Non-Muslims often wonder if they can use Islamic finance as their alternative. Here we briefly explain the development of Islamic finance and why it should not be an issue for non-Muslim to use Islamic Financial services.
Islamic Finance is a relatively new phenomenon and it has a quite interesting history. In Egypt, the first bank started operating in 1963. Iran, Saudi Arabia, Malaysia, Europe, the United Kingdom are key centres of Islamic Banking around the world. Islamic Finance is quickly expanding. Its rapid expansion reflects a huge interest among Muslims that has initially been underserved by the conventional banking industry. Many Islamic Banks have had double-digit growth rates for the previous two decades, outpacing their conventional counterparts. In 2017, the industry’s entire worth was projected to be $2.05 trillion across its main three areas: banking, capital markets, and takaful.
As Islamic Banking operates according to Islamic principles, the majority of people associate Islamic Banks with Islam and Muslims. In other words, Islamic Banks cater and serve Muslims exclusively while people from other religions or non-Muslims unable to deal with them. This viewpoint is unquestionably wrong and requires clarification.
Can non-Muslims use Islamic Finance?
Non-Muslims can save money, borrow money, and use Islamic Bank’s services; they can even work there. Islamic Banking is quickly expanding around the world, not just in Islam-majority nations, but also in non-Islamic countries such as the United States, Singapore, and the United Kingdom. There is a tremendous growth of Islamic Finance and Banking, although they are not Islamic countries. Non-Muslims account for 15% of Islamic Bank customers in Malaysia. This obviously demonstrates the importance of Islamic banks among non- Muslims.
Although Muslims are the major customers of Islamic Finance providers, there are some reasons for non-Muslims to join as well. Islamic Finance services are not only competitive, but they might even be more appealing than conventional ones.
Islamic banks are conventional banks that comply to two principles:
- They do not receive or give funds in the form of lending; instead, they take and give money on the basis of sharing, selling, or leasing.
- They do their business in a morally responsible manner. Casinos, liquor, cigarettes, and other non shariah compliant activities, for example, are not acceptable to get the financing.
Conclusion
Growth in recent years is proof of the bright future of Islamic Finance. Islamic Finance should not be an issue for non-Muslims to use its services. Its solid ethical principles, combined with strong performance, have made it a viable alternative for smart investors to explore and diversify.
Islamic banking serves the same function as conventional banks, with the exception that it follows Shariah’s laws, known as fiqh Al-Muamalat (Islamic transactions rules). There is no doubt that both Muslims and non-Muslims can use Islamic finance without any distinction.
However, Islamic Financial banks still have work to do as competition heats up. Strategic decisions and focus on operational basics need to be evaluated continuously to capture untapped market opportunities and overcome the shifting dynamics of the industry. Islamic Finance is going to flourish more as long as highly dedicated people with hybrid qualifications such as Shariah understanding and good financial knowledge operate within the industry.
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