As per the year 2019 census only 2.6% of the Australian population was Islam, this means that Islam in Australia is a minority religion, despite this, several financial institutions that are run on the Islamic finance regulations have taken foot in the country key among these institutions being the ATB. In the kingdom of Saudi Arabia however, Islam is the sole religion and all the financial institutions are run based on the doctrines of the Islamic faith. Australia therefore becomes a good sample of non Islamic countries with Islamic financial institutions and therefore offers a fair basis against which financial institutions in purely Islamic regions – Saudi Arabia can be compared.
In Saudi Arabia the financial institutions exists to offer financial services and that forms the basis upon which they are built. There are quite a number of banks and other financial institutions such as tax expert groups but they offer their services to the population purely with an aim of accruing profits (Bines & Thel 2004). The basis for operations of these financial institutions offers the first difference. However, in Australia, the script differs. The institutions exist mainly to promote the Islamic religion and operate on the Islamic belief of brotherliness. They make profits just as any other market player but this is not their main objective. They give out loans to Muslims on softer terms than to a non Muslim. As a matter of fact some of these banks do not render their services to non Muslims. The bank of Eahjhi in the Kingdom of Saudi Arabia is simply a business venture that is operating in the Saudi’s financial market for the key objective of making profits. Most of its policies and regulations therefore are geared toward achieving that.
Islamic banks use the loaning services to attract customers. Their rates are a lot lower than other normal banks (ibid). For their customers the interest rates in their deposit accounts are higher but in most cases they tend to have a catch. Some would welcome any customer from any religion to open accounts and deposit with them but when it comes to accessing some other services such the previously mentioned loans then the other underlying terms get into play. The terms would often favor Muslims and this virtual catch twenty two situation that the need to obtain the services creates would often compel some of their customer to convert to the more lucrative Islamic faith (Saeed 1996).
Australian financial institutions give extra attention to offering aid at the expense of making profits but all these efforts are implemented with a hidden aim of not just practicing corporate social responsibility but to market the organization and win more popularity. The underlying belief being that should the population appreciate the humanitarian effort they support then they are more likely to hold dear the religion as well (Lane 2005).
All businesses are done in a society and the policies governing whichever business one seeks to set up, must always put into consideration the social responsive investment in other words this is normally referred to as giving back to the society (Mansley 2000). The Rajhi bank in the kingdom of Saudi Arabia has in the past taken part in a number of charitable activities some of which include donations to hospitals and children homes. Such activities are normally budgeted for within the annual budgets of the institution and have to run in correspondence with the budget. Any impromptu occurrence such as the fires and tsunamis that would hit the nation and thereby compel the institutions to offer their assistance must always be properly coordinated and put into proper consideration lest the firms incur losses. The Islamic financial institutions in non Islam areas a case at hand, Australia spend more doing these charity works and their policies are designed to sustain them.
A common feature between the financial institutions either in Saudi Arabia or Australia is the use of technology. The usage of technology is a little more determined by the revolution in the Information and Communication Technology, ICT sector. Just as the other banks in the market would always like to maximize the security of their assets so does the Islamic institution, they always tend to operate on similar networking system with similar Local Area Network systems in their premises. ICT becomes similar more specifically because when a new design is obtained like currently the cloud computing technology is taking foot in most countries world over, the service providers would always vend their products equally to all potential customer religion not withstanding and the technology that promises more security is normally purchased (Rammal & Zurbruegg 2008).
The use of such social cites as Facebook, Twitter, MySpace among others are banned in the Saudi Arabia with the main reason being that such sites erode culture. This therefore means opportunities offered by social networks are not exploited by banks or financial institutions in the country. This is a belief that is not only held in the Kingdom of Saudi Arabia but held by Muslims all over the world. The policy of not using social sites to advertise their services thus applies even to their firms outside Saudi Arabia or any other Islamic nations Australia included. However, this position is disputed and this is demonstrated by recent riots that were witnessed in several Arab countries in Africa and Asia.
Bines, H.E & Thel, S 2004, Investment Management Law and Regulation, Second Edition, Aspen, London.
Lane, M.J 2005, Socially Responsible Investing: An Institutional Investorâs Guide,Euromoney. London Aspen, London.
Mansley, M 2000, Socially Responsible Investment: a Guide for Pension Funds and Institutional Investors, Monitor Press, London.
Rammal, H.G & Zurbrueg, R 2007, ‘Awareness of Islamic Banking Products among Muslims: The Case of Australia’, Journal of Services Marketing, 12 no.1, pp.65-74.
Saeed, A 1996, Islam Banking and Interest: A Study of the Prohibition of Riba and Its Contemporary Interpretation, E.J. Brill, Leiden-London.