It is very nice and interesting nowadays to walk on the streets of Baghdad and watch how peaceful it has become after years of many painful events. Currently, many positive things are happening in Iraq in general and especially in Baghdad with many new buildings and real estate projects under construction.
Review of 2021
In every corner of Baghdad, malls and many commercial as well as residential buildings are under construction.
Various new products and brands are coming into the Iraqi market. Iraq is on its way to becoming a normal country like the rest of the countries in the world. The social and economic lifes of the Iraqis are changing.
All this is happening during a period of low oil prices. The crude oil prices are now on the rise and are soaring at a fast pace. Hence, the rising oil prices will help Iraq to become a more contemporary country and it seems there will be many positive economic developments in Iraq.
This is good news for the Iraqi government, the Iraqi banks and the people of Iraq. There will be growth in all sectors which would need the banks’ support. Islamic banks in Iraq in particular have an excellent opportunity to benefit from the evolving developments and apart from benefiting financially, they can also contribute in building and developing Iraq’s economy by leading industrial and developmental projects in sectors that contribute the most to Iraq’s economy.
Preview of 2022
However, Islamic banks need to develop themselves first before developing the economy and leading such important projects. Despite the small developments in the Islamic banking sector, the Islamic banking industry is still considered as a virgin market with a huge growth potential.
Islamic banking is much more developed in countries like Malaysia, Turkey, Bahrain and the UAE which have more varieties of Islamic banking services and products. They also have experienced professionals in this field and use better technology to serve and reach their clients. The Islamic financial institutions in these countries have so much to offer and should explore and seize the opportunities in the Iraqi market.
Islamic banks in Iraq cannot achieve the aspired growth without cooperating with Islamic banks and financial institutions in other more advanced markets. They should enter into partnerships and cooperation relationships as well as develop the caliber and talent of the employees working in the Iraqi Islamic banks.
Furthermore, Islamic banks should be focusing, in the coming years, on attracting all market segments. For such a long time, the Iraqi Islamic banks sought to attract segments which for religious reasons avoid conventional banking and prefer to deal with Islamic banks because they are Shariah compliant. This objective was excellent at the beginning but this period required a different vision. A vision which targets all market segments, even those which have no reservations in dealing with conventional banks.
The Iraqi Islamic banks should develop their offered services, customer service, products and technology to become attractive to all market segments so that these segments will prefer to deal with Islamic banks in Iraq not only because they are Shariah compliant but because they are better banks, with more services, better products, better customer service and more convenient technology. The more Islamic banks can attract customers, the more profitable the Islamic banks will be.
However, attracting all market segments requires having a huge competitive advantage in terms of services, products and technology used. The Islamic banks in Iraq should improve their services and technology to be able to attract all kinds of customers and not only the customers who seek Shariah compliant products.
Due to previous wars and past tragic circumstances in Iraq, Islamic banks in Iraq are not on par with Islamic banks in other markets. They have limited experience and expertise in the banking services, products and technology banks are using that customers are enjoying in other more advanced markets. Even though each market is different, the basics are the same. There are many services and products, let alone the technology which can achieve huge success if launched in Iraq, for example, Islamic funds, Islamic syndicated financings, Shariah compliant credit cards, e-payment technologies and such. For these and many more, the Islamic banks in Iraq need to seek the assistance of Islamic banks in more advanced markets. They simply do not need to reinvent the wheel, since someone else has already invented it. By importing and replicating these services and products, the Islamic banks in Iraq can expedite the process and advance the market.
Yasser Al-Hayki is the head of international banking at Al-Mahreq Al-Arabi Islamic Bank. He can be contacted at [email protected]