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 Joy Abdullah, Brand Strategist, has more than 20 years of experience across ASEAN & the Indian sub-continent in developing and managing national, regional and international brands in a wide variety of industries covering Islamic Financial services, tourism, B2b Halal, telecommunications, beverages, real estate, tobacco, hospitality and healthcare.

The global Islamic Finance industry is a $1 trillion industry with annual growth estimates ranging from 10 to 15 percent a year. Nevertheless, at the consumer level (and specifically retail banking) there is no 'real' market data available - certainly not in the open. Most of the industry statistics that are available have been focused on institutional preferences: after-the-fact product data and somewhat generic growth figures (alongside highly subjective forecasts).

Thus far the 'classic' type of market research seems to have eluded the industry, this despite the fact that door-to-door written surveys have been replaced with the ease and rapidity of online tools. Not only that, but the predominant audience of Islamic finance surveys are the Islamic finance practitioners themselves, introducing a clear (albeit unintended) bias to any survey result.

Furthermore, there is scant research available on the consumer perception and understanding of Islamic finance, from product specifics (i.e. what is ijara?) to the overall perception of the industry's value proposition (i.e. do consumers actually care?). Such critical analysis would be invaluable to the industry, specifically as input for the design of Islamic finance products that serve a real need amongst retail consumers.

Such consumer perception studies could provide the Islamic Finance industry with a platform to:

I. Develop basic financing products adhering to Shariah, which are applicable across geographical boundaries, thereby providing globally-operating IFIs a common product pool to use across markets and jurisdictions.

II. Support global standards as opposed to country-specific or even company-specific SSB certification/approvals.

III. Encourage the industry to innovate on areas of brand identity through service improvements, technology inputs and consumer wealth development.

This would lead to an overall social and economic development in the markets that these IFIs operate in (and by virtue of that they would be living up to the essence/spirit of Islamic Finance). In this regard the following research papers provide some valuable insights:

The lack of information/data on how Muslim consumers perceive and behave towards using Islamic financial products.

Attitudes, Perceptions and Motivations of Libyan Retail Consumers toward Islamic Methods of Finance
By Alsadek H. Gait and Andrew C. Worthington
Griffith Business School, Griffith University

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1370736

Key Points:

1. Little is still known on how Muslims and non-Muslims are affected by religious convictions in their financial decision-making. Despite the evolving literature on Islamic finance, much work remains to be done on consumer behaviour using more sophisticated choice-modelling techniques and more extensive samples.

2. This work on attitudes, perceptions and knowledge of Islamic finance has been undertaken in a particular national context, not across regions and certainly not globally.

3. Finally, one reason for the growth of Islamic finance worldwide has been the willingness of national governments with a sectarian-orientation to support its establishment. It is not known what particular role these governments have played in attempting to modify the perceptions, attitudes and knowledge of Islamic banking alongside any direct or indirect support or encouragement to the institutions themselves.


The lack of comprehension amongst Muslim consumers ie Islamic finance and its co-relations to religious tenents
Choice of Financing amongst Malays-Between religiosity and perception
By Wan Marhaini Wan Ahmad, Asmak Ab Rahman, Nor Aini Ali A and Azizi Che Seman
University of Malaya
http://eprints.um.edu.my/926/1/W.Marhaini&others_Choice_of_financing_amongst_malays_between.pdf

Key Points:
1. The importance of this study can be viewed from two dimensions: impact of level of religiosity to sources of  banking  financing and determinants of credit selection criteria. In terms of religiosity, this study shows that a   more religious customer will tend to choose Islamic financing. And a person tends to be religious when they receive higher formal religious education exposure. The findings point to the importance of this group as target customers for Islamic financing products since their tendency to subscribe it is higher.                                                         

2. For other groups especially those who were found to be casually religious and those without any formal Islamic education, a different approach than stressing the Islamicity of the products is necessary.

3. For financing selection criteria, a majority of them found that apart from favorable credit terms of the financing products, efficiency in services especially the after-hour and less hassle services of using the electronic services are the most important factors in choosing where they get their financing. Such factors should be considered seriously by bankers in designing their products and perfecting their customer services especially when developing their market strategies concerning working Malay Muslims.

There is a clear lack of market data available that can lead to more precise conclusions, and the above research would be most welcome across a wider range of consumer markets. Hence it is increasingly obvious that a Consumer Survey is in much need to gauge awareness, perception, misconception and overall understanding. In the coming weeks we aim to develop and deploy such a study and share the findings to identify consumer segments, trends, as well as any country-specific issues. Hence we will be able to open a window into the mind of current (as well as prospective) consumers of Islamic finance products.

Your feedback and comments are very important to us, please feel free to contact the author via email.