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BANKING
INDEX
BY EMIRATES
ISLAMIC™
2019
Page 1
Introduction
Page 3
Methodology
The ISLAMIC BANKING INDEX by The 2019 ISLAMIC BANKING INDEX by EMIRATES ISLAMIC™
survey was conducted in the UAE to determine the penetration
EMIRATES ISLAMIC™ is a benchmark of Islamic banking in the emirates; as well as current
survey revealing the progress, knowledge, perceptions and future intentions of consumers on
penetration and perception of the Islamic banking. Our methodology, questionnaire and sample
Shari’a-compliant banking sector in the size has remained consistent with the first Index which was
carried out in 2015, to provide accurate information on this
UAE, as well as the future intentions of
fast-growing sector.
the nation’s banking customers.
Using the YouGov Public Opinion Research Panel, responses
were gathered online in August 2019 from more than 900
panellists aged 18+ who have a bank account in the UAE with
a minimum income of AED 5,000/- per month. The sample is
representative of banking consumers in the UAE who are above
18 years; in terms of gender and nationality and covers all
seven emirates.
Page 4
Top Findings
PENETRATION
SCORE
60% 55% 52% 51% 47%
PERCEPTION
SCORE
38% 35% 31% 29% 26%
KNOWLEDGE
SCORE
37% 39% 36% 37% 36%
INTENTION
SCORE
80% 80% 74% 79% 75%
Notes:
• Penetration score is the percentage of consumers who have any Islamic product from any financial provider
• Perception score is the average rating of Islamic banks on a range of attributes
• Knowledge score is the percentage of respondents able to correctly define Murabahah. This score is calculated by
multiplying the percentage of those aware of any Islamic concept by the percentage of those selecting the correct definition
of the concept
• Intention score reflects the percentage of respondents who indicated they would subscribe to an Islamic banking product
within six months
Page 5
In-depth Insights
Penetration
65 60 63 55
ALL BANKING PRODUCTS 100 3 100 8
54 42 59 36
Current account 54 4 49 5
47 48 5 51 44 5
Savings account 43 44
Personal finance 18 46 50 4 20 45 49 6
39 59 38 59
Auto finance 15 2 12 3
Islamic banking is on the rise in the UAE - three out of five respondents now have at least one
Shari’a-compliant product - 60% - up from 55% in 2018. Respondents’ use of conventional
banking products has rallied by two percentage points since 2018, but has fallen overall
by five percentage points since 2015, while Islamic products have grown by 13 percentage
points during the same period
The outlook continues to be positive for Islamic banking. There was a general increase in specific Islamic products being
When it comes to specific Islamic products, most have used by Muslims, while the opposite was true for conventional
experienced growth in the last year, with Islamic credit cards products. More Muslims are using Islamic current accounts,
and current accounts experiencing the highest increases at credit cards and savings accounts while Islamic personal and
five percentage points and six percentage points respectively. auto finance have seen a small decrease. The largest increase
has been seen in current accounts, growing from 31% to 40%
Use of Islamic products grew by five percentage points among
from 2015 to 2019.
both Muslim and non-Muslim respondents over the last
year, to 70% and 45% respectively. Use of Shari’a-compliant
products has increased faster since 2015 for non-Muslims
than Muslims, from 31% to 45%.
Page 6
% Penetration score amongst Muslims
Don’t
Conventional Islamic Conventional Islamic Don’t
know
know
2019 2018
60 70 58 65
ALL BANKING PRODUCTS 3 5
49 50 50 46
Current account 1 4
37 62 39 58
Savings account 1 3
42 54 38 58
Personal finance 3 4
68 70
Auto finance 31 1 29 1
Interest by non-Muslim customers surveyed, in Islamic products fell by 10 percentage points. There was also a six
products, has seen a significant increase in all areas since percentage points increase in Islamic savings accounts for
2018, including a nine percentage points increase in Islamic this customer group, while conventional products fell by six
current accounts, while conventional current account percentage points.
65 75
Current account 26 10 17 8
62 68
Savings account 28 10 22 9
Personal finance 51 43 6 52 40 8
53 42 56 38
Auto finance 4 5
Page 7
In-depth Insights
Perception
The overall perception of Islamic banks continues to improve, with the percentage of
customers agreeing that Islamic banks have a range of positive attributes rising from 35% in
2018 to 38% in 2019. Perception of Islamic banks has improved steadily from 26% in 2015,
with significant improvements in key areas relating to technology and customer service
The perception of Islamic banks continues to be on par with are particularly far ahead when it comes to supporting
conventional banks, with both scoring 38% in the perception the community in meaningful ways and being considered
category in 2019. Islamic banks are better perceived than trustworthy - eight percentage points and six percentage
their conventional equivalents in several key areas, and points respectively.
