Optimism and Opportunities Ahead: Emirates Islamic reveals 2021 findings of ISLAMIC BANKING INDEX by EMIRATES ISLAMIC™

Dubai, 21 November 2021: Emirates Islamic, one of the leading Islamic financial institutions in the UAE today announced the latest edition of its ISLAMIC BANKING INDEX by EMIRATES ISLAMIC™, a benchmark survey revealing the progress, penetration, and perception of the Shariah-compliant banking sector in the UAE, as well as the future intentions of the nation’s banking customers.

Key findings of the 2021 ISLAMIC BANKING INDEX by EMIRATES ISLAMIC™

Penetration

Star Finding: Islamic banking products bridge adoption gap

• For the first time since the launch of Index, the gap between the penetration of conventional and Islamic banking products in the UAE has narrowed to just 1 percentage point
• 61% of the surveyed customers say they have a conventional product compared to 60% who have an Islamic product
• Islamic banking has grown in popularity in the UAE since 2015 –47% in 2015 to 60% in 2021, while conventional banking is on a downward trend in the same period –70% to 61%

Perception

Star Finding: Nearly half of those surveyed –48 percent, agreed that they prefer Islamic banks more since the onset of the pandemic, up from 45 percent from when we first asked that question in 2020.

• Both conventional and Islamic banks have maintained a steady overall perception score at 38%. Overall, perception of Islamic banks remained consistent at 38% since 2019 but has improved from 26% in 2015
• Islamic banking continues to be strong in areas that inspire long-term loyalty as they are perceived to be more financially sound, more supportive of their communities and more trustworthy
• Perception on innovation technology and service continues to be lower for Islamic banking compared to conventional banks
• Islamic banks continue to advance in terms of specific criteria including for being financially sound (48% in 2021, compared to 44% in 2020) and having low transaction fees (39% in 2021, compared to 37% in 2020)

Awareness*

*This year, Awareness Score i.e., the percentage of respondents who are aware of any Islamic banking concept has replaced Knowledge score. Based on the results of previous studies, we no longer measure respondents’ ability to select the correct definition of certain Islamic banking structures.

Star Finding: 35% of the total respondents state that awareness of Islamic banking terms does influence their decision to a large extent, consistent with 2020’s findings.

• 71% of the respondents are aware of at least one Islamic banking product even if they’ve never used them, compared to 59% in 2015
• Awareness of Islamic banking terms among both Muslims and non-Muslims is substantially higher than in 2015.
• Especially among non-Muslims, Awareness increased from 46% in 2015 to 67% in 2021
• Takaful and Murabaha continue to be the highest recognized Islamic banking terms

Intention

Star Finding: Better digital technology is emerging as a key decider for consumers to shift to Islamic Banking. Respondents showed a marked preference for better digital technology, increasing from 16% in 2020 to 21% in 2021.

• Since the start of the Covid-19 pandemic, the intention of UAE consumers in 2020 showed a decrease for both Islamic as well as conventional products, attributable to the uncertain economic climate.
• Islamic intention score** has increased slightly from 77% in 2020 to 78% in 2021, but still lower than 2019.
• Purchase intention has remained stable for conventional banking products and a cautious increase for Islamic banking products, but the levels are still to catch up with 2019.

Commenting on this year’s findings, Wasim Saifi, Deputy CEO-Consumer Banking and Wealth Management at Emirates Islamic said, “The results of this year’s survey are testament to the growing relevance of Islamic banking, especially as we look ahead to a post-pandemic world. For the first time since we launched the Index in 2015, we see a closing of the gap between the adoption of Islamic and conventional banking products – it is clear that consumers are increasingly choosing Shariah compliant solutions when it comes to financing and saving. This bodes well for Islamic banks as they continue to be considered more financially sound, trustworthy and supportive of their communities than conventional banks, which are all factors that will inspire long-term loyalty in customers and clients.”

Expanding on the opportunity ahead for Islamic banking, Saifi added, “As we move into a crucial time in the history of Dubai and the UAE with the hosting of Expo 2020 Dubai, the first world event of its kind to take place in the region, it is an opportune time to harness the momentum currently being experienced by Islamic banking to boost interest in and loyalty to our sector, to stand us in good stead for the future.”

Added Farid Al Mulla, Deputy Head of Consumer Banking and Wealth Management at Emirates Islamic, “As the shift to digital banking continues to grow, we can confidently say that the shift to online and mobile banking is indeed permanent. It is clear that this is an area that needs to be strengthened much more if Islamic banking want to outpace conventional banking’s growth and grow beyond borders. Customer experience is another area that needs to be prioritised to expand Islamic banking’s base and truly close the adoption gap.

The challenges - and their solutions - remain clear. As Expo 2020 Dubai’s theme encourages us toward Connecting Minds, Creating the Future, this is our time to seize the moment and the opportunities afforded to us to bring forth our message to the world.”

A detailed whitepaper with the findings is available here