Are consumers really drawn to the ethical appeal of Islamic finance, or will it always come down to which bank offers the best freebies?
It is often said that Islamic finance is not just for Muslims, but for anyone interested in ethical investing. As a non Muslim with an Islamic current account, I know this only too well – only it was the monthly millionaire draw that won me over, not the idea of sharing equal risk with a corporation far richer than me.
I was interested to hear from a contributor of mine who estimates that 90 per cent of Muslims still prefer conventional finance, but not entirely surprised. With a universe of conventional ethical funds only the most devout will confine themselves to what remains a limited choice.
Charity begins at home. Research shows time and time again that while consumers like the idea of ethical brands, they will still buy whatever’s on special offer that week. I gave up the idea of saving the world by using an environmentally friendly washing liquid when I realised I needed something that actually cleaned my clothes. Consumers will buy what is cheapest and what works. Or, of course, whatever they are familiar with.
Yet more research shows people in the western world are more likely to end a relationship with their spouse than they are their bank. People don’t like change.
This may explain why Islamic retail banking has been slower to take off than the commercial side. So what can a new industry do to drum up support?
I confess the millionaire draw did it for me. Outside the corporate world, where Islamic finance is muscling in on the mainstream and serious investors are snapping up opportunities, consumers are won with flashy offers and clever branding – the complexities of the contract and the good it will do for the wider world is lost on your average punter – including me.
It is pointless preaching transparency to people who don’t understand what they’re looking at. Islamic finance must evolve to be consumer-friendly as well as business-friendly if it wants more customers.
Read more : A little faith too much to ask?
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