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Islamic banking products most popular among UAE residents
Attractive and transparent fees and rates important reasons for selection, Souqalmal.com survey reveals.
November 24, 2013 8:25 by kippreport
Islamic banking is clearly gaining traction and becoming more appealing in the UAE, as 60 per cent of residents hold at least one Islamic banking product, according to the latest survey by Dubai-based price-comparison website, Souqalmal.com.
The poll, which surveyed 5,300 respondents of all ages, income levels and nationalities, reveals that of those that hold an Islamic banking product, approximately 50 per cent says that more attractive and transparent fees and rates were among the most important reasons for choosing the product.
It also shows that Islamic banks have succeeded in establishing a broad appeal for their products by courting consumers for whom faith is an important selection criteria (43 per cent) and building good reputation with consumers for having the best rates.
When asked whether Islamic compliance is a deciding factor in the choice of product, 60 per cent of both UAE nationals and Arab expats said it is, followed by close to 50 per cent of Asian expats. Western expats are least likely to make their choices based on whether an offering is Islamic or better priced, with quality of service and online banking taking the top spots.
Interestingly, the survey confirms that the appeal of Islamic products cuts across ages, with no material differences observed between age categories – and respondents below the age of 25 years are among the most enthusiastic advocates of Islamic banking.
However, Islamic banks still have a long way to go to educate consumers about what they offer, how they are different and what alternatives they can offer consumers of conventional banking. Of those respondents who do not hold any Islamic products, more than 40 per cent say it is because they do not understand what Shari’a banking is all about. Broader information and educational campaigns, both by banks and the government, could help increase awareness and understanding.
Islamic banking products adhere to the principles of Shari’a, with one of the cornerstones being that interest (or Riba) is forbidden, and that risk is shared between the customer and the bank. As a result, Islamic banks 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.
This week, Souqalmal.com launched a dedicated section for Islamic products and specific content related to Islamic banking. The website compared more than 250 Islamic banking products.