Nearly half of Muslim consumers have never used Shariah-compliant products, marking a wake-up call to the UK Islamic banking industry, new research by Home Purchase Plan provider and Shariah-compliant bank Gatehouse reveals.
A surprising 46% of Muslim consumers say they have never used Shariah-compliant products, according to the study.
The figure1 - which rises to 53% among Muslim women — underlines the challenge faced by Shariah-compliant finance providers.
However, a number of positive findings highlight the huge opportunity available to the sector if it invests in the right areas.
Seven in ten (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 that 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.
Gatehouse Bank’s 2019 Islamic Finance Consumer Report, is believed to be the first study of its kind to unpick the barriers and drivers to adoption of Shariah-compliant products by Muslim consumers in Britain. Muslim consumers contribute £31billion to the UK economy, boasting a spending power of £20.5billion2.
A key recommendation of the report is that the industry better communicates what makes its products Shariah-compliant, after finding that over three-fifths (61%) of consumers were sceptical about how Islamic the products really are.
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.
Among consumers who said they were not interested in Islamic finance, awareness fell to just over a third (36%) and positive perception to a disappointing 3%.
The study also found that, while 71% of people surveyed thought that Islamic finance was trustworthy and ethical, some 60% found it difficult to purchase, and 62% thought it was hard to compare options.
Islamic finance providers need to work with the community to increase awareness and improve perceptions of their products to boost adoption by the 60% of Muslim consumers who don’t currently use Islamic finance, the report recommends.
This is because 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 ten (28%) read about it on the internet, almost two-fifths (18%) learned about it from social media, while 14% heard about it on Muslim-specific media including TV, radio and podcasts, the report found.
Beyond their community, interested consumers also value the opinions of faith leaders – with 33% relying on Islamic scholars, and 32% seeking the advice of Muslim financial experts.
People aged over 45 years value the opinions of Muslim financial leaders more than any other age group, while consumers aged between 25 and 44 value the opinion of the media more than any other age group.
Charles Haresnape, CEO of Gatehouse Bank, said:
“Our report highlights that providers of Shariah-compliant finance are missing out because of a largely untapped market for their products.
“If nearly half of all Muslim consumers have never used Islamic finance that means hundreds of thousands of potential customers are waiting to be reached.
“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.
“Most importantly, the research shows we need happy customers and faith leaders to become community advocates for Islamic finance because word-of-mouth is highly valued among Muslim consumers.”
1The report surveyed 1,000 Muslim respondents living in the UK. Interviews were conducted online by Sapio Research in April 2019.
2The Muslim Pound.