Effectiveness of competitive strategies adopted by Islamic commercial banks in Kenya

Abstract

Competitive advantage exists when the firm is able to deliver the exact benefits as the competitors but at lower cost. The study area will add to a pool of knowledge the area under research on competitive strategies adopted by Islamic commercial banks in Kenya. The review literature provided an explanation on theoretical rationale of research problem under the area of study and the previous studies and how findings relate to the current study. The research methodology shows data collection, analysis and presentation of findings. Descriptive case study research design was adopted by the study where top management, middle management and support staff of first community bank were targeted. The researcher used qualitative data analysis techniques so as to bring out the relationship between variables. The research findings of study show Islamic banks lacks effective competitive strategies in place. Majority of the respondents had the opinion that, the number of Islamic banks offering Islamic products in Kenya is growing. Respondents indicated lack of proper ICT strategies among Islamic banks. Respondents were of the opinion that by engaging in risk management, Islamic banks can increase the value of the banks by reducing the chance of occurrence of costly lower tail-end in earnings and cash flows. Respondents indicated that Islamic banks lacks proper guidelines on their marketing strategies. The study concluded that competitive strategies enables strengthen the linkage of finance and economic activities that are real, when making contribution on inclusive and the balanced growth. Effective information communication strategies can enable Islamic banks maximize value for information technology investment through aligning information technology with the requirements of the business, business agility increment, business risk management and optimum use of information technology infrastructure. The strategies on used by Islamic banks helps in identifying if a certain bank leads the market, the challenger, the follower and the nicher through identifying the mission, vision, the objectives, and their strategies on marketing . There is need for proper guidelines on marketing strategies employed by Islamic banks so as to change with business environment banks. Limitations of the studies were that there are some respondents who did not cooperate to provide full information on effectiveness of competitive strategies adopted by Islamic Kenyan Banks. The researcher assured the respondents that the information provided was of strict confidence and was used for the purpose that it was indicated. The researcher encountered lack of adequate information to the fact that most people may not cooperate due to fear of victimization, this is likely to contribute to low response rate the researcher explained to the respondents that the study was of academic purposes and their views was kept highly confidential. The study recommended that Islamic banks should analyze the market before coming up with competitive strategies. Islamic banks should adopt effective competitive strategies to align with the changing business environment. Islamic banks should invest on ICT infrastructure which should help the bank grow towards achieving goal. Islamic banks should adopt sales strategies that works for them. Islamic banks should align sales strategies with organization goals. Islamic banks should develop clear guidelines on their market strategies. Further study is necessary on effectiveness of competitive strategies adopted by Islamic Commercial Banks in Kenya to cover other commercial banks offering Islamic products.