MY participation at the International Islamic Finance Forum in Istanbul early this month has reinforced my belief that to survive in the present world, Islamic financial institutions have to make many more efforts to improve.
Gone are the days when they could expect customers to come to them and be satisfied with whatever they anaged to offer in terms of a limited number of shariah-compliant products and services.
Today, customers demand more than basic modes of financing that fulfil their needs, especially in the area of corporate business and investment.
On top of that, they expect professionalism and honest practices too. Although Islamic consumer banking has been relatively successful so far, yet in the domain of corporate finance it seems a lot can be improved. The forum in Istanbul, however, showed that the Islamic finance movement has experienced a new phase in its development.
In the past, players used to be institutions established and run by the Muslims but now more and more Western institutions have come in and are participating actively in this niche market.
In fact, they are well equipped to offer their financial services and it seems they do well in the international market as they are global in their outlook and approach.
In contrast, Muslim-owned Islamic financial institutions are not well connected internationally, so they are slow in adapting to the international environment.
I would like to share with the readers what happened to me as a depositor at one of our local banks which offers
Islamic banking services.
I had a wadiah account with this bank situated just a few minutes’ walk from my office in downtown Kuala Lumpur.
I opened the account nearly a year ago for convenience’s sake. The bank issued me with an ATM-cum-debit card as part of an international payment system.
It was my hope that, given previous experience using similar cards overseas, which utilised the same payment network, I would face no problem this time in making withdrawals or payments while travelling overseas.
As it turned out, my hope was unfulfilled. On the first day I arrived in Istanbul, I tried the card at an ATM machine situated just beside the hotel where I stayed.
I managed to withdraw money without any hassle. I felt relieved. However, four days later, to my surprise, the same machine refused any attempt by me to make further withdrawals.
The machine seemed to function normally as other people could withdraw their money without problem.
Not satisfied, I called the branch where I kept my account and managed to talk to the staff to ask what had happened.
It was clear they already had a record of my early withdrawal and happily told me the amount had been debited to my account in Malaysian ringgit.
The staff with whom I had the conversation told me it was likely my ATM card had become faulty and there was no way for me to make a withdrawal unless the card was replaced with a new one.
For that I needed to be home to get the new card, she said. She was adamant that the card needed placement and that they could not do anything to remedy the situation. Because I badly needed the money I still tried several other ATM machines the next day.
I also spoke to several bankers in Istanbul about the problem. Finally I tried my card at an ATM machine that belonged to a well-known international bank. The machine advised me to talk to the branch office and displayed a code number on the screen.
I immediately called the bank’s helpline and spoke to a staff member. It seemed he was part of a team of specialised tele-advisers attached to the payment network I mentioned earlier. He told me the code meant I was unable to withdraw money because my branch had refused to authorise the transaction.
Back at the hotel I immediately called the branch and confronted them with the new piece of information that I had gathered from the ATM machine and the tele-advisor. I asked the staff why they refused authorisation although I had a more than sufficient balance in my account. She was surprised and tried to give some other explanations saying, among other things, that it might be possible that the computer line was faulty at the time I tried to make withdrawals.
When I left Istanbul that night I still could not make any withdrawal with the use of the so-called smart ATM card.
Deep inside my heart I felt very angry. I arrived in Malaysia the next day and tried the card at an ATM machine and managed to make a withdrawal. So the card was not faulty after all! I had no other feeling at that very moment except a realisation that the whole episode had a moral story to tell.
And that is, to be competitive in the world market, it is not enough to tell the world that we have the most advanced Islamic banking system while our banks are not up to international expectations. Although Malaysia is known to be very serious in promoting Islamic banking and finance, this episode that I have gone through tells me something must be wrong with the way our banks carry out their Islamic banking services.
My fear is if they continue like this, the time will come when they have to close their business and be taken over by more efficient foreign banks.
My mind immediately recalled the words that a friend who also attended the same forum in Istanbul: “Doc, if you travel a lot, please do not forget to make arrangements with foreign banks for anything to do with money.”
I just could not respond to his sudden advice as I had to hastily depart from the hotel for the Attaturk International Airport to catch a flight home.
It is interesting to note that this beautiful airport was recently refurbished with money raised through an Islamic financial instrument and it looks like Islamic finance, popularly known in Turkey as alternative finance, has a bright future in this once powerful Muslim country.