Islamic banking popularity is growing among the UAE residents and has reached almost the same level as conventional banking this year, according to the annual survey released by Emirates Islamic Bank on Sunday.
The findings revealed that the penetration between the Islamic and conventional banking products in the UAE has narrowed to just one per cent. As many as 61 per cent of the residents said they have a conventional product compared to 60 per cent who have an Islamic product.
Islamic banking has been growing in popularity in the UAE since 2015, increasing from 47 per cent in 2015 to 60 per cent in 2021. Conventional banking is on a downward trend in the same period, falling from 70 per cent to 61 per cent.
Islamic banking products such as auto finance and saving accounts are popular than conventional banks' products while personal finance products are equally popular for both the segments of the banking industry. In comparison, conventional banks continue to lead for credit card and current account products. Shariah-compliant lenders' products are understandably quite popular among Muslims in 2021 as conventional banks' popularity has declined from 59 per cent in 2020 to 54 per cent in 2021 while the penetration for Islamic banking products increased by two percentage points from 69 to 71 per cent.
Among non-Muslims, the penetration of Islamic banking products increased by 5 percentage points to 45 per cent in 2021, highlighting the growing appeal of Islamic banking among the larger population.
Nearly half – 48 per cent – of the UAE residents who took part in the survey said they prefer Islamic banks more since the onset of the pandemic, up from 45 per cent in 2020.
"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," said Wasim Saifi, deputy CEO for 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 wants 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," said Farid Al Mulla, deputy head of consumer banking and wealth management at Emirates Islamic.
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