The industry needs two major requirements before it can enter the major growth phase:
- Products and services need to be consumer-driven, rather than product-driven, and
- The quality of products needs to be on par with, if not better than, conventional products.
The Muslim community living in Australia are exposed to an array of conventional financial products which not only cater to consumer needs but can also be customized for individual requirements. With the introduction of highly qualified and experienced Muslim entrepreneurs and professionals into the Islamic financial services industry in Australia, we are beginning to see better quality services and products which comply with Shariah standards and are on par with conventional products and services.
Performance is being driven with more market share obtained from conventional products and services providers; however, the evolution is seen in the transition currently being made from product-driven to consumer-driven within our community. I have personally seen this transition in the past two years, where Muslims are now conducting their own research into providers and then making their own informed decisions. This is a pleasant development from the past where they would simply be making decisions on which product was better sold to them. This is a real indication of a market developing and approaching the growth phase. This can begin to not only allow current quality providers to leverage, but also ensure that Muslim consumers do not simply follow blindly into inferior products and services.
The Muslim community is growing the fastest in Australia at approximately 9% year-on-year, with almost 10% of all skilled migrants being of the Islamic faith. This allows organic growth in the client base, ensuring a bullish trajectory for years to come. Islamic financial services providers within Australia need to ensure the key performance driver is not just a generic growth rate, but that Muslims are actively seeking their services and products off the back of good feedback, client research, and superior products.
Regulatory constraints and tax issues
I am a true believer that a genuine entrepreneur never makes excuses, but the only find solutions to challenges. In my opinion, there has been too much talk on regulatory constraints and unfavorable tax laws which hinder the growth of the Islamic financial services industry in Australia, and western countries in general. Yes, it is true, in an ideal world, all regulations will assist in the marketability of Islamic financial products, but until this transpires, we need to stop making excuses, and become problem-solvers and solution providers.
The conventional market has over centuries continuously innovated as a result of constantly changing laws and compliance by regulators and politicians. Financial institutions have always required product development to ensure competitiveness within the industry — this is the norm in all industries globally. We as Islamic financial services providers cannot just make excuses that the laws are unfavorable, and just sit on our laurels with inferior products and services. The Muslim community deserves quality products and services, and if this means that providers who do not wish to find solutions and innovate within the guidelines of Shariah are eliminated from the market, then so be it as this is beneficial for all Muslims.
This will ensure that qualified individuals and organizations remain competitive in the Islamic financial services space. The Islamic community will eventually be the real winner, where they will be invested in highperforming investment funds and take loans that do not disadvantage them because they want to conform to their religious beliefs. There is no mountain that is unclimbable, hence tax laws and regulations should not stop the true believer from obtaining quality Islamic products and services.
Laws and regulations are constantly evolving, therefore sometimes they will change and benefit product developers and sometimes they will make it more difficult. However, one thing should always remain: the end user should always be provided with a better product.