Continuing from my earlier post– Is Islamic Finance up to the Challenge— how do we bring about commitment from industry in making the required changes?
Let’s start with what Mr. Daud Vicary Abdullah– President & CEO of INCEIF in his article-“EPL in Islamic Finance: Education”— stated. He has, very correctly, shown highighted three key areas in which education on Islamic Finance needs to be implemented and implemented with the objective of ensuring clarity and comprehension.
To me, of the three areas, the single most important one is “General Mass Awareness”.
Improving mass awareness is critical in ensuring that Islamic Finance industry grows through acceptance of is value proposition. Specifically mass consumers would drive growth for the industry through acceptance of the retail products. But at present, the retail market has its own set of complexities. Depending on the geographical market, awareness and comprehension, of Islamic Finance varies from negligible to aware but not convinced and coupled with that comes specific biases based on socio-cultural conditioning. There is, unfortunately, not a “one-size’fit-all” strategy for educating the mass. In each end market one will have to adapt according to the needs of the consumer.
However, on a macro level and as a possible CSR activity, it is possible to undertake a financial literacy education campaign, that targets primary school children and upwards. A campaign that focuses on the salient points of investment, savings, individual financial management from the perspective of Islamic Finance and, most importantly, the value proposition of Islamic Finance.
The content (of this campaign) would be the key in ensuring increasing awareness and comprehension and would need to ensure it:
- demystifies Islamic Finance and clearly puts forth a rational value benefit
- highlights what is the benefit of key retail products
- simplifies the investment products and communicates transparently on how the ‘back-end’ works
In terms of delivery of the campaign a multi-media approach, with emphasis on social media utilization, would be necessary in order to allow the mass to interact with selected industry practitioners and enable:
- feedback–which would help measure improvements of the educational campaign–AND
- let the practitioners to know the ‘pulse’ of the mass i.e. what are their financial needs
Bringing it back to the industry and the benefits of such an undertaking for the industry:
- Strategically such a campaign will position the organisations suporting and leading it as the “go-to” source for the consumer. Thus creating a pool of potential customers.
- It would enable the Islamic financial institutions to identify what the consumers want in terms of investment and retail products and thus ensure product portfolio profitability.
However the question that goes begging at this stage is, To Be Consumer Centric or Not To be?
Whilst Islamic Finance continues its growth based on corporate business. Will this provide it a sustainable growth? Would global organisations want Islamic Financing? OR should the industry develop a strong retail base in order to ensure this sustainability?
Education of the masses can assist in the growth and, in fact, ensure preference for Islamic Financial products and it will lead to improving current perceptions about Islam thereby bring about the much required change in mindset.