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Digital Marketing Strategies of Islamic Banking Industry in Bangladesh

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Added on  2020-06-04

Digital Marketing Strategies of Islamic Banking Industry in Bangladesh

   Added on 2020-06-04

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Digital marketing strategies andcommunication channels used by Islamicbanking industry in Bangladesh
Digital Marketing Strategies of Islamic Banking Industry in Bangladesh_1
Table of ContentsChapter 2: Literature Review...........................................................................................................12.1 Introduction...........................................................................................................................12.2 Background of Bangladesh...................................................................................................12.3 Banking sectors in Bangladesh ............................................................................................22.4 Islamic Banking and Finance................................................................................................42.5 Islamic Banking and Finance in Bangladesh........................................................................82.6 The effectiveness of marketing strategies and communication channels currently used bythe Islamic Financial Institutions in Bangladesh .....................................................................11REFERENCES..............................................................................................................................14
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Chapter 2: Literature Review2.1 IntroductionLiterature review in dissertation covers the reviews and arguments of various researchscholars, authors and philosophers. In accordance with this context, this chapter will cover theliterature review of digital marketing strategies and communication channels used by Islamicbanking industry in Bangladesh. The demographic, geographic and political study of Bangladeshwill be made in this chapter. Further, types of banking sector incorporated in Bangladesh will beexamined in this dissertation. Islamic Banking and Finance, it history and financial services willbe covered and its impact on Bangladesh banking sector will be investigated. Finally,effectiveness of marketing strategies and communication channel used by Islamic FinancialInstitutions in Bangladesh will be analysed.2.2 Background of BangladeshThe country of Bengal, officially the “People's Republic of Bangladesh” is a country ofSouth Asia. Bangladesh shares its boundaries with countries like India and Myanmar and it is theeighth most populous country in the world (Khan and et.al., 2017). The national capital ofBangladesh is Dhaka and the official language for communication is Bengali. The country got itsIndependence from Pakistan in the year 1971. According to 2011 census the total population ofBangladesh was around 142.3 million. Almost 80% of people follow Islam as their religion(Rahman and Akter, 2017). The country is known for its biodiversity, rivers, sea beaches andcoral reefs. Bangladesh is the middle power and also a developing country (Akhter and Wilson,2016). The currency of Bangladesh is Taka. The gross domestic product (GDP) of Bangladeshcalculated in 2016 was approximately US$209 billion. Kamal, (2015) said that the economy ofthe country rising rapidly and with constant efforts of both government and people Bangladesh’seconomy will surpass the economy of other countries effectively and efficiently. Kamal, Hasanand Davey, (2015) argued that there are limited number of giant industries and large companiesincorporated in the country, this is reason of lack of growth and development of the economy. Bangladesh is known for its rich cultural inhabitants and textiles industries. According toIslam, Rahman and Mostofa, (2017) the policies and legislation formulated by currentgovernment will help in boosting the economy of the country effectively. There is a huge scopeof entrance of new markets that will aid in increasing the economy effectively and efficiently.Das, 2015 contends that the country is notable for its soil fertility land, including the Ganges1
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Delta, Sylhet Division and the Chittagong Hill Tracts. Agriculture is the largest sector of theeconomy, making up 18.6 percent of Bangladesh's GDP in November 2010 and employing about45 percent of the workforce (Huda and et.al., 2017). Thus, there are tremendous efforts requiredin order to increase the economy of the country. Akter, Dawson and Sibbritt, (2016) said thatBangladesh is the seventh largest natural gas producer in Asia, ahead of its neighbour countryMyanmar. Approximately 50% of the electricity in the country is generated with the help ofnatural gas. Albeit, even after having ample number advantages, the country lacks in improvingeducation facility (Rahman and et.al., 2015). As a result, the literacy rate in the country is lowestas compared to its neighbour countries. According to Talukder, (2017) universities inBangladesh are classified into three categories, which are public, private and international. Mostof the population gave up on education after passing schools. Thus, it implies that the country is business oriented country. There are various touristdestinations in the country which attracts tourists from several countries. Government ofBangladesh generates its high revenues from tourism industry (Rahman and et.al., 2015). Interms of service sector, Bangladesh ranks with Pakistan as South Asia's second largest bankingsector. 2.3 Banking sectors in Bangladesh a) Conventional and Islamic banking in BangladeshAccording to Beck, Demirgüç-Kunt and Merrouche, (2013), Islamic banking system the bestmotivating part for the citizens is the interest free loans, the system provides variousopportunities to establish own start-up by providing the investment. The interest system iscompletely prohibited in Islam in fact anyone charges interest for given amount is the punishableoffense (Bangladesh Bank. 2017). The rule and law is established to promote the stability ineconomic and social life of citizens. In contrast, the rule has enhanced the level of Islamicbanking practices across the globe. However, in the contrary, Safiullah, (2010), has stated thatIslamic banking is not charging interest but the banks charges interest in the form of profitsearned from the investment amount. On the other hand, Ahmad, Rehman and Saif, (2010), hasstated conventional banking in Bangladesh charges a particular amount on investment accordingto the determined interest rate which is fixed return policy that is interest whereas Islamic banktakes a share from the earnings which is earned by the investment. Moreover, the rules andregulation of Islamic banking are completely different from the conventional banking system.2
