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Islamic banking emerged rapidly to fulfil the financial needs of Muslim consumers, by using different viable modes of Islamic financing. These tools of financing were designed to avoid risk-free return, unjustified increase of money on money (ribii.) and uncertainty (gharar). To offer Islamic finance products and services, the number of full-fledged Islamic bank branches has increased since 1985. The industry then further expanded with the entrance of local and international conventional banks, which advertised their Islamic banking products heavily. At the present time of heightened competition, it has become more difficult for Islamic banks to differentiate themselves in terms of providing products and services. By understanding customers' attitudes, it might be possible to differentiate their banking products and services. Therefore this research investigated the level of satisfaction and overall attitudes of respondents, both Islamic and conventional bank users, of different nationalities and aged between 30-40, living in Pakistan, UK, UAE, Saudi Arabia and Malaysia. Through an online survey regarding Islamic banking objectives, products, services, staff, Shari 'ah board and marketing, 385 responses were collected and analysed using the techniques of means and percentages. SPSS and Excel were used to produce bar charts and tables. Another distinctive aspect of this research was that it analysed product advertisements of Islamic banks (full-fledged and local/international banks) on websites based in Pakistan, UK, UAE, Saudi Arabia and Malaysia, in order to understand the differences and similarities with regard to website structures, content information, colour, marketed web products and targeted audiences. By investigating these factors, this research provided practical suggestions to design effective webpages or promotional messages to educate and inform customers of the distinction between the Islamic banking products and services that have emerged as a result of increasing competition in this market. Based on both quantitative and qualitative methods, the result of this research suggested Islamic banks should focus on the components of Customer Relationship Management (CRM) to achieve strategic competitive advantages. The research findings-suggested that Islamic banks should gather sufficient customer related information from all banking channels and utilise it accurately to reconnect with customers by offering innovative products, re- establish lost connections with existing customers, build relationships with new customers, reconstruct a trustworthy image and revise marketing approaches. Most importantly, these banks should refocus on incorporating the Islamic elements of gharar- (uncertainty) and r ib d- (usury) free operational processes. This research strongly asserted that verbal authenticity by Islamic banks and a reliance on highly-camouflaged conventional banking products alone cannot build customer trust. To regain trust, and to acquire a greater market share in the competitive financial sector, Islamic banks' staff and Shari 'ah scholars need to imply sincere motivation, truthful intention, and dynamic, personalised and practical CRM approaches to uplift the Islamic financial brand and to fulfil its promises.

Islamic Financial Institutions (IFIs) have recently witnessed remarkable growth triggered by an increasing Islamic awareness, rising oil revenues in the Gulf and IFIs’ holistic business model. The key selling factor, however, is their Shari’a-based business proposition which often requires some financial sacrifices e.g. being ethical, responsible and philanthropic. It also requires them to refrain from investments in tobacco, alcohol, pornography or earning interest. On the other hand, for IFIs’ sponsors and managers, the key motivational factor of entrance into the Islamic financial market is not their desire for achieving Shari’a objectives through the holistic business model but rather the desire to tap this highly profitable market where customers are inclined to pay a premium for Shari’a compliance. In order for IFIs to be accepted by the market, they need to be certified by Shari’a scholars, known for their integrity and expertise in Shari’a. One can, therefore, expect potential tensions between IFIs’ managers and Shari’a scholars. The purpose of this research is, thus, to probe the struggle for achieving a high level of Shari’a compliance in the presence of a desire for business objectives within Islamic banking. The research explores the following questions. Firstly, who determines and defines Shari'a compliance? In other words, is it the Shari’a scholars who dictate Shari’a compliance or managers or an alliance between the two? Secondly, what are the various levels of Shari’a compliance within IFIs? Thirdly, what causal and intervening factors determine the level of Shari’a compliance within IFIs? Fourthly, what strategies are adopted by Shari’a scholars and managers to tackle this phenomenon? Lastly, what is the prevailing level of Shari’a compliance in IFIs in the present scenario? The study explores these questions using Grounded Theory (GT) as a methodological framework. The choice of GT for this research was triggered by two factors; i) non-availability of sufficient literature in this area and ii) the entwinement of the related hidden phenomena with deep social intricacies. Data, which was steered by theoretical sampling, consists mainly of in-depth interviews with a number of key stakeholders from three significant cases and a regulatory body. The findings reveal that Shari’a compliance is a complex process and is determined by a combination of religious, social, ideological, structural, regulatory and self-interest forces. Though Shari’a scholars can apparently be seen as the supreme authority in defining, dictating and implementing Shari’a compliance, the practical phenomenon is opaque because of the managers’ substantial ‘invisible hand’ in the whole process. While many Shari’a scholars employ considerable efforts in making their respective institutions genuinely Shari’a-compliant, managers, on the other hand, try to tap the market with the tag of Shari’a certification obtained from Shari’a scholars. This involves the exercise of a number of strategies e.g. avoidance, controlling, coercion, compromising, confrontation and separation on the part of the two parties. As a result, the study illustrates that Shari’a compliance is not an absolute term. Rather it is constantly being positioned and repositioned- termed as fatwa repositioning in this study- by the combination and intensity of the above-mentioned forces and strategies. It varies from ‘superficial’ to ‘reasonable’ levels on a continuum with two extremes; ‘deep’ and ‘no’ Shari’a compliance. The research has three main implications: theoretical, methodological and practical. On the theoretical side, the research contributes to the Islamic finance literature in particular and organizational control literature in general. The study claims that organizational control is much more complex in IFIs because of the struggle for achieving divergent objectives (pursued by different authorities) through the same institution. There is a latent struggle between the two parties to control each other. Interestingly, Shari’a scholars are generally not in control of what they are supposed to be controlling i.e. Shari’a compliance. On the methodological front, the study suggests some new analytical techniques e.g. a snapshot view of the coding framework and a combination of manual and computer-assisted analysis. From a practical standpoint, the study suggests that Islamic banking is currently in a critical stage. It can either become a viable alternative to the conventional banking system by genuinely incorporating Shari’a objectives into its business model or pave its way to collapse by its existing struggle to achieve business objectives through Shari’a certification from Shari’a scholars.