Islamic Finance for British Muslims, 2024 findings.

insights.

A New Era for Muslim Money

Islamic finance is one of the most enduring financial systems in existence today, distinguished by its longstanding principles of equity and ethics. The UK, notably the City of London - a global finance hub, has emerged as a Western forerunner in embracing the economic potential of Islamic finance. This includes the UK government's issuance of sovereign Sukuks (the Islamic equivalent of government bonds), the upcoming launch of Shariah-compliant Alternative Student Finance, and the availability of compliant products and services from various retail banks, pension funds, and investment firms.

But there's a growing gap between market offerings and the needs of the 3.9 million-strong British Muslim population. With 86% expressing a desire for Shariah-compliant banking products and services, there's a clear demand for more inclusive financial options. This community has undergone significant socio-economic transformations over the past decade. Over 1.3m work in a profession and over a third hold a university degree which has meant the modern generation have greater disposable income and financial literacy which has magnified their attention towards financial management and attitudes towards their dealings.

This Islamic Finance study is the latest instalment of our cultural insights research we ran with over 1000 British Muslims across the UK to uncover their motivations, behaviours and attitudes towards different lifestyle areas and opportunities for brands to engage with them. This summary report introduces our first five insights below.

To have a chat about our complete study and how your brand can play a part, feel free to get in touch at contact@mudorange.com

The British Muslim Backdrop

British Muslims make up 6.5% of the UK population. To put that into context, that’s bigger than the population of Wales. More than half of all British Muslims are Gen Z and Millennial who demand brands to cater to their dynamic and modern lifestyles instead of the stereotypical stuff they’re all so used to seeing.

The latest census data show transformative social shifts, with 1/3 of all British Muslims attaining a university degree and 38% of all of those working are in a white-collar profession. British Muslims are an economically active population that largely go unnoticed during marketing and commercial moments. And as their demand goes unmet, they’re taking it into their own hands and pioneering new industries themselves to fill the gap. In the finance space this has led to bespoke Islamic finance products and services from investment platforms, mortgage alternative fintechs, to business finance providers to create financial mobility for Muslims looking to uphold Islamic values. 

And this isn’t a niche market. It’s a significant, growing segment of the population. 1 in 10 Gen Zs in the UK are practising Muslims, so the commercial significance of British Muslims is compounding as this demand becomes a non-negotiable requirement they expect from the industry. So brands need to start building insightful strategies that connect with them, from both a product and communications lens. 

As a boutique creative agency, we work with brands with data-backed insights to produce disruptive ideas to engage this growing dynamic audience.

First five Islamic finance insights

1. The Halal Investment Surge

Whilst residential home financing naturally still leads, the demand for Shariah-compliant investment opportunities is seeing huge growth, with 44% of the British Muslim population now seeking competitive, secure, and compliant investment options. The demand is inversely correlated with age, with 18–24-year-olds expressing the strongest intent partly driven by a wider cultural shift of greater investment literacy and better availability of consumer investment apps.

“Ever since I was in uni, I’ve put a bit of money into my [investment app] account. Before it was from my uni grants but now I just put away a couple hundred quid from my paycheck every month and invest in something that builds on my savings” Habib, 23, Birmingham

Those who have graduated from university express the strongest desire for halal investment opportunities. They’re more likely to have disposable income and savings accumulating, and it frustrates them that money in their current accounts sits idle and is losing value. They actively search for Shariah-compliant ways to make their money work.

2. The Bad Rep Has Burnt The Industry

Whilst 86% of the British Muslim public want an Islamic banking provider, a significant proportion choose not to because of: distrust (34%), bad customer experience (32%), and lack of awareness (27%). The industry is still rebounding from legacy players over the last two decades who have failed to meet service standards which has tarnished the sector. This means that new and innovative players in the space have a lot to undo despite providing a service that competes with mainstream leaders.

“I used to have an account with [an Islamic bank], but every time I needed anything, it was like they were doing me the biggest favour someone could ever ask of them. It’s like they were my customer!” Nabeel, 27, Kent

The sector as a whole needs a “relaunch”. This means new players really need to take their branding, campaigning, customer engagement, PR super seriously to shake off the shackles of legacy players and introduce a new era of Islamic finance.

3. Property Entrepreneurs Demand Proper Finance

Property investors and developers are the loudest callers for Shariah-compliant financing because they’re deeply embedded in the property industry and often find themselves conflicted between their livelihood and religious values. 92% of Muslim property entrepreneurs say it is essential for financial institutions to provide Shariah-compliant alternatives to commercial loans, bridging finance, to buy-to-let mortgages – giving them a way to continue with their careers without compromising their values.

“I’ve been in the property industry ever since I left school. I worked with my dad and we did everything from going to auctions, rolling our sleeves up with some of the building work, to moving properties on. This is our family trade but we’ve never found a way to make it halal without fronting all the cash upfront ourselves” Mo, 54, Essex. 

These entrepreneurs rely on commercial finance solutions, and as it can compromise their values it often leaves them in an emotionally tense position. That’s why they would switch to a product that’s less financially competitive if it meets their religious needs, but the service and speed must match their needs. Brands engaging this audience will see super strong traction, but engagement and experience must be at the forefront.

4. Gen Z Are the Most Financially Literate

91% of British Muslims between Gen Zs say it’s important to them that their bank offers Sharia-compliant financial products or services – that’s over 900k people. This is because the understanding of the Islamic finance framework in the UK has rapidly grown over the last few years with various Islamic finance publications, thought leaders, and fintech providers bridging the knowledge gap between finance and religion. 

“If it ain’t halal, I ain’t interested. I’ll happily rent for the rest of my life” Samad, 25, Bristol. 

For this generation, being British and Muslim is part and parcel of the other, so they unapologetically demand the mainstream market to catch up to their needs, otherwise they’re not willing to play ball. Unlike previous generations, they won’t accept the status quo and “make do” because faith is an integral part of their lives, everything from finance to fashion. So they expect brands to step up, shake up, and serve up.

5. Halal PCP and HP should be ABC

A significant portion of British Muslims, particularly within the British Asian community, are passionate about cars. So, getting the latest car with top spec trimmings is a huge desire, with 1 in 3 British Muslim men seeking halal Hire Purchase (HP) and Personal Contract Purchase (PCP) options for new car purchases. With the lack of Shariah-compliant financing, car dreams are often relegated to the second-hand market or a handful of interest-free players. 

“It’s heartbreaking to know I probably won’t ever get to buy my dream car. I see people online take out a normal interest-based deal but for me it’s not possible” Takbir, 27, London

This gap in the market presents a substantial opportunity for financial institutions to introduce Shariah-compliant car financing in a co-ownership model similar to Shariah-compliant home purchase plans. This would cater to the huge demand from a community where cars are not just a mode of transport but a lifestyle choice and passion.

This summary article introduces the first five insights of our study on British Muslims’ motivations, behaviours and attitudes towards Islamic Finance in the UK.

Our complete study provides a cross demographic analysis into all of our findings: from consumer mindset, motivations and decision-making, to their discovery process, obstacles and needs.

To have a chat about our complete study and what it means for your brand, feel free to get in touch at contact@mudorange.com.

Arif Miah, Strategy Director, mud orange.