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Besides, Akhter, Raza and Akram, (2011), has argued that the conventional banking system hasits own way of framing objectives, principles, procedures, goals and methodologies which assistthe citizen in deriving the systematic control over practices. Conventional bank in Bangladesh isthe dealer in debt which promotes the settlement by providing debt to each other and itsfunctioning is based on capital and monetary transactions. In this only two parties are involvedthat is the immediate lender and borrower (Uddin and Suzuki, 2011). However, in contraryAbduh and Chowdhury, (2012), has argued that Islamic banking in Bangladesh is promoting itsrules as it supports the building development and human welfare against exploitation. Further,the interest free financial system of Islam is ensuring the justice for both that is suppliers andinvestors. Moreover, the system encourage and patronize the entrepreneurship program inBangladesh.b) Banking policy and marketing strategies in BangladeshMarketing strategies act as tonic for the organisation for any country, city or state. Thestrategies are determined and implemented according to the objectives of the business (Akther,Fukuyama and Weber, 2013). According to Saad, (2012), marketing strategies are the action planwhich helps the business in executing its promotion plan for the product development anddistribution. The Islamic banking system holds the strong control over market because of itsinterest free system in which its charges fund after the success of enterprise and if the investmentturns into loss then it does not charge any amount. The objective and practices of this bankingsystem are the ultimate marketing strategy which is supporting its stability and growth anddevelopment (PAYMENT SYSTEMS. 2017). However, on the other hand Ika and Abdullah 2011, has argued theta the conventionalbanking system is more profitable in accordance to Islamic banking as it only focused andlimited to welfare and social and economic stability. Besides, Hussein, (2010), has stated thatIslamic marketing strategies of marketing draws the attention of consumers by marketing aboutthe practices of system which aims at supporting and providing benefits to public. The systemhas the ability to communicate effectively with the citizens in order to promote the advantages ofthe banking system to attract the borrowers. In contrast, Awan and Shahzad Bukhari, (2011), hasstated the Islamic banking system is the alternative solution to the conventional banking whichneed to innovate its services and practices according to the environmental fluctuations. Theinnovation in the practices and services of banking system is the major benefits which assist the3
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bank in attaining competitive advantage (Newaz and Zaman, 2012). Henceforth, in accordanceMondal, Kamp and Pachova, 2010, has stated that marketing strategy used by Islamic bankingsystem are effective enough to influence the decision of borrowers over borrowings. c) Current business scenario of banking sectors in BangladeshAccording to Ahmed, Rayhan, and Mahjabin, (2012), since the time of liberation therehas been a rapid development in the banking system of Bangladesh as it established the safemode of saving and interest to depositors. Further, the establishment of private bank was toenhance the competition in banking sector but the increased pressure from creditors has limitedthe growth and creditability of sectors. In contrary, Josend and Robert Buchanan, (2013) hasargued that the Ismalic banking sector is struggling and heading towards the achievement as itpromotes the motive of interest free system as has more borrowers in comparison to conventionalbanks of Bangladesh. Ahad, Dyson and Gay, (2012) stated that many giant multi national corporations andlarge organisations are establishing their plants in Bangladesh. This leads to boon in theeconomy of the country. Many local organisations are also expanding their trade activities, thusthey require loans and grants. Islamic banks provides them loans on no interest policy whichhelps in growth and development of the organisation. Thus, it implies that the current businessscenario of business in the country is blooming and many researchers feels that the future ofIslamic Banking is bright. From this context, Siddiqi, (2011) stated that due to increase in themarketing strategies and communication channels the Islamic Banks are developing theirstandards and customer base effectively and efficiently. This leads to growth and development ofthe national economy of the country (Ahmed and Dey, 2010). From the above reviews it can beconcluded that business incorporating in the country are increasing their profits and productivityrapidly. Thus leads to growth and development of the national economy of the country.2.4 Islamic Banking and Financea) Understanding Islamic Banking, Finance and EconomicAccording to Rahman and Sulfia, (2015) Islamic banking or Islamic finance is banking orfinance activity that complies with “Sharia” (Islamic law) and its practical application throughthe development of Islamic economics. Abdul-Rahman, 2014 said that some of modes of Islamicbanking and finance include Mudarabah (Profit and loss sharing), Wadih (safekeeping),Musharaka (joint venture), Murabahah (cost plus) and ljar (Leasing). According to sharia law,4
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