Malaysia's millennials, Gen Z lead in Islamic banking - Report

KUALA LUMPUR - Millennial and Generation Z (Gen Z) Muslims in Southeast Asia are increasingly embracing Islamic banking, with 77 per cent of Malaysians and 65 per cent of Indonesians surveyed using it alongside traditional banking, compared to only 31 per cent globally, according to a report.

A study conducted by Mambu -- a leading Software-as-a-Service (SaaS) cloud banking platform -- revealed that Malaysia also boasted the highest proportion of consumers who only use Islamic banking (42 per cent), compared to just over a quarter (26 per cent) of global respondents.

The report indicated that across all regions, 85 per cent of consumers who are not currently using Islamic banking express interest in doing so, with the percentage increasing to 92 per cent in Indonesia.

Mambu Asia Pacific (APAC) market sales director Colin Kum said APAC represents around 25 per cent of the global Islamic finance market, with Malaysia emerging as the clear leader in the region.

"This research highlights consumers’ growing interest in Islamic banking and clarifies that banks have to embrace Syariah-compliant products and services to serve new and existing markets.

"A continued focus on technology is also crucial for banks, with 92 per cent of respondents calling out the importance of their Islamic finance provider offering online banking options,” Kum said in a statement.

Mambu's research, initially conducted in 2021 and repeated in 2024, surveyed over 1,500 Muslims aged 16 to 40 across the United Kingdom, South Africa, the United Arab Emirates, Saudi Arabia, Malaysia, and Indonesia.

The findings were compiled in a report titled 'Beliefs & Business: The Shape of Islamic Finance in 2024'.

The report also underscored Malaysia's dominance in Islamic banking, highlighting that millennials and Gen Z Muslims in Malaysia have a much higher awareness of the range of Islamic banking services (65 per cent in Malaysia compared to 53 per cent globally). - BERNAMA