Due to growing demand for a new products that cater for the appetite for Islamic Banking products , the industry need to enhance product diversification . This can only be established by firstly recognising the benefits that product innovation and diversification can bring to islamic financial institution and then implementing measures to realize the strategies that help to create a diverse range of products and services .
A diverse product offering can help to benefit clients by enabling them to fulfill their financial needs . In addition clients can manage their finances in a Sharia compliant manner adhering to their faith and be able to handle their finances in a ethical way.
There are a number of ways that Islamic banking institution in Asia and Abroad can implement to diversify the Islamic banking sectors in and open up more opportunities for growth of innovative products.
These innovatives methods can include the Islamic Institution and banks being more transparent in their data of activities and working towards standardisation of best practises to ensure products remain Sharia compliant.
The importance of developing innovative products and services to the need of clients cannot understated. The main consensus for products diversification is that the main areas will be in the asset backed by securities such as Sukuk and Takaful.
In addition Islamic retail banking will hold ample opportunities for diversification of products and infrastructure investments from major islamic financial hubs can further heighten diversification and products innovations .
Some of the main Islamic financial hubs have already recognised the scope for focusing their diverse range of innovative products in specialised sector of Islamic finance industry .
As described in Figure 2 the main sectors for products diversifications are in Takaful , Sukuk , Islamic retail banking , infrastructure and Islamic mortgages . These ares hold the most scope for a wide range of products offerings and services which can utilise Islamic financial instrument such as Ijarah , Mudaraba and Murahaba amongst many others leading Sharia compliant instruments. One of the most lucrative sectors for product diversification of Islamic financial products is the Takaful Islamic insurance sectors.
Takaful is a lucrative sector due to the fact that it has a scope for new products and services as it is currently an under-developed sector which need the rights products to cater for the growing demand for Islamic insurance.
IN 2014 major Islamic financial hub such as Malaysia have implemented legislative measures whereby Sharia scholar are held legally accountable for any products that has been approved as a permissible under Shariah law.
THis ensures that any newly developed products or innovative Islamic financial services wholly Sharia compliant .
The new legislation that had been created for the purpose of product diversification which is compliant with Sharia has enable heightened level Sharia compliance .
The future of product diversification and innovation remain bright and holds ample opportunities for the growth of lucrative industry. The number of asset in Islamic financial hubs such as Malaysia is expected to grow to more than $390 billion USD by 2018.
This shows a staggering growth rate that can offer in Asia and worldwide . Innovative Shari compliant products and services such as mobile banking , internet and others technological advancement can further growth in its product offering.