Support the community in 48 Are technologically Support the community in Are technologically
meaningful ways 43
45 advanced meaningful ways advanced
46
45
31 Have low transaction
Have low transaction fees fees Are innovative
35 Are innovative
35 35
31
Are trustworthy 40 Provide fast service Are trustworthy Provide fast service
47 37 37
30 36
Offer the best rates for 33 37 Have easy procedures Offer the best rates for Have easy procedures
borrowing / financing
borrowing / financing
30 33
Provide solutions
34 37 37 Provide solutions according to my needs
Offer the best profit/ Offer the best profit/
45 according to my needs
interest rates on interest rates on
38
deposits deposits Offer superior
51 Offer superior
customer service customer service
Are financially sound Are financially sound
Page 8
% Strongly agree amongst non-Muslims
2019 Islamic banks Conventional banks 2018
33 35
34 Offer the best rates for Have easy procedures
Offer the best rates for 40 Have easy procedures
borrowing / financing borrowing / financing
34 33
36
34
38 Provide solutions Offer the best profit/ Provide solutions
42
Offer the best profit/ 36 according to my needs interest rates on according to my needs
interest rates on 44 deposits
deposits Offer superior Offer superior
Are financially sound customer service Are financially sound customer service
Continued investment in service delivery in both Islamic and Particularly positive is the continued improvement in
conventional banks has contributed to the improvement in perception of Islamic banks for Muslim respondents, the
perception for both, and is likely to have a positive impact key customer base for Islamic products. More than half of
across the banking sector in general. Muslim respondents, 51%, agreed with the statement that
Islamic banks are ‘financially sound’. Islamic banks performed
As well as experiencing an overall improvement in perception, better than or on par with conventional banks in all but three
Islamic banks are perceived to have improved in all areas categories amongst Muslim respondents.
surveyed, most significantly those relating to customer
convenience, with the number of respondents agreeing with However, if we look at non-Muslim respondents, there
the statements that Islamic banks ‘have easy procedures’ and remains a sizeable gap in perception between conventional
‘provide solutions according to my needs’ both increasing by and Islamic banks when it comes to areas such as
six percentage points. ‘technological advancement’, ‘innovation’, ‘having outstanding
apps for mobile/internet banking’, ‘having easy procedures’
The perception of Islamic banks also continues to improve and ‘providing solutions according to my needs’. While Islamic
in matters relating to technology, for example, 41% of banks have shown clear improvement over last year’s rankings
respondents agreed with the statement that Islamic banks across several of these metrics, there remains a need to
are technologically advanced, and 43% that they have address these deltas in perception in order to truly challenge
outstanding apps for mobile/internet banking. There was also conventional banks’ standing and market share among non-
a leap forward by four percentage points in the perception Muslim banking consumers.
that Islamic banks have the best profit rates on deposits, as
well as in the category ‘are innovative’.
Page 9
In-depth Insights
Knowledge
% Knowledge score
45
39 39
37
30
24
2019 2018
Knowledge or awareness of Islamic banking terminology is the only category that has not
seen clear improvement since the ISLAMIC BANKING INDEX by EMIRATES ISLAMIC™ was
first launched in 2015, starting at 36% five years ago, before rising to 39% in 2018 and
falling back to 37% in 2019
Page 10
% Islamic banking product
50
Takaful
45
32
Murabahah
29
Mudarabah
20
16
17
Ijarah
12
17
Musharaka
18
12
Bina’
10
26
None
31
As there has been no great improvement in the knowledge and in the Islamic banking sector in making Takaful a mainstream
awareness of Islamic banking terminology in the UAE, we aim proposition, with clear regulatory frameworks and guidelines
to take the lead in taking these concepts to the people to help being put in place, and the increase in take up shows that
create a better understanding of Shari’a-compliant finance. this has paid dividends.
While the overall knowledge score has remained consistent, The data shows that awareness has risen of products, such as
there has been a rise in the awareness of some individual Takaful, that have become successful in the financial sector.
Islamic banking products. For example, 50% of respondents It naturally follows that as other Islamic products continue to
had heard of Takaful, an increase of 11 percentage points reach larger markets, understanding and awareness of them
since 2015. The number of respondents who had not heard will organically follow suit, as the product names become
of any Islamic banking products has steadily reduced since more widely used.
