Banks in Malaysia are insisting their Muslim clientele avail Islamic banking products – even when they don’t want them
Every time I have interviewed Governor Zeti she has given me the same quote about Malaysia’s dual banking system; it gives choice to the consumer. Muslims have the option of banking in accordance with their faith – but what if they don’t want to?
“If you are Malay, they will assume you are Muslim and the banks will insist on giving you an Islamic product,” a lady from Malaysia told me today. “Few consumers are aware they have a choice, and if you try to object the banks aren’t helpful.”
Not wanting what she deemed to be a more restrictive product, the woman was annoyed to be given an Islamic credit card by her bank. “I did not want it,” she said. “I asked for a conventional credit card but they gave me an Islamic one anyway. I had to go down to the branch and put up a real fight to be given a conventional one.”
This practice is apparently widespread in Malaysia, where Islamic consumer banking has lagged behind the commercial sector. Although many of the large banks operating Islamic subsidiaries boast an equal number of Islamic and conventional clientele, the consumer is often unaware they have been given an Islamic product.
“They will simply receive a Takaful policy instead of an insurance one, and few question it. Many don’t understand what it is or that there was a conventional insurance policy on offer,” said the woman, who did not wish to be named. “At the end of the day I want a product that best suits my needs, and I should be allowed to choose that for myself. Non Malays are given the choice, why aren’t I? It’s unethical.”
Ironically, Islamic banking is often promoted by governments as a way of granting the power of choice to the consumer. Nearly every central bank governor I have interviewed gives this as a reason for introducing an Islamic banking framework. And nearly every observer says Islamic consumer banking must be competitive to win over Muslims, and indeed non-Muslims. Nearly everyone agrees that being Islamic is not a selling point on its own.
American writer Mark Twain once said, “If voting made any difference, they wouldn’t let us do it.” Malaysia’s Islamic banks seem to have taken this to heart, and clearly don’t have enough faith in their products to let the public decide for themselves. Sadly, it is the power of choice that ultimately drives up standards, and if Malaysia’s Islamic banks allowed this they would end up with Islamic banking products customers wanted to choose.