Islamic Banking Strategy and Struture of Islamic Commercial Banks in Kenya

Abstract

The banking industry in the last few years has experienced changes both in the strategy formulation and structure framework. These coupled with the highly competitive environment has forced most banks to formulate strategies that will ensure they gain competitive advantage over their rivals and align both strategy and structure. The research was carried out with the aim of analyzing Islamic banking strategy and structure of Islamic commercial banks in Kenya. Descriptive research design was adopted in this study. 8 banks took part in this study in which 6 banks duly responded. Primary data was used in this study. Questionnaires were used to collect the data. The respondents held the position of managers and shariah board in their respective organizations. Descriptive statistics and especially SSPS were used to analyze the data. The effect of Islamic banking strategy and structure of Islamic commercial banks was investigated using chic square analysis method. From this study the researcher found out Islamic banking strategy is associated with various performance indicators which are both financial and non-financial and that customer loyalty, cost leadership, price leadership, product differentiation and reputation influence Islamic banking strategy. This study recommended that Islamic banks as well as the commercial banks offering Islamic products and services should review their strategies regularly within less than five years so that they are able to meet market and organization demand in offering of Islamic products and services and they should develop clear guidelines on their shariah compliance regulations. Further studies should focus on pure Islamic banks for generalization of the findings.