How ‘Islamic’ are bank customers?

THE issue how ‘Islamic’ are bank customers? is a key issue of Islamic banking.

I classify bank customers into three. The first group is members of society who opt Islamic banking products without questioning their Islamicity (i.e. the halalness). They believe it is a purely halal for mardhatillah.

The second group is members of society who question the Islamicity of Islamic banking products. Snakingly, they are not patronising them and the hidden enemy. The second group is members of society who do not care about the term Islamicity. They choose the products provided they are convenience and accessible.

I have also seen some individuals who are easily manipulated by an evil-intent person who aims to create division and isolation to the detriment of Islamic banking. The problem, however, is pinpointed by small group of individuals who confuse with respect to their Islamic banking knowledge. This group creates an unsymmetrical information by disseminating fallacies that have a profound impact on social media. Everyone is easily divided on the media. What one posted on social media remains in cyberspace, inferring the permanency of the digital footprint. Who cares? Some say it is an e-democracy.

Three questions are explained as follows.

Q#1- What are criteria to call an individual as an Islamic consumer?

Q#2-What are differences betweenthetermIslamicconsumer and conventional consumer?

Q#3-Can ‘Islamic’ bank customers establish?

Idyllically, bank customers are of key contributing factor for the profit generation of Islamic retail banking operations. Just imagine, a bank with a total customers of 3.5 million is able to generate a fee-based income of MYR1.75 million as if the bank imposes an ATM transaction fee of MYR0.50 annually. In 2016, an ABC Bank of Malaysia (i.e. not real name) reported a 73 percent of total financing segments were sprung from a consumer segment. This is confined to household segment instead of consumer or corporate segment. This assertion suggests how important the consumer segment to the bank is.

Likewise, bank customers who keep on criticising Islamic banking are somehow not comfortable with themselves that takes away their whole ‘self-acceptance’ platform. Every new and good thing is viewed as an enemy of their receptiveness. This issue is controllable if their fallacy remains within themselves but the real fear is when it is shared on social media where ‘addition’ is made plausible at the price of newcomers. Overtly, there are many people out there who are believing in it.

The term ‘Islamic consumer’ is a user who considers the rules of Islamic consumerism to undertake any decisions of patronising products and services. In other words, the term may loosely refer to a person who opts or buys goods and services for personal use where Shariah is brought into play. In the current context, however, the term may refer to an individual who elects Islamic banking products owing to the religion conviction.

Considering the criteria, I provide five but are not confined to:

#1-God fearing. One does what God loves and avoids what God hates, someone who sacrifices he owns to please the Almighty. He prefers to avoid ribawi transactions for an improved religious well-being.

#2-Congruency. One has a uniformity between what he is saying and what he is doing that symbolises his intent, saying and action are merged and go as one. He is compatible with God.

#3-Islamic vision. An Islamic consumer has a vision to follow on what is true and what is permitted by the Quran and the Hadith. He is not described by laymen as ‘follower-person type’ but instead ‘leader-person type’.

#4-Halal loving. One who loves halal goods or services has a tendency to seek halal products at their best for consumption. He discerns good from evil and who has the Islamic consumption, investment and spending.

#5-Islamic Ihsan. One who is an Islamic consumer thinks of other good. He considers others in his decision. He may feel offended if he does not share his wealth with family members and others. Otherwise he is a materialist.

Pertinent the second question, three indicators are expounded. The first one is on an Islamic worldview that is rooted in the mind eyes of Islamic consumers. Conventional consumers, instead, are captured by a traditional worldview that sees nature as an enemy to be conquered. For instance, as analogy, many lost their lives every year for conquering the Everest (because of prides). In the banking sector, one sees exploitation is a means to get more profit from customers. The second one is on ownership. Islamic consumers see everything is owned by Allah (SWT) while their peers argue one as an absolute owner. In Islam, we own our clothes, foods and charity deeds only. The third one is on brotherhood. Helping others and respecting each other are amalgam together with a balanced consumption, spending and actions of worship in the count of hasanat. Hasanat means good deeds are rewarded by Allah (SWT). Such an implication is truncated in their conventional counterparts.

Of course, the issue of how ‘Islamic’ bank customers is a key missing dimension that requires a focus. In fact, however, a focus is heavily given to how ‘Islamic’ is Islamic banks. Both should go together for an impact of the industry where the consumers’ demand and Islamic banks’ supply are in congruence to help the nation to achieve a 40 percent market share by 2020. Is it possible? Primarily, customers need to obliterate their fallacy and ignorance. What is more, today action determines future result. Henceforth, the inclusion of customers’ opinions in all product developments are of help to bring up the banks to the top. However, are Islamic banks cogent to capture ‘Islamic consumer’ in their lists? Is there any strategy to shape it?

Moreover, a challenge ahead for Islamic consumer is on defining bank customers according to the products’ consumption. The Islamic banking products are typically of three. Shariah based, Shariah compliant and pseudo Islamic. What we have in the market is relatively the second two. For instance, tawarruq home financing is under pseudo Islamic. Can we call a person as an Islamic consumer if he opts tawarruq home financing? Else, can we call a person as an Islamic consumer if he consumes all types of products? Fallacies are also of growing as the governing Shariah principles used for products are different from one bank to another. More works needed to shape a better conception of the term Islamic consumer.

Taken as a set, consumers are of significance to impact the profit earned by Islamic banks in addition to an improved customer base. At first, Islamic banks should incorporate the Islamic finance culture (iFC) in their product offerings where customisation, a continuous financial education and Islamic norms are upheld. In turn, the sufficiency of this culture can help to give a birth of ‘Islamic’ bank customers who are not only patronising Islamic banking products but also ‘educating’ others to patronise, a contributing factor that leads Islamic banks to an improved survival and better growth, at least.

*The author is an Associate Professor/Dean at the Labuan Faculty of International Finance, Universiti Malaysia Sabah, Labuan International Campus. He has a PhD from the International Islamic University Malaysia (IIUM) in Islamic Banking and Finance (PG310163). He can be contacted at hanudin@ums.edu.my