People are becoming more aware of green and ethical finance than before the pandemic, research from a lender has found.
A study from Sharia-compliant lender, Gatehouse Bank, showed that among people aged between 18 and 24, 83% were familiar with Islamic finance, which has ethical lending values.
Islamic lenders do not charge interest on home loans and do not invest in sectors that do not align with their values such as gambling or weapons.
By comparison, just a quarter of people aged 18-24 knew of Islamic finance in 2019.
Among people aged 45-54, 44% are aware of Islamic finance and 26% of people aged 55 and over have knowledge of this type of finance.
Overall, Gatehouse Bank’s research found 63% of people in the UK had awareness of ethical finance and 57% knew of green finance.
The research found knowledge was higher among those of the Muslim faith, with 81% knowing about ethical finance and 72% being aware of green finance.
Further, 41% of Muslim consumers said Sharia-compliant finance lenders were more transparent and ethical because they did not invest in harmful industries.
In contrast, some 44% of non-Muslim people 44% knew about ethical finance and 43% knew of green finance.
Misconceptions around Islamic finance remain
The Gatehouse Bank study found consumers still had misconceptions about Islamic finance, as 35% of non-Muslim respondents and 26% of Muslim respondents believed Sharia-compliant finance was only available to people of the Muslim faith.
The lender also identified areas of opportunity, finding that 51% of Muslims had never taken out a home purchase plan and 41% had never used Islamic savings accounts.
For just under a fifth, 19%, of non-Muslim respondents, a lack of understanding around how Islamic finance worked prevented them from using the products.
Charles Haresnape, CEO at Gatehouse Bank, said: “The familiarity with ethical and green finance among UK consumers of the Muslim faith reflects the interconnectedness of Shariah principles, community support and environmental stewardship. In turn, this presents a unique opportunity for financial institutions to cater to an increasingly conscientious market.
“However, the research still underscores a critical gap in accessibility and education around Islamic finance for consumers from other faiths or from non-faith backgrounds. By addressing these barriers and misconceptions, we can unlock significant potential for even more growth in the Islamic and ethical finance sector, making sustainable financial products available to a much wider audience.”
Andy Homer, chief customer officer at Gatehouse Bank, added: “It is encouraging to see growing awareness of alternative finance options among UK consumers of the Muslim faith, as well as an appetite to learn more about these products among non-Muslim consumers.
“At Gatehouse Bank, we have observed consumers’ willingness to align their financial goals with their ethical values first-hand, with nearly nine in 10 (87%) of our savings customers citing tree-planting as a key driver for opening a Woodland Saver account. This demonstrates a strong desire for sustainable and ethical products across diverse customer segments, even if more work needs to be done to further bridge the knowledge gap.”
Shekina is the deputy editor at Mortgage Solutions and commercial editor at Mortgage Solutions and Specialist Lending Solutions. She has nearly eight years of experience in the B2B publishing market, having previously covered the hospitality, retail, pet, accounting and jewellery sectors.
Shekina has worked for Mortgage Solutions and Specialist Lending Solutions for almost five years. Here, she covers the market’s breaking news stories, engages with professionals in the sector, and oversees any commercially agreed content in partnership with mortgage-related companies.
This includes presenting webinars and hosting roundtable discussions on developing themes in the mortgage sector.
She is an NCTJ-trained journalist and was nominated for the Headline Money Awards Mortgage Journalist of the Year in 2021.
In her spare time, Shekina likes to read, travel, listen to music and socialise with friends.
She currently reports on current events in the mortgage market and liaises with financial clients to produce sponsored content.
Follow her on Twitter at @ShekinaMS
