Money talks: Word of mouth is key to promoting Islamic Finance
Paul Stockwell, (pictured), chief commercial officer, Gatehouse Bank
No matter what industry you work in, understanding your customers and their needs is vital, especially when you are looking to develop and improve the products and services you offer. With this in mind, and after finding there is very little research readily available on the UK Shariah-compliant finance market, Gatehouse recently commission a piece of research amongst UK Muslim consumers.
Our Islamic Finance Consumer Report 2019 shows that nearly half (46%) of respondents have never used a Shariah-compliant product. This, oddly, is not down to the fact that these products had previously disappointed them but because of how they are perceived.
But our study shouldn’t dissuade the industry from catering for Muslim consumers because there’s so much potential. Outside of the Middle East and South East Asia, the UK is the leading Western Islamic Finance centre. UK Muslims make a contribution of £31bn to the UK economy and have a collective spending power of £20.5bn.
While Shariah-compliant products struggle to get the attention they deserve, what we have found through our study is that Muslim consumers are positive about this type of finance, once they’ve had experience in using it.
Awareness of Islamic Finance is high, on the whole, with 77% of Muslim consumers familiar with it. This increases to 82% in the 35-44 year age group. But when it comes to subscribing to these products, there are several challenges that the industry needs to overcome to convince more Muslim consumers that they are right for them.
The first is to get the product promoted by a trusted individual, as our study shows that friends, family members and colleagues are the most common way that Muslim consumers hear about Islamic Finance products.
What’s more, the opinion of these individuals is very highly regarded in comparison to other types of information such as adverts on the television, billboards, radio or social media platforms. So, word of mouth is key.
Getting tongues wagging about financial products does pay off as our research highlights that once a Muslim consumer has tried an Islamic Finance product, they are generally satisfied with it. We found that 68% of current users versus 21% of non-users viewed Islamic Finance very favourably.
Consumers who value ethical business practices can rely on the fact that all the bank’s business is conducted in accordance with a strict set of ethical principles. Gatehouse Bank does not support activities against Shariah principles such as gambling, alcohol, tobacco or arms.
Our study established that 66% of participants were skeptical about whether Shariah compliant products truly reflected Muslim values. This means the industry needs to work harder to explain how Islamic Finance products work.
Accessibility is another issue. Of the thousand people that participated in our research, 60% highlighted that Islamic Finance products are hard to purchase and 62% said that they were also difficult to compare.
The onus is clearly on the industry to deliver that message by tapping into local communities, building trust and creating more accessible products that any friend or relative would be proud to recommend.