2015, from 41% to 26%.
Unsurprisingly, understanding and awareness of specific
The increase in awareness of Takaful is to be expected, as it Islamic products is higher among Muslims than
is now a $46 billion industry. Understanding and familiarity non-Muslims, at 39% and 30%. But, overall awareness has
with the product in the financial sector in particular is, as a increased among non-Muslims by six percentage points
result, widespread. Much time and effort has been invested since 2018.
Page 11
In-depth Insights
Intention
80 80 82 82
76 76
The number of respondents who say they would subscribe to an Islamic banking product in the
next six months has remained consistent since 2018 - four out of five, or 80%
38 40
ANY ISLAMIC PRODUCT ANY CONVENTIONAL PRODUCT
34 34
19 15
Current account with salary transfer Current account with salary transfer
16 15
14 15
Credit card Credit card
14 12
18 12
Current account Current account
13 15
17 15
Savings account Savings account
15 15
12 9
Personal finance Personal finance
10 9
10 7
Auto finance Auto finance
8 7
Page 12
The high interest by non-Muslim respondents in Islamic products. For example, the increase for conventional current
banking products shows the broad appeal of Shari’a- accounts with salary transfer has been from 14% to 15% since
compliant finance in the UAE. It suggests that while 2015, while the increase for the Islamic equivalent has been
non-Muslims may not have the awareness or knowledge from 11% to 19%.
of the sector, they can be convinced of the benefits.
As customers’ perception of Islamic banking continues
While overall, respondents said they were more likely to to improve, there is clear evidence from the Islamic
subscribe to a conventional banking product in the next six Banking Index of what Islamic banks must do to encourage
months than an Islamic product – 40% versus 38%, when consumers to shift from conventional banks. 40% of
it comes to individual products, people were more likely to non-Muslims said better rates and pricing would encourage
choose an Islamic product. The potential for respondents to them to shift to Islamic banking, while 15% said better
subscribe to individual Islamic banking products has gradually customer service was the priority. For Muslims, 28% said
increased since 2015, with current accounts seeing the better rates and pricing would encourage them to shift,
largest increase at 8%. The increase in potential to subscribe while 20% said better customer service was most important.
to individual Islamic products was larger than for conventional
33
28
18
13
Better Customer Better Digital Better Rates and Better Product All of the Factors
Service Technology Pricing Range
28 28
20
14
10
Better Customer Better Digital Better Rates and Better Product All of the Factors
Service Technology Pricing Range
40
28
15
11
6
Better Customer Better Digital Better Rates and Better Product All of the Factors
Service Technology Pricing Range
Page 13
Conclusion
The 2019 ISLAMIC BANKING INDEX by EMIRATES ISLAMIC™ Consumers have the opportunity to choose from any
shows the progress already made and the potential of number of financial resources at the click of a mouse button
Islamic banking in the UAE. Islamic banking products now or the tap of a smartphone, and our Index shows that
reach three out of five respondents or 60%, but there is customers’ interests lie ultimately in the bottom line, with
still some way to go before awareness of Shari’a-compliant better rates and pricing being the most cited reason that
finance reaches the same level as that of conventional would tempt them to shift their finances from conventional
products. This is something that Emirates Islamic, as a to Islamic banks. But, as the eyes of the world focus on the
leading Islamic bank in the UAE, will seek to address in the UAE for Expo 2020 Dubai, we have a unique opportunity to
coming years. reach an audience of millions. We have shown consistent
growth of the Islamic banking sector over the past five years,
While responses from non-Muslim consumers suggests and it is now time to look forward, to a bright future at the
that there are categories under which conventional banks heart of global finance.
are preferred, for example, in terms of having efficient
and convenient online banking and services according
to customers’ needs, they consider Islamic banks to have
low transaction fees, offer the best rates for borrowing/
financing and be trustworthy, which illustrates the market
potential of Islamic banking to all types of customers.
Page 14
A white paper on the Findings of the
“ISLAMIC BANKING INDEX by EMIRATES ISLAMIC™“ 2019
Published in 2019 by Emirates Islamic
Copyright © 2019 Emirates Islamic www.emiratesislamic.ae
All Rights Reserved
Content from this document may be re-published,
provided clear citing of ISLAMIC BANKING INDEX
by EMIRATES ISLAMIC™ as source.
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