Dubai: A perception gap is seen adversely impacting the growth prospects of Islamic banks in the GCC, according to a study by PwC.
Islamic values primarily drives the decisions and behaviours of Islamic Finance customers. However, worryingly for Islamic banks, many Muslims expressed scepticism of Islamic banks actually living up to these values. Only half (52 per cent) of existing Islamic bank customers agreed with the statement that their provider was ‘an Islamic bank and followed Islamic Sharia’.
The study suggests that Islamic banks may be missing a huge opportunity within the Muslim population due to this perception gap. “The findings of our Voice of the customer survey suggest that part of the reason customers may not be entirely convinced by Islamic finance may be due to the industry’s tendency to mirror conventional banking products,” said Ashruff Jamall, PwC Partner and Global Islamic Financial Services Leader.
This perception gap among banking customers is also a huge opportunity, according to PwC; for banks that can more clearly communicate and demonstrate their Islamic values, the benefits could be substantial.
PwC commissioned a survey of more than 500 retail banking customers in the GCC, to find out what customers really want; the findings of which they say can help inform the growth strategies of the region’s banks.
Banks looking to grow by attracting a greater market share of the Muslim population need to build trust among their core customer base and more clearly communicate and demonstrate their Islamic values. As an intrinsically values-based industry, Islamic banks must address this problem of perception.
To best capitalise on the opportunity in the Islamic banking sector, institutions will need to realise that merely branding themselves as Islamic is not enough — they can’t just talk the talk, Islamic banks need to walk the talk. Articulating more clearly the values of the bank, and clearly demonstrating action and fulfilment of their values may help banks to close this perception gap and attract greater market share of the Muslim population.
“There are huge opportunities for the region’s Islamic banks to grow; expanding populations and economies, with a high proportion of Muslims, create a market with huge potential. But to achieve that potential, Islamic banks will need to address this perception issue and also improve service levels to be competitive with other banks — Islamic and non-Islamic — from a customer service perspective,” said Jamall.
Better communicating and demonstrating Sharia values is just one of the areas Islamic banks should consider as part of their strategy to compete, differentiate and grow; the findings also suggest that service levels are lacking — non-Islamic banking customers were more likely to agree with the statement “My bank provides a fast service” than Islamic bank customers. But again, there is opportunity says PwC, as customers are willing to switch to Islamic banks if they feel that service levels at least match what they get from non-Islamic (or conventional) banks. So, enriching the customer experience can help to drive growth.
