Strategic Framework for New Product Development in Islamic Banks of Pakistan: A Comprehensive Analysis of the Islamic Banking Landscape

Abstract

Islamic financial industry is at the verge of maturity, to keep it alive it needs new and timely products for its customers. The purpose of this research is to develop a framework which describes new product creation within Islamic banks of Pakistan based on the earlier framework provided by Ahmed (2011). The present study uses qualitative method to explore the product development process in Islamic banks of Pakistan by collecting data through unstructured interviews from individuals related to the field of product development. Findings of this research shows induction of 4 steps to the product development process in case of Pakistan such as State Bank’s approval and Management’s review after in-house testing, legal department and Operations Shari’ah review. With the induction of these steps this framework can be adopted by the Islamic banks of Pakistan. Finally, it is recommended that Islamic banks should foster an environment of Shari’ah based product creation to achieve Maqasid al-Shari’ah and reduce the documentation process to gain and retain customers. State bank should devise a separate Islamic PR department to deal with Islamic banks only, provide protection and ease to Islamic banks in documentation process and produce guidelines for Islamic banks separately.