Hybrid Islamic-Conventional Banking Products Development: Integrating Complementary Banking Capabilities
Year: 2026
Type: article
Abstract: Islamic banking (IB) and conventional banking (CB) coexist in many financial systems, yet limited research explains how their complementary capabilities can be integrated into hybrid financial products while preserving Shariah requirements and institutional boundaries. This study proposes a seven-stage, problem-driven framework for hybrid IB-CB product development and demonstrates its application through three concepts: Tawazun SME capital, Baraka Green Finance, and Taaleem Fund, addressing SME financing, sustainable investment, and education financing, respectively. Expert evaluations from banking professionals and IB-CB specialists indicate that all three concepts were generally viewed positively, although assessments of collaboration potential were more cautious than evaluations of the concepts themselves. Among the proposed products, Tawazun SME capital exhibited the most balanced stakeholder value proposition, while Baraka Green Finance and Taaleem Fund were perceived as delivering stronger customer-oriented benefits. Qualitative findings highlight regulatory compatibility, independent Shariah governance, stakeholder alignment, operational readiness, and market awareness as critical conditions for successful implementation. The study contributes to the literature by providing a structured framework for transforming IB and CB complementarities into assessable hybrid product concepts. The findings offer practical insights for financial institutions seeking to expand innovation, promote financial inclusion, and facilitate collaboration across banking systems while preserving their distinct operational and regulatory characteristics.
DOI: 10.3390/jrfm19100816
Institution: Riga Technical University
Language: English
Subfield: Accounting
Domain: Social Sciences
Open Access status: hybrid
Estimated APC paid: $1,689
OpenAlex ID: W7222168189