IslamicFinance
Ethics & Social Responsability
New Entrants
Clients
Substitute Products
Low
Threat
No
powerplaySuppliers
Ethical banks
- Sharia’ scholars with business knowledge- Support institutions- Universities and business schools
No
powerplay
Low
Threat
Strategic Management for IFIs
Porter five forces
AM Chaar – Introduction – 5th Islamic banks and financial institutions conference – Damascus 2010.
Education in Islamic Finance
Strategic Management for IFIs
Education in Islamic Finance
Strategic Management for IFIs
Abdel-Maoula Chaar
Thank you
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