How Islamic Banking Thrived in North America ?
LARIBA is the first Islamic bank to be established on U.S. soil. What led to your decision to enter this market ?
In 1972, in Dallas, Texas, we initiated the first Islamic Association of North Texas with the aim of acquiring property for the inaugural mosque in Dallas. The purchase price was $35,000, and our available funds were only $17,000.
Some community members who had settled in the U.S. before us suggested seeking loans from conventional banks. I consulted the community, but many were unwilling to finance a mosque through interest-based loans (Riba). This prompted me to delve into Riba and explore Sharia-compliant financing alternatives
In 1986, after relocating to Los Angeles and following my Friday sermon and prayers at the Islamic Center of Southern California, a humble individual introduced himself as Sheikh Saleh Kamel – may Allah bless his soul. He expressed his support for our Riba-free financing ideas and encouraged me to pursue this mission in America. We agreed that he would facilitate introductions to Riba-free scholars for further education. I stressed our intent to maintain an educational partnership and self-reliance.
My objective was to meet the challenge by harnessing the resources within the American Muslim community. In 1989, after extensive research and pilot testing, we presented a paper at Harvard University’s Islamic Finance Project, garnering popularity.
In 1987, we initiated a fundraising campaign among friends, collecting contributions ranging from $5,000 to $10,000. I shared our vision of establishing LARIBA (Riba-Free) and forming a team of expert community volunteers with banking and finance experience to initiate the project. We raised $200,000. That same year, we provided Riba-free financing for our first house in Madison, Wisconsin, where my wife and I attended school.
Today, in 2023, we operate American Finance House LARIBA and the Bank of Whittier – the first and only full-service Riba-free national bank in the U.S. We manage a servicing portfolio of $750 million, with bank assets reaching $170 million, serving clients in all 50 states without Riba.
Bank of America recognized our growth and achievements, deciding to invest capital in our bank in 2021, owning a minority share of the Bank of Whittier (4.9%).
What leadership principles or strategies do you consider most critical for Lariba Bank’s success, especially in a non-Muslim country?
Start with the Possible to Achieve Your Impossible Dream: As Lady Aisha, the wife of the Prophet (S), said, when facing a challenge, Prophet Muhammad (S) began with the easiest solutions, gradually moving to more challenging ones with patience and commitment. Follow your dreams, understand your capacity, and never lose sight of your aspirations. Learn from others’ success stories.
Serve Others: As the Prophet (S) said, the best people are those who benefit and serve others. We aim to serve people of all faiths and use our institutions as windows for propagation, showcasing our disciplined approach, values, and commitments.
Embrace Setbacks as Learning Opportunities: Setbacks and failures are crucial for learning and improvement. These are tests from Allah that assess our commitment and resolve.
Networking: Keep your eyes, heart, and senses open wherever you go. Introduce yourself, share your dreams, inquire about others’ expertise, and identify those who can help you achieve your dreams.
Sincerity and Humble Efforts: Never forget the blessings (Barakah) of Allah, which come through sincerity. Sincerity combined with humble efforts expands your impact.
Operating an Islamic bank in a non-Muslim country presents specific challenges. Could you elaborate on some of the challenges Lariba Bank has faced and how you’ve overcome them?
It’s no secret that there is widespread propaganda aimed at discrediting Islam. To promote our mission, we adopted the following strategies:
Choosing the Right Name: We introduced the term “Riba-Free Banking and Finance” about 20 years ago and popularized it. This term is now widely used. Our research showed that “Islamic Banking” gave the impression to the majority of Americans in a non-Muslim country that it was exclusively for Muslims. Our goal is to serve all Americans, and in fact, over 70% of our bank’s depositors are non-Muslims. We have consistently received a 5-star rating for the past 20 years. We are currently promoting a new brand name: “RF Banking,” where “R” stands for Riba (in Islam) or Ribbit (from the Old Testament) and “F” stands for Free Finance.
Demonstrating Added Value: We emphasize the added value of our services in terms of Riba-Free financing and deposits, showcasing the real benefits of going Riba-Free.
Diverse Staff: Our staff is diverse in terms of ethnicity, religion, and national origin. This diversity allows us to showcase Riba-Free financing and groom a new generation of staff who can offer RF Banking and Finance with added value.
Research and Documentation: We have authored several books, including a best-seller on Amazon published by one of the world’s largest publishing companies, John Wiley & Sons. Our book sold 20,000 copies and was translated into Turkish. We also have research papers that document the RF Finance Models we use.
Lariba Bank offers a range of Islamic financial products. Could you highlight some key offerings and discuss how these cater to a diverse customer base in a non-Muslim country?
Strategy: We offer products that may seem like conventional ones but are Riba-Free. We employ the metaphor of two chickens, both prepared in a way Americans enjoy, but one is Halal and the other is regular. This approach illustrates that our products are Riba-Free without compromising familiarity.
Effective Communication: We follow the Prophet’s (S) guidance to communicate with people in the language they understand, capturing their imagination and hearts.
Popularization: We have presented our work and services in major U.S. and Canadian cities, as well as at leading universities such as Oxford, Cambridge, and the London School of Economics.
Educating Regulators: We have taken the initiative to educate regulators about our discipline. They now acknowledge in their examination reports that “the main reason for the outstanding performance of the Bank is RF Banking and Finance Discipline.”
What are the major success stories with the highest social and economic impact?
We have empowered families to become successful entrepreneurs. One example is a husband and wife who initially worked as cooks in a KFC restaurant. We helped them acquire their first store, and they eventually owned six stores, providing employment opportunities to many new immigrants in the community. We have also provided financing for community schools and centers.
Additionally, we have a special fund called the “Miskeen” (needy) Fund to assist those who have lost their jobs in meeting their obligations while seeking new employment opportunities.