Perceptions and Experiences of British-Based Muslims on Islamic Banking and Finance in the UK

The purpose of this study is to critically examine the perceptions, experiences and expectations of British-based Muslims on Islamic Banking and Finance. Many academics have examined the phenomenon of Islamic banking by exploring the growth of the industry, investigating selection criteria and evaluating institutional performance. Many studies analyse the attitudes of Muslims and non-Muslims towards Islamic banking from a finance perspective, ignoring theological debates and insights from critical perspectives. This thesis attempts to fill the gap in the literature by engaging in critical debates among ordinary Muslims, Islamic scholars and Islamic banking employees in an attempt to gain insights so that Islamic banking practices can be improved to serve the disadvantaged.

In the past, philosophers have used critical theory to engender change in both society and culture. Critical theory aims to liberate human beings from the circumstances that enslave them while challenging injustices and inequalities in contemporary society and calling for a new empowering democracy that could serve the needs of neglected groups through satisfying accountability. Thus, critical theory using its immanent critique can help challenge the social realities of Islamic banks in replacing extant inaction based on the false correspondence between Islamic values and Islamic banks’ operations with emancipatory praxis, aimed at making the ideal real.

To achieve these objectives, a mixed-methods approach was employed involving the employment of semi-structured interviews with 25 Muslims around the UK to ascertain their views and attitudes towards the practices of the nation’s Islamic banks. Questionnaire surveys were distributed to cover a wider sample of Islamic scholars from UK mosques and employees within British branches of Islamic banks to explore their perceptions and views on practices and factors contributing towards the growth (or lack of growth) in Islamic financial services in the UK.

The results of the interviews indicate that the majority of Muslims are unhappy and unsatisfied by products and services of Islamic banks in the UK. The criticisms include: concern about the cost of products to conventional ones; a lack of advertising, focus on the rich in society and the “twisting” and “rebranding” of the names of products to produce Shariah-compliance; the absence of efforts to achieve social justice and equality in the society; and employing the same Shariah scholars across Shariah-boards, thereby reducing opportunities for newer and younger scholars. However, the main perceived potential advantage of Islamic banks is the satisfaction of knowing that investments will not be used to fund “unethical” projects. The Muslims taking part in this study also showed a strong need for ‘Ijtihad’ by Islamic and Shariah scholars in order to remove any doubts and easy understanding of Islamic financial products.

The results of the questionnaires indicated that the views of Islamic scholars were similar to those of Muslims living in the UK. However, the evidence reveals a lack of trust regarding Islamic banks’ actual practices v.v. what they claim to do, as well as a degree of misconception among non-Muslims over Islamic banking activities. Whilst the scholars and Muslims taking part in the study expressed a need for specialised products for women, children and young entrepreneurs, the banking employees indicated a lack of understanding of Islamic products among Muslims and a lack of qualified Shariah scholars in the industry to be the main issues. The latter group called for more cooperation between Islamic scholars and the Islamic banking industry to overcome the problems, whilst strongly calling for ‘Ijtihad’ so that the voices of underprivileged Muslims can be heard better.