More than half of young Malaysian Muslim consumers would adopt Islamic banking if it were more accessible, according to a report from cloud banking platform Mambu.
The report, entitled ‘Faith and finance: The changing face of Islamic banking’ surveyed 2,000 millennial and Gen Z Muslim consumers globally and illustrates the growing appeal of Islamic finance services around the world.
Mambu’s recently appointed General Manager, Malaysia, Kevin Pu, says 79% of Malaysian respondents say it is important to access Islamic financial services online or via an app.
Two-thirds say it is a deal breaker if their bank cannot offer online banking services.
“This shows us just how imperative it is for Malaysian banks and financial institutions to offer Shariah-compliant products and services via digital channels.
“The Mambu survey also identifies that young Malaysian Muslims have high levels of satisfaction with their current banks, which put these organizations in a position to offer new Shariah-compliant products.”
DIGITAL BANKING GROWTH
Malaysia is considered the centre of Islamic finance in the Asia-Pacific region, with a penetration rate of 39.9% for Islamic financing (as at June 2020, Bank Negara Malaysia) as a percentage of total banking’s loans and financing.
Approximately 60% of Malaysia’s population identifies as Muslim, with this percentage projected to increase to 72% by 2050.
Digital banking, while still in its early stages in Malaysia, is soon set to experience rapid growth and innovation, says the report.
Bank Negara Malaysia is now assessing the merits of 29 applications for five digital banking licences potentially on offer from 2022.
“Malaysian Islamic banks, and conventional banks offering Shariah-compliant products, have a tremendous opportunity to capture the hearts and wallets of the young.
“They are digitally savvy Muslim customers and can be reached via innovative digital products and services, but competition will be fierce, so organisations need to hasten their digital adoption,” says the report.
