More on Islamic banking - online, and for airports

Back in July, I wrote a post on Islamic banking, a concept that is (literally) foreign to me. As an update, I wanted to link to two newer articles that discuss the business.

Internet Evolution noted the paucity of Islamic e-banking services:

One study found that, of 24 institutions offering both Islamic and conventional services, only eight offered Islamic e-banking, while 17 offered conventional e-banking. Among the reasons cited for this, the most plausible is also the most interesting: that e-banking’s advantages -- speed, efficacy, convenience -- are less valued in a region where “a visit to the bank… might be… an opportunity to socialize.”

Marsha Weinstein of Internet Evolution spent some time discussing one exception:

[A]s Internet access increases in the Middle East and the Muslim middle class expands, so will the presence of Islamic online banking. One sign of this is the online Dow Jones Islamic Market Indexes. Another is Failaka, a research and advisory fund in Islamic financial investment established over a decade ago.

That Failaka’s Website lists more members on its shariah advisory board than it does professional staff may obliquely highlight why there’s a lag in Islamic banking’s online parity with its conventional peers. The imperative that an Islamic financial institution have an advisory board of shariah experts may slow decision-making and, hence, transactions, making them no match for Internet speed. Moreover, until recently, there has been a shortage of professionals who are experts in both Islamic law and economics.

Meanwhile, Business Week noted that the types of investments made by Islamic entities is changing because of market conditions:

Islamic bonds that pay returns based on cash flows from airports and utilities rather than income from property may stay in favor in the coming year after a drop in Persian Gulf real-estate prices shook investor confidence.