What keeps young Muslims from embracing Islamic banking?
The lack of available online banking options will be a dealbreaker for most.
Islamic finance services’ appeal has grown amongst young Muslim consumers during the COVID-19 pandemic, with more than half or 53% saying that they would adopt Islamic Banking—if it were more accessible, reports cloud banking platform, Mambu.
One in two of the 2,000 millennials and Gen Z Muslim consumers surveyed globally indicated that they would choose Islamic banking if barriers to entry were removed, according to the “Faith and finance: the changing face of Islamic banking” report.
This reflects a wider demand for ethical banking services in the wake of COVID-19, as consumers seek to make more sustainable and socially conscious choices post-pandemic, notes Mambu.
“Younger consumers are demanding financial change, and the Islamic finance market is no exception. Our research illustrates how Islamic banking trends mirror the demand we’re seeing for ethical banking practices more broadly,” said Elliott Limb, chief customer officer at Mambu.
There are over 1.9 billion Muslims underserved globally, which presents a huge opportunity for both Islamic and conventional banks, alike, to provide compliant solutions for the modern consumer.
The Islamic finance market is growing rapidly in recent years, with total assets in the sector exceeding $2t and expected to reach $3.8t by 2023. But a lack of digital services could be a major barrier to service uptake among the next generation of consumers, Mambu warns.
Religious beliefs as a key factor
Mambu’s study found that 74% of young Muslims said they want banks to make investments that align with their religious beliefs. Three in four young Muslims (75%) also said they want to make investments that "do good in the world".
Lending to tobacco companies is a big turn off, with almost two thirds (62%) indicating opposition to their bank lending to tobacco companies.
Almost seven in ten or 69% also said that they would rather their banks not lend to gambling institutions.
No matter the religious belief, the availability of online banking options is important for millennial and Gen Z consumers. Three in four (76%) young Muslims told Mambu that the availability of online banking options is a dealbreaker.
Specifically, 70% said that it’s important they can make an investment without having to see someone in person; 74% said they want to access their bank’s services via a mobile app; and 80% said it’s important they can access banking services anywhere, at any time.