This was a fascinating article. I am a bit interested in Islamic Finance. It provides a fascinating alternative to the currently held normal rules of investing and financial behaviour. Although I have my serious doubts about the “practises” of pricing Islamic instruments, the concept is quite interesting. A Muslim Private Equity sector so to say. So from that perspective, I agree with what the author says:
1. The size of the prize.
The global Muslim community, the ‘Ummah’ is huge – nearly 1.8 billion people around the world. The majority of those people are in Asia, particularly South and East Asia. It’s also a very young demographic – 52 per cent are under 24 years old. Author Vali Nasr has described this as ‘the third one billion market’ after China and India. However it has been widely neglected and has massive economic potential.
There are actually very few products that you can pitch to this entire population. So that has to be very clear. I cant say anything about Islamic Shampoo’s but what I can talk about are financial products. So the products that one can think about in this area are travel insurance, pilgrimage loans of a sort, basic mortgages, project financing, letters of credit, etc.
2. Don’t believe stereotypes.
Modern Muslims are going through a major period of re-assessment of their relationships with religious structures, cultural assumptions, authority, consumption and technology. This can be quite confusing for observers. A move towards conservatism in dress, for example, does not imply a rejection of hi-tech lifestyle items. They are often highly technically literate but at the same time do not see accepting Western technology as a reason to accept ideas they see as wrong.
This is nothing new, from time immemorial, Muslims have constantly reassessed their relationship with religious structures and frameworks. This is one of the reasons why so many sects of Islam have come forth. Also, I am not sure what this western technology is. Is Japanese technology western technology? How about the tech developed by India? This is a bit of a weird statement. And ironically, the chap warns against stereotypes and then proposes 5 rules/statements for the global muslims.
3. Tokenism doesn’t work.
Stamping products as Halal or Shariah-compliant is not enough. In fact our research shows that despite all the investment in Shariah banking, finance is seen as the least trusted category. Muslim consumers are highly interested in the authenticity and provenance of brands and the companies behind them. Their trust is therefore difficult to win, but once achieved is likely to be deeper.
This is indeed problematical. We dont have that many people who are cognisant of all the intricacies of finance versus Sharia. Then you end up in the problem of different sects. So there is over-reliance on a very few number of people who judge the authenticity and provenance of brands. Does that work to endanger trust? Sometimes.
4. It’s an open market.
You don’t have to be Muslim to be Shariah. Only 10 per cent of Muslim consumers cite manufactured for Muslims only as an important attribute when selecting brands. Ethics and business practice are perceived as more important.
5. Engage strongly, but carefully.
The Muslim community is very open to marketers who seek their custom, so long as they feel it is done sincerely and honestly. However they are also fiercely protective of their religion and its culture, and very unforgiving to marketers who make mistakes or are seen to be hypocritical in their standards. There are many cases of bad errors in packaging, promotion and business practice.
Well, this is a matter for faith. When somebody asks me about Islamic Finance, I tell them to think about organic food. Its the same thing, for want of a different flavour, people are willing to pay more in a premium. But if the food turns out to be inorganic, trust is diminished and the stuff wouldnt sell.