By Faizan Usmani

To date, various forms of conventional and Islamic banking services are provided by modern financial system. Conventional banking, no doubt, is the most popular from of banking all over the world, but the presence of riba (interest) element in conventional banking has made it quite unacceptable in Islamic countries.

Apart from purely Islamic banks, many conventional banking institutions have also started Islamic banking under a separate brand identity but several concerns have been raised on their authenticity of policies by many religious scholars and school of thoughts.

Despite the presence of both conventional and Islamic banks, their consumers are not in an ideal state as modern banking practices don’t afford them due profitability and financial returns they widely deserve. Aforementioned is not only the problem in Pakistan but also true for the rest of the world including all European and American countries.

In fact, modern banking, at present, offers little to its account holders by any means. Though, modern banking, be it conventional or Islamic one, has the potential to work like an ideal investment pool for their consumers but lack of innovative financial and banking solutions within their offers makes modern banking unbeneficial for local consumers.

Banks are the safest place to reserve one’s savings but the return on the deposit is usually very marginal and there is no option available for consumers to keep their money other than the banks.

On the other hand, corporate account holders all over the world get not only guaranteed security but highest percentage of financial returns against their deposited money.

Both in terms of substantial offers and higher level of financial securities in conjunction with quite convenient and user-friendly banking operations, today’s banking is solely dedicated to serve the corporate segments and common account holder is nowhere to be found in their list of preferences.

Starting from utility bills to the payment of monthly installments of credit cards, banking operations are rather inconvenient for general account holders, mostly representing salaried and retired individuals are destined to queue up before their banks in order to drag their own financial livings no matter what.

Briefly put, banks have a most prominent status and as per our present living styles we all have to visit banks more than any other place as they facilitate most of our monetary affairs.

Modern banks know how to deal with money profitably though each profit remains in their own custody with a meager ratio going to the general account holders.

If modern banks gears up to change its role from money holders to investment hubs, they can easily change the fate of their account holders. Poverty, unemployment, poor medical facilities, increasing ratio of crime and other social issues could be easily dealt with provided our modern banking decides to amend their banking practices and utilise its definite potential for the welfare of their account holders.

These days real estate is considered as an ideal investment zone both by large and small scale investors. Provision of profitability at grass root level through financial institutions is not a difficult task in today’s world and we can easily achieve the aforesaid goal through innovative depository procedures followed by banking institutions all over the world. For this purpose, we just need to alter the existing yardstick to quantify financial results with other measures based on gold rate in the world market.

Right now, profit mechanism being applied in both conventional and Islamic banking revolves around the value of related currency.

That is why the overall return to their account holder is low as any currency can never achieve its utmost point in such a short duration. Particularly in our case, gradually declining value of rupee in relation with heavy currencies like dollar and Euro are enough to decrease the margin levels of consumers.

Thus, reducing our dependence on currency is the only option to get Out of the recent economic crisis and it can only be achieved if we alter the whole profit mechanism with gold rate.

As gold never gets obsolete and the same holds true for its strong financial worth in global market, following the same could easily ensure multiplication of bank deposits both for general and corporate account holders in a shortest span of time.

In short, there are lots of new entrants joining in to the banking industry having a potential to appear as ideal investment paradise for both small and large scale investors, it all depends on our own thinking abilities to see an opportunity into a threat and change the current scene in society’s favour.