Launching new propositions brings many learnings

Paul Stockwell, Chief Commercial Officer

Whenever a financial organisation launches a new product, despite all the research and insight they have carried out, there is that sense of nervousness as they wait to see how it will be received.

When you occupy a relatively young category in the UK— like Shariah-compliant finance — that concern is increased because every product involves convincing people to consider and choose something new.

In our case that goes for many Muslim consumers too. While many of the UK’s 3.3m1 Muslim community would prefer Shariah-compliant products, they have for years had to settle for conventional finance in the absence of any real choice or products that fit their religious needs.

So in December when we piloted our first Home Purchase Plan, a Shariah-compliant mortgage alternative, we had a good idea who our proposition would appeal to. However, we have been surprised by the strong response we have seen.

Experience tells us that no amount of market research can guarantee how a new financial product will be received. In the end, it is always the market that decides and that can either be exciting or depressing, depending on the response.

We are fortunate enough to have been positively surprised by the reaction to our home purchase plan proposition.

When we first rolled out Home Purchase Plan, the generally accepted view was that the main audience would be members of the UK Muslim community but we knew there were good reasons why others might be interested. We resolved to encourage customers with diverse backgrounds to consider the benefits.

We took the decision to also offer our service to UK expats and international residents looking for a home.

Demand from all quarters was a major factor in the bank accelerating the development of a wider range of products. In fact, the first major evolution of Home Purchase Plan occurred last month, well ahead of schedule.

Something else we didn’t see coming was the extent to which non-Muslim consumers would be attracted to our offering although, of course, we had hoped this would take place.

Why? The answer lies in the UK’s global workforce which means just over 4.9m Britons live abroad2. Many will continue to have strong financial ties to the UK and represent a huge opportunity for UK institutions. Despite this, expats have been under served in recent years and there are a few reasons for this.

Some institutions have focused on domestic markets as regulatory requirements have become more demanding and therefore more expensive to administer. KYC checks on those overseas can be more difficult and, because those overseas can often have less conventional earnings patterns, they can struggle to meet the current affordability criteria introduced since the financial crisis.

All this meant that when our Home Purchase Plan product for expats went live in December, a captive audience was waiting for us.

A failure of other providers to satisfy demand in this market has forced them to consider other options.

Brought to us by necessity, many of these customers are now far more aware of what Shariah-compliant finance has to offer, more comfortable with the linguistic differences and a great many will no doubt embrace other Shariah-compliant products in the future.

Conventional banking’s loss will hopefully be our gain.


2United Nations

This blog was featured on Specialist Banking.