According to recent data provided by leading SaaS cloud banking platform Mambu, 85% of Muslims in Generation Z proactively wish to explore Islamic banking.

The information was obtained during a follow-up survey by Mambu with participants aged 16 to 40 from the UK, South Africa, the UAE, Indonesia, Malaysia, and Saudi Arabia. The first study was performed in 2021.

According to its 2024 research, more Muslims in Generation Z than ever before are eager to bank with a financial institution that provides Shariah-compliant goods.

Despite the challenges associated with obtaining Islamic banking, one-fifth of those polled even stated they would like to try it.

Mambu: Weaknesses of Islamic Banking

Beliefs & Business: The Shape of Islamic Finance in 2024, a research by Mambu, may hint at a different future in which Shariah-compliant goods begin to proliferate the market in response to rising demand.

But currently, a sizable 39% of Muslims are unaware that Islamic banking is an option. This occurs at a time when 28% of Muslims find it difficult to obtain a bank that follows Islamic law.

In fact, 25% of Muslims who have found a bank believe that their bank has to do more to provide services that completely comply with Shariah, and 18% don't believe that their bank will keep its compliance pledges.

According to Omar Paul, SVP of Product and Engineering at Mambu, our financial decisions are influenced by our worldview. The possibility for financial institutions to provide Shariah-compliant financial products in response to evolving customer demands is becoming more and more apparent.

It should come as no surprise that this is supported by our most recent study, which shows that 83% of respondents—up from 74% in 2021—want the investments their bank makes with their money to be consistent with their religious views.

"In order to meet the growing demand for both Islamic and ethical banking, banks must assess their portfolio and raise awareness of the financial options available."

Will the number of Shariah-compliant items increase?

According to Mambu's research, Muslims are still underserved even if there is a demand for financial products that comply with Shariah.

With a record number of Gen Z Muslims looking for Islamic banking, banks may be able to enter this market by offering goods that adhere to Shariah.

According to Mambu's study, 31% of Muslims in the UK who are millennials and Gen Z now use traditional or investment banking, but they would switch to Islamic banking if it were more readily available.

Naturally, banks must first educate and teach Muslims about Islamic Banking's viability before they can implement Islamic Banking. About 44% of respondents to Mambu's surveys in Saudi Arabia and the UK, respectively, said that they don't utilize Islamic banking because they were unaware that it was an option.

Nonetheless, a few banks have defied the trend in recent times. In 2021, Boubyan Bank launched Nomo, an Islamic digital bank brand, into the UK market in response to the increasing demand for solutions that adhere to Shariah.

Though some banks might believe there isn't enough of a market for Islamic banking services, Muslims in their millennial and Gen Z generations still place a high priority on moral and religious principles.

According to a Mambu research, 82% of Muslims in these generations believe it is critical that banks use their profits to make investments that benefit society.

We examined the emergence of Shariah-compliant applications and how they are bringing in a new investor base in December 2023.