Islamic finance providers need good old word of mouth more than ever
Paul Stockwell, Chief Commercial Officer
The UK’s 2.8m Muslim consumers contribute £31billion to UK economy and boast a spending power of £20.5bn, so the opportunity for Islamic Finance is huge. Yet research carried out by Gatehouse Bank has found that nearly half of Muslim consumers have never used Sharia-compliant financial products.
Quite rightly this has to be seen as a wake-up call for our industry to get better at highlighting the positives about the services we provide by investing in the right areas.
This investment, however, is not necessarily about advertising on television, radio, billboards or social media. It’s about harnessing the most powerful and oldest form of marketing — word-of-mouth.
This was one of the key findings of our recently published Islamic Finance Consumer Report. The study was the first of its kind, and that meant headline findings which showed 46% of Muslim consumers had never even used a Shariah-compliant product were enough to make the whole industry sit up and take notice.
What is telling from our consumer report is that the impression people have of Islamic Finance is much more positive among those who have actually used it. The research drew a clear divide between the reality experienced by the minority — our customers — and the preconceptions of the many who had never entered this market.
This shift in perception was backed up by the research — 85% of Islamic Finance consumers thought that their experience exceeded expectations. But we’ve got to get people to the point of using Islamic Finance before they find that out for themselves.
That mission is currently being held back by a lack of awareness and poor perception of Islamic Finance among non-users.
It is one of our industry’s greatest hurdles. Three in five Muslim consumers are still sceptical about how Islamic the products truly are. Our research shows that just over half of non-users know anything about it, with little more than a third viewing it favourably. We must do better at shouting about our ethical offering and how we’ll never support sectors such as alcohol, tobacco, gambling, adult entertainment and arms.
And if those are the symptoms, the diagnosis offered by the report is that the industry is held back by lack of word-of-mouth referrals, because, as it turns out, Muslim consumers are very sensitive to what products their friends and family are using. In other words — we need word of mouth more than anything because Muslim consumers greatly value each other’s opinions.
Friends, family and colleagues are the most common way to hear about Islamic Finance (39%) but, significantly, they are also the most influential. Personal acquaintances triumph as the most valued source of information when compared to all other sources by a significant margin — 64% to 36%.
This is why, among those Muslim consumers who say they are not interested, 34% identify the fact that they don’t know anyone else who is using shariah-compliant finance as a major barrier.
This is a clarion call for all of us involved in Islamic Finance. The UK is the leading Islamic Finance centre outside the Middle East and South East Asia. We have great Shariah-compliant products but they aren’t winning as big a following as these competitive, culturally sensitive solutions deserve.
So when the vast majority of people who become customers are known to finish up being unexpectedly delighted by their experience, the industry must smell opportunity. It is the customer that becomes its most promising source of new approaches.
We must seize these powerful stories by proactively encouraging consumers to communicate them.
If we are to reach people and succeed as champions of shariah-compliant products, it is our customers who must champion them first.
This blog was featured on Specialist Banking.