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PERSPECTIVE Millennials & Islamic Finance By Blake Goud Blake Goud is CEO of the Responsible Finance & Investment (RFI) Foundation, a non-profit organization working to identify a universal value proposition for responsible finance that includes Islamic finance. He was Community Leader at Thomson Reuters' Islamic Finance Gateway and Chief Research Officer at Middle East Global Advisors. Millennials want to see something more from their career, from their financial institutions or even when they buy a pair of shoes. There is a shift in younger consumers around the idea that “the success of a business should be measured in terms of more than just its financial performance.” This belief-identified in research by Deloitte which surveyed Millennials from the United States to Europe, Latin America, Turkey, Southeast Asia and China, found that nearly nine in ten respondents agreed with the wider focus of business in society. When you ask what Millennials value themselves, in their careers and in the companies they buy from, they talk about having a positive impact on society. But they don't just look for companies to say the right things, they look for action and signs from businesses that they are able to be trusted to behave consistently with the values they publicly sign up to. They look for companies with quality products, companies that have high employee satisfaction, and are able to deliver similar satisfaction to their customers. Social Impact of Islamic Finance Interestingly, and not surprisingly given the ethical framework which guides Islamic finance, people look for similar indications of trust, safety and social impact from Islamic finance as well. A small survey-based study released recently found that transparency, trustworthiness, truthfulness and fairness were important qualities for customers deciding whether to deposit with Islamic banks. In addition, the customers were concerned with corporate responsibility and community welfare when making a decision. The overlaps between Millennials as a group and Islamic bank customers in what they value is notable. While the concerns of Muslims include Sharia compliance, and may be a make-or-break factor for some, it is not the only decision factor. Some Islamic banks have become more aware of this and are reaching out to people on the basis of their products being grounded in trust, fairness and honesty. But most have not and there is a quiet complacency with the generational shift. One can still hear talk of how young Islamic finance is relative to conventional banking which rings a little hollow now more than it did a decade ago. This is especially true when you consider the demographics of Islamic banks' customer base which has changed significantly over this time. Growth Potential A decade ago, only the oldest of the Millennials were in the workforce and none were in their prime earning years. For a young industry, the older generation was 'where the money was' to paraphrase Willie Sutton. Yet today, the situation is the reverse. Older Millennials are entering peak earning years and Millennials of all ages are the bulk of the growth potential for Islamic finance. The difference between an older generation who were served by last decade's Islamic finance industry and today's young consumer base is that today, Millennial Muslims have grown up always having a Sharia compliant option available. It no longer becomes as much of an exceptional feature as just the baseline of what they expect and their expectations for what Islamic finance should deliver becomes more nuanced. The benefit for Islamic finance from these changes to consumer preferences and demographics is that instead of being harder to serve their core market, it becomes easier to serve their core market and expand into others. There is a long-running debate about how much Islamic finance should focus just on Muslims or focus on being something that delivers a universal good for humanity. The changes underway make it imperative to deliver on universal principles within Islamic values to maintain the growth of Islamic finance and expand its appeal to the wider world. “The overlaps between Millennials as a group and Islamic bank customers in what they value is notable” Islamic Finance Today - November | December 2016 IFT 44
“Talent is universal; opportunity is not” Human Capital Mudaraba for expanding higher education opportunities By Charles Selestine Charles Selestine is FISA Development Manager at Wedu. He holds an MA in Islamic Banking Finance and Management from the University of Gloucestershire, and has worked with an Islamic Bank in Qatar. 45 IFT Islamic Finance Today November | December 2016
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