Managing business model duality in banking: how conventional banks navigate the integration of Islamic finance

Abstract

Purpose This study investigates how conventional Moroccan banks organise and manage the coexistence of their conventional and Islamic business models. The duality of these models creates both strategic opportunities and operational challenges, particularly in contexts where Islamic banking is expanding beyond a niche market. Design/methodology/approach A qualitative multiple-case study approach was adopted. Data were collected by extensive document analysis and 21 semi-structured interviews with key executives, managers and branch personnel across Moroccan conventional banks offering Islamic financial services via windows (i.e. units within conventional banks whose operations comply with Sharia law) or subsidiaries. Findings The analysis reveals that conventional banks adopt different entry modes into Islamic banking, including Islamic windows, subsidiaries established in partnership with Islamic finance experts and fully locally owned subsidiaries. Correspondingly, three operational coexistence strategies emerge: integration, phased separation and separation strategy. The findings highlight the importance of resource allocation, team specialisation and client communication in ensuring effective management of the dual model. They also indicate that phased separation may offer a balanced approach, allowing gradual capability development and risk mitigation. Originality/value This study contributes to the literature on business models and Islamic finance by comparing the practical implications of Islamic banking windows and subsidiaries. It provides empirical evidence on how Moroccan conventional banks manage dual business models and offers theoretical insights into strategic pluralism, organisational ambidexterity and hybrid arrangements in banking.