HSBC in the Market of Islamic Banking

Link to Article

Barney's framework was chosen to analyze this article (the resource based view).

HSBC Amanah’s performance

HSBC has been very successful in Islamic banking where it is considered to be the second largest bank in the world. The performance of this Islamic bank seems to be going pretty good businesses. In the article it talks about the performance of the Amanah in Islamic countries, it says “the significant growth experienced by HSBC Amanah” and also added “Given a total population of more than one and a half billion Muslims worldwide, and an estimated industry size of US$250-300 billion, HSBC see Islamic finance as one of the most important strategic initiatives in community banking, the Islamic financial services industry is growing at 15% per annum,” these sentences kind of give us a hint that the company has been doing very well in the Islamic banking and the promising growth of this industry (Islamic financial services).

· 3 Main Resources
There are three main resources that were extracted from the article which are the financial, physical, and human. HSBC has invested great assets from its conventional banking to expand in the filed of Islamic services as it says in the article, “HSBC Global Shariah Supervisory committee has approved the utilization of conventional capital for the purposes of Shariah compliant financing while restricting the usage of Shariah compliant funds in generating Islamic assets only”, this kind of imply that HSBC has invested amount for the assets of Amanah which is considered to be the financial resource. Also from this expansion the bank employs an advanced technology that already exists as it says in the article “HSBC provides a comprehensive range of financial services through an international network linked by advanced technology” which is considered to be the physical resource. Last but not least, the human resource is considered to be the Shariah Supervisory Committee as it says in the article “HSBC Amanah works closely with an independent Shariah Supervisory Committee of scholars to ensure that its products and transactions meet the requirements of the Shariah (Islamic law).”

· VIRO Analysis
* Valuable? So, are these resources valuable? Indeed, it is valuable because such expansion enabled the company to respond to the environmental opportunities as it says in the article, “as the industry grows and matures, Islamic finance can be expected to draw conservative Muslims who have, to date, avoided financial services as well as current customers of conventional products who may switch over.” From this we can say that these resources are valuable because they helped HSBC to respond to the opportunity which is the needs of this market segment (Muslims customers) and also has helped the company to expand its boundaries for Islamic services beyond the Middle East, as mentioned in the article “HSBC Amanah is headquartered in the UAE and has regional representatives in the UK, US, Saudi Arabia, Gulf countries, Malaysia, Bangladesh, Indonesia, Singapore and Brunei”.
* Rare? But are these resources and capabilities rare? It says in the article “With extensive operations in the Middle East, South East Asia and Northern Africa, HSBC has a greater presence in the Muslim world than any of its competitors, and are highly regarded as an imbedded institution.” This also addition to the fact that HSBC Group is the second largest banking and financial services organization in the world and the Group's international network comprises some 9,500 offices with almost 125 million customers in 76 countries and territories in Europe, the Asia-Pacific region, the Americas, the Middle East and Africa. However, these Islamic services are provided by many financial institutions around the world and could be much accurate in terms of Islamic law than HSBC. Lastly, I can safely say that these resources and capabilities are not rare. Another reason why these resources are not rare is because Citibank also running the same business concept.
* Difficult to Imitate? As I have mentioned in the question of rareness that these resources are not rare, I can’t go further and determine whether these resources are difficult to imitate. However, lets say if these resources were rare, I would say they will not be difficult to imitate because there are banks who already serving these Islamic services from the deep of Shariah Law (Islam Law). Also I want to refer to Citibank that it has Islamic window which is also doing the same like HSBC.
* Well-organized? To address the question of organizing, I assume that HSBC is a well organized bank for the reason it is the second largest bank in the world. But it terms to exploit the full competitive potential of these physical, human, financial resources it is not well-organized because I have just mentioned previously that these resources not rare.

· Result?
Having said that these financial, physical, and human resources are valuable but not rare, HSBC will generate a competitive parity. In other words, HSBC’s economic performance at this aimed expansion will be normal.

Now, let me give my personal opinion about the whole story. I think such Islamic bank is not trusted because the assets of the bank came from the money that mixed with Interest revenues and Islam does not allow that. Although it mentioned in the article that Islam law allowed that there should be internal transactions between HSBC Group and HSBC Amanah. That means there’s again a mix of money generated from interests, and of course is not allowed by Islam. Another reason is that this bank deals with non-Muslims and theretofore, there’s money that comes from the treading of Alcoholic and such prohibited goods b y Islam. I would this bank is not an accurate Islamic bank, it just brainwash customers that it is Islamic based system.