Karachi—The appeal of Islamic banking is growing among both Muslim and non-Muslim consumers in the world while in the UAE Shariah Finance gaining momentum primarily due to its asset based nature, according to the second Islamic Banking Index. The survey results show increases in market penetration, perception, knowledge and intent of UAE consumers towards Islamic banking compared to last year. In terms of penetration, 51 per cent of the UAE’s banking consumers have at least one Islamic banking product. In addition, 36 per cent of the UAE’s banking consumers have an Islamic product from an Islamic bank, up from 34 per cent in 2015. “This year’s survey brings much good news to the industry, providing clear evidence that the strength and scope of Islamic banking in the UAE is on the rise.
Around 51 per cent of banking consumers have at least one Islamic product, demonstrating that the efforts by Islamic banks to improve their customer outreach are paying off,” Emirates Islamic CEO Jamal bin Ghalaita told Media. In terms of perception, the survey results show Islamic banks’ trustworthiness rose among both Muslim consumers (42 per cent versus 37 per cent in 2015) and non-Muslim consumers (34 per cent versus 27 per cent in 2015).
In addition, the perception of conventional banks as being technologically advanced rose among both Muslim (41 per cent versus 33 per cent in 2015) and non-Muslim consumers (42 per cent versus 40 per cent in 2015). The survey findings also revealed that 62 per cent of banking consumers in the emirates are aware of at least one Shariah-compliant banking product. For the second consecutive year, the best-known products remain Takaful and Murabahah, with 40 per cent and 31 per cent of respondents familiar with their use.
Around 79 per cent of consumers are willing to consider Shariah-compliant banking products, according to the survey findings. There is also a sizeable increase in the number of non-Muslim consumers willing to consider subscribing to an Islamic banking product, from 59 per cent in 2015 to 68 per cent in 2016. “The message to Islamic banks is very clear; we have to put customer service and technological innovations at the heart of our growth strategies and at the same time provide a value proposition to our customers.
It is now up to us to seize the market opportunity and stay focused on ongoing improvements in our product and service proposition,” bin Ghalaita said. He mentioned that the survey results are extremely encouraging as Islamic banking’s appeal is growing among both Muslim and non-Muslim consumers, demonstrating the potential opportunity that will drive the industry’s future growth. Another key finding is that more than half of the consumers will consider Islamic banks only if the benefits are comparable to or better than conventional banks.
The survey also highlights the key challenges for Islamic banks. For a second consecutive year, Islamic banks lag conventional banks in technology, innovation and customer service.