The Islamic Finance Consumer report 2019 from Gatehouse Bank has revealed that nearly half of all Muslim consumers have never used a sharia-compliant bank. In fact, 46% of Muslim consumers – rising to 53% of Muslim women – are missing out on the benefits of using a bank that is governed by Islamic finance principles.
In addition, despite sharia-compliant banks often providing chart-topping returns on investments, such as fixed rate bonds and notice accounts, they remain underused by non-Muslim investors who wrongly believe that these offers can only be accessed by practising Muslims.
Awareness and perception of Islamic finance among non-users of Islamic products is one of the industry’s biggest obstacles to overcome, with only 53% of non-users knowing anything about it, and only 35% of non-users viewing it favourably, the research found.
According to the Gatehouse bank’s findings, friends, family and colleagues are the most common sources of information among those who have never used Islamic finance, with over a third (34%) of those yet to use shariah-compliant products hearing about it through these channels. Almost three in 10 (28%) read about it on the internet, 18% learnt about it from social media, while 14% heard about it on Muslim-specific media including TV, radio and podcasts.
However, several positive findings highlight the huge opportunity available to the sector if it invests in the right areas.
Seven in 10 (71%) Muslim consumers questioned believe that Islamic finance is dedicated to the interests of the community, while 61% believe it works hard to better serve its customers. A staggering 85% of existing Islamic finance consumers said their experience exceeded their expectations, suggesting that using this rich seam of positive experiences and building on a sense of community could be key to increasing popularity.
The lack of uptake for Islamic banks could lie in the fact that 60% of the respondents said they thought it was harder to purchase, while 62% said it was difficult to compare options.
On this last point, it should be noted that Moneyfacts savings & ISAs comparison charts do provide a fast and easily understandable way to compare offers and product across the whole of the market, including both Muslim and non-Muslim providers.
Charles Haresnape, CEO of Gatehouse Bank, commented: “Our report highlights that providers of Shariah-compliant finance are missing out because of a largely untapped market for their products.
“A key lesson is that we and the whole industry need to do a better job of reaching out to the Muslim community and explaining the benefits of shariah-compliant products.”
Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.