Competitive strategies adopted by Islamic banks: A Comparative study of Kenya and the United Arab Emirates

Abstract

Islamic banking was born in Egypt in the early 1960s with the landmark experience of a microfinance Sharia compliant institution. Since then, it has evolved and spread to many other countries. The Gulf region, with its flows of oil wealth, has seen the fastest growth of this kind of banking. This was interesting to the researcher considering the current recession that has literally brought some financial institutions to their knees. It seemed fit to research and find out the strategies these banks are employing and whether we can replicate their success in Kenya. The research looks at the competition challenges faced by Islamic banks in Kenya and the UAE. The study goes a step further by looking at the competitive strategies adopted by these banks to mitigate the mentioned challenges. Since this is a comparative study, the data analysis brings out the key differences and similarities between the UAE and Kenyan Islamic banks. The study also looks at the scholarly views on the objectives at hand. The data analysis further suggested that the Kenyan counterparts could borrow a leaf from the UAE and improve on their IT infrastructure, tailor-made products, innovations and empowering of their human resources. The research however, found that the Kenyan banks have been in operation for less than two years compared to the majority of the UAE Islamic banks which have been in operation longer. This may explain the differences and similarities in the study's objective between the two countries.