Islamic and conventional banking business models coexistence
Bilal Bourkha, Soumya Bouknana, Ikram KandiliPurpose
This study aims to answer the following research question: What are the key factors determining the strategy that conventional banks should adopt to enter the Islamic banking market? This question has become increasingly critical for a growing number of conventional banks in Islamic countries where Islamic banking is emerging.
Design/methodology/approach
To address the research question, the authors adopted a mixed-methods approach. A qualitative study based on case studies and 21 interviews with all Moroccan banks offering Islamic products was followed by a quantitative survey analyzed with partial least squares, confirming findings and deepening the understanding of strategic choices in dual banking systems.
Findings
This research identifies three main strategies adopted by Moroccan banks to manage the relationship between the conventional banking business model (CBBM) and Islamic banking business model (IBBM). The integration strategy offers Islamic products within the CBBM, risking internal tensions. The phased separation strategy begins with integration and leads to dedicated Islamic branches. The total separation strategy creates distinct branches for each model while maintaining informal links. These choices depend on financial resources, Islamic finance capabilities and growth objectives.
Research limitations/implications
This study deepens the understanding of business models and introduces innovative criteria like strategic origin and required resources. It proposes a typology – integration, separation and phased separation – and offers practical tools to align strategies with resources and goals. It also contributes to teaching strategic management and Islamic finance by providing concrete analytical frameworks. Finally, it highlights the societal value of Islamic finance in promoting inclusion and trust through value-aligned solutions.
Originality/value
This study offers an original perspective on the underexplored interaction between CBBM and IBBM. It proposes a framework to help conventional banks integrate IBBM by identifying key entry factors and highlighting potential synergies. Adopting an inter-model strategic lens, it delivers practical insights into evolving and diverse banking practices in a globalized, changing context.