The banking industry in Malaysia offers a range of financial products and services tailored to meet the diverse needs of individuals and businesses. Two prominent models within this industry are conventional banking and Islamic banking. Understanding the benefits and differences between these two approaches is crucial for entrepreneurs seeking banking solutions that align with their values and aspirations.

In today’s dynamic business landscape, entrepreneurs encounter various challenges, one of which is meeting the requirements of Shariah principles that mandate good governance and social values. Recognising this need of small and medium-sized enterprises (SMEs), OCBC Bank (Malaysia) Berhad has introduced OCBC eBiz Account-i, a fully Shariahcompliant business account. It offers a streamlined online application process, designed to align with the goals and aspirations of SMEs according to the principles of Qard.

While conventional banking has been widely practised, Islamic banking has gained significant popularity due to its adherence to Shariah principles. This article aims to delve into the benefits and differences between conventional and Islamic bank accounts.

What is the difference between Conventional and Islamic bank accounts?

Conventional bank accounts are based on traditional banking principles. In this system, banks act as intermediaries and generate profits by charging interest on loans and providing various financial services.

Conventional banks typically offer competitive interest rates on savings accounts and fixed deposits, enabling entrepreneurs to grow their wealth over time. The established infrastructure of conventional banks provides a robust network, ensuring convenient access to financial services.

Islamic banking accounts, also known as Shariah-compliant accounts, operate on the principles of Qard. While offering similar features to conventional accounts, they strictly adhere to Shariah, which prohibits the payment or receipt of interest and promotes ethical investments.

Islamic Banking Concept

Islamic banking ensures that financial activities are conducted in line with Islamic law, offering customers peace of mind and ensuring that their banking practices align with Shariah.

In contrast, conventional bank accounts offer interests on deposits – deemed Riba (usury) - and is strictly prohibited in Islamic finance.

In principle, the primary distinction between conventional and Islamic banking is their approach in handling the concept of interest or profit/return (as the case might be).

Key differences that set Islamic banking apart

• Instead of paying interest, Islamic banking provides returns through discretionary Hibah (gift) or profit derived from sale transactions.

• Investments prioritise socially responsible sectors that adhere to Islamic ethical guidelines.

• Investments in industries such as alcohol, gambling, tobacco, or conventional financial institutions are prohibited.

By engaging in ethical investments, Islamic bank accounts empower entrepreneurs to support ventures that uphold their values. Moreover, Islamic banking provides greater transparency by disclosing the nature and sources of their investments. This transparency enables customers to make informed decisions about where their funds are allocated, ensuring that they are not involved in activities that contradict their ethical beliefs.

Which business account should I choose?

When it comes to choosing a bank account for your business, entrepreneurs have the option of either conventional banking or Islamic banking. Each approach encompasses a unique array of benefits and features.

For businesses, opening a current account is considered a standard as the accounts are designed to undertake a multitude of daily business transactions. With current accounts, an array of banking tools and services are provided to facilitate seamless and convenient fund transfers. To compensate for the extra liquidity and easy access to funds anytime, current accounts typically do not provide any interest on the amounts deposited. However, they provide additional solutions that allow for easier funds management, like e-invoicing, financials analysis, overseas transaction services, etc.

OCBC Bank is well-known to entrepreneurs for its OCBC eBiz Account for conventional banking. Catering to the needs of Islamic banking adherents, OCBC Al-Amin has introduced the OCBC eBiz Account-i as its Shariah-compliant version.

Both account types come with a range of benefits, such as:

Which business account should I choose?

When it comes to choosing a bank account for your business, entrepreneurs have the option of either conventional banking or Islamic banking. Each approach encompasses a unique array of benefits and features.

For businesses, opening a current account is considered a standard as the accounts are designed to undertake a multitude of daily business transactions. With current accounts, an array of banking tools and services are provided to facilitate seamless and convenient fund transfers. To compensate for the extra liquidity and easy access to funds anytime, current accounts typically do not provide any interest on the amounts deposited. However, they provide additional solutions that allow for easier funds management, like e-invoicing, financials analysis, overseas transaction services, etc.

OCBC Bank is well-known to entrepreneurs for its OCBC eBiz Account for conventional banking. Catering to the needs of Islamic banking adherents, OCBC Al-Amin has introduced the OCBC eBiz Account-i as its Shariah-compliant version.

Both account types come with a range of benefits, such as:

1. Ease of access and convenience

   OCBC eBiz Account/i offers a 100% online application process, allowing entrepreneurs to apply for the account from the comfort of their homes or offices. The simplified application process saves time and effort, enabling entrepreneurs to focus on their core business activities.

2. Low initial deposit

   Start your business account with only an initial deposit of RM500. This eliminates financial barriers and ensures that businesses of all sizes can access the benefits of having a business account.

3. No introducer required

   Unlike some traditional bank accounts that require introducers, the OCBC eBiz Account/i does not mandate the need for an introducer. This streamlines the account opening process and provides entrepreneurs with greater convenience.

4. Seamless application

   Upon submission of the completed application and compliance with the Bank’s requirements, entrepreneurs will receive their account activation notification within 1-2 working days¹.

In addition, OCBC eBiz Account/i offers a range of value-added business banking tools and solutions designed to support your business’ financial management needs. These include:

• Business Debit Card/i

  Entrepreneurs can apply for a Business Debit Card/i with the annual fee waived, facilitating cashless transactions, and ensuring easy access to funds.

• Business Internet Banking

  OCBC Velocity, OCBC’s business Internet banking service, provides a user-friendly platform for businesses to manage their finances efficiently. It offers features such as fund transfers, account inquiries, and transaction history, empowering entrepreneurs to stay in control of their financial activities.

• OCBC FX Online

  This feature enables entrepreneurs to access foreign exchange services conveniently. It offers competitive rates and streamlines processes, making international and foreign currency transactions smoother and more cost-effective.

• Additional Business Tools and Solutions

  The OCBC eBiz Account/i also offers a range of supplementary tools and solutions, including OCBC OneCollect for QR collections, DuitNow registration, and OCBC Merchant terminal. These will provide entrepreneurs with greater flexibility and convenience in conducting their business transactions.

How to apply for Islamic business bank account?

To be eligible to apply for the OCBC eBiz Account/i, businesses must fulfil the following criteria:

1. Wholly owned by Malaysians

   The business should be wholly owned by Malaysians.

2. Registered with SSM

   The business must be registered with the Companies Commission of Malaysia (SSM) to ensure regulatory compliance.

3. Sole proprietor or up to two (2) partners or directors

   The account is available for sole proprietorships or businesses with up to two partners or directors, accommodating a wide range of entrepreneurial setups.

4. Shariah-compliant businesses

   Only applicable to OCBC eBiz Account-i. You can check out the list of Shariah non-compliant businesses for more information.

In the ever-evolving business landscape, choosing the right banking account is a vital step towards unlocking the full potential of your business. By carefully considering the benefits and complementary tools offered by both accounts, you can now decide which best aligns with your business objectives and values, paving the way for sustainable growth and success.

¹Subject to completion of application submission and the Bank’s discretion.