Almost 60% of UAE residents hold at least one Islamic banking product. This is one of the striking outcomes of the latest survey on Islamic Banking of 5,300 respondents across nationalities, ages and income levels carried out by Souqalmal.com, the Middle East leading price-comparison website.
Islamic banking products adhere to the principles of Sharia’a, with one of the cornerstones being that interest, or riba, is forbidden, and that risk is shared between the customer and the bank. Islamic banks as a result operate based on a different set of income-generating mechanisms, such as fixed fees and profit rates for financing products, and raffles or prizes for deposits.
The survey results show that the Islamic banks have succeeded in building this broad appeal for their products by both courting consumers for whom faith is an important selection criteria (43 percent), but also building the perception with consumers for having the best rates.
Over 50 percent of respondents who hold Islamic products say that more attractive and transparent fees and rates were amongst their most important reasons to choose the product.
When asked whether Islamic compliance is a deciding factor in their choice of product, around 60 percent of both UAE nationals and Arab expats agree, followed by close to 50 percent of Asian expats. Western expats are the least likely to make their choices based on whether an offering is Islamic or even better priced, with quality of service and online banking taking the top spots.
Interestingly as well, the survey confirms that the appeal of Islamic products cuts across ages, with no material differences observed between age categories – and respondents below 25 among the most enthusiastic advocates of Islamic banking.
Yet at the same time, Islamic banks have still some way to go to educate consumers about what they offer, how they are different and what alternative they offer consumers to conventional banking. Of those respondents who do not hold any Islamic products, more than 40 percent say it is because they do not understand what Sharia’a banking is all about. Broader information and educational campaigns, both by the banks and the government, could help increase awareness and understanding.
On its part, Souqalmal.com launched this week a dedicated section for Islamic products and specific content related to Islamic banking. It now compares over 250 Islamic banking products including Islamic credit cards, Islamic personal finance, Islamic home finance and Islamic vehicle finance, allowing consumers compare products side by side and make an informed decision
With Dubai hosting this week the first major conference on the Islamic Economy, we invite consumers in the UAE to learn more about Islamic finance through a comprehensive set of user-friendly guides and How Tos on Islamic banking industry available on Souqalmal.com