How are Islamic banking products developed? Evidence from emerging country

Sharia product development in Indonesia faces unique challenges in terms of strategy and innovation compared with conventional products. Islamic banking managers must adhere to Sharia principles to maintain customer trust and comply with Islamic law. Compliance with Sharia principles is not only a religious obligation but also the foundation of the business model. This study used qualitative methods, specifically semi-structured interviews, to validate the Sharia product development practices in Indonesia. Seven experts from diverse backgrounds were interviewed, and their responses were thematically analysed using NVivo version 12. The findings confirm that the Sharia supervisory board and Islamic banking management play crucial roles in developing Sharia products. They collaborate to ensure that Sharia products adhere to the principles, meet customer needs, and comply with relevant regulations and standards. This collaboration enables efficient development of Sharia products that align with values and meet market demands. Moreover, their involvement goes beyond their compliance. They also contribute to the ethical and responsible growth of Islamic banking by fostering customer trust and confidence. Their commitment to upholding the core principles of Islamic banking establishes a solid foundation for the sustainable development of Sharia-compliant products in the global market.Building strong relationships with clients should be a priority for Islamic banks, achieved through a deep understanding of their unique needs and the provision of personalized solutions. This approach helps to establish trust, loyalty, and long-term relationships with customers. Islamic banks should prioritize ethical and responsible banking practices, including transparency in transactions, adherence to ethical standards, and promotion of social responsibility. Islamic banks must effectively communicate the moral and ethical aspects of their business models to customers. This not only helps build customer trust, but also differentiates Islamic banks from conventional banks, attracting customers who value ethical and responsible banking practices. The success of Islamic banks in the competitive banking sector relies on their ability to strategically position themselves by continually innovating and developing products that meet the needs of their target customers.