Www.assenti-research.co.uk Shariah Compliant Credit Union Product Research Presentation of Findings Prepared for: DWP Financial Inclusions Champion Initiative

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Shariah Compliant Credit Union Product Research

Presentation of Findings

Prepared for: DWP Financial Inclusions Champion Initiative (West of Scotland)

Date: June 2010


Assenti Research commissioned to establish interest in a Shariah compliant credit union product among Glasgow’s Muslim population

Key research objectives to determine: Current usage and attitudes to financial products and services Knowledge and understanding of Credit Unions Interest in a Shariah Compliant Credit Union account and products

Background & Objectives


Quantitative approach was used - 206 face-to-face interviews conducted in Glasgow

All interviewing was undertaken by Taylor Mackenzie

All respondents practicing Muslims and financial decision makers

Loose quotas were set on age to ensure that the sample reflected the local Muslim population.

Analysed using Snap

Method & Sample


Final Sample Structure – Age Quotas

Quota

%

Achieved

%

Quota

No of Interviews

Achieved

No of Interviews

16-24 26 24 52 50

25-34 29 32 58 66

35-59 37 33 74 68

60+ 8 11 16 22

Total 100 100 200 206


Demographic Profile


Gender: 61% male, 39% female

Age: Reasonable spread of ages – Minority in the 60+band (11%)

Employment: Two thirds (68%) in employment full time /part time or self employed. 16% looking after family

Majority (90%)have more than one adult in the household-

Majority are families with children (82%)

Over half (59%) in rented accommodation private or social, a third (36%) owner occupier

Summary of Demographics


61% male and 39% female

Age and Gender

Age

11%

33%

32%

24%

0% 5% 10% 15% 20% 25% 30% 35%

60+

35 - 59

25 - 34

16 - 24

Base: 206


Adults in Household

Number of adults in household

8%

19%

21%

19%

23%

9%

0% 5% 10% 15% 20% 25%

Six +

Five

Four

Three

Tw o

One

Base: 206


Majority have children under 16 (82%)

Number of children (under 16) in household

Number of children (under 16) in household

8%

29%

29%

16%

18%

0% 5% 10% 15% 20% 25% 30% 35%

Four

Three

Two

One

None

Base: 206


Employment Status

%

Employed (full time or part time) 54

Self employed (full or part time) 14

Looking after home /family 16

Full time education 9

Unemployed and available for work 3

Retired 3

Permanently sick /disabled 1

Base: 206


Housing Status

Housing Status

4%

39%

20%

36%

0% 10% 20% 30% 40% 50%

Other

Rent private

Rent social

Ow ner occupier

Base: 206


Financial Decision Maker

Who makes financial decisions?

3%

19%

42%

35%

0% 5% 10% 15% 20% 25% 30% 35% 40% 45%

Me & other family

Me & parent(s)

Me & partner

Only myself

Base: 206


Current Financial Product Holdings Yes

(%)

No

(%)

Current Account (Bank or Building Society)

81 19

Insurance (Home contents etc) 36 64

Mortgage 35 65

Savings Account (Bank or Building Society)

33 67

Credit card 29 71

Personal loan from a family member 16 84

Bank Loan 9 91

Personal Loan from a friend 5 95

Credit Union Account 2 98

Base: 206


No of adults with bank/CU account v’s no adults on household

No. adults w ith no bank/CU account v's no. adults in household

8%

19%

17%

13%

15%

14%

14%

8%

19%

21%

19%

23%

9%

0% 5% 10% 15% 20% 25%

Six +

Five

Four

Three

Tw o

One

None

Base: 206

No. adults

No. adults no bank/CU


Credit Card Usage

Agree Disagree Don’t Know

% % %

I pay off my balance every month

83 17

I use my credit card to help me spread out payments for large purchases

32 68 -

I don’t pay interest on my credit card

60 38 2

I use my credit card to help me juggle my finances

62 36 3

Base 60


Reasons for self/other adults in household not having bank account

Reason Single Most Important reason

No need 70 62

Not compliant with Shariah Law 28 15

Language Problems 24 4

Don’t have regular income 18 11

Don’t trust banks 7 6

Convenience 3 1

Can’t empty the account when I need to

2 -

No banks or credit unions near my home

- 2

Base 178


Value of Current Savings

Value of current savings

39%

36%

6%

3%

4%

12%

0% 10% 20% 30% 40% 50%

Refused

£5k+

£2-£5k

£1-£2k

£500-£1,000

Less than £500

Base: 69 (Those with savings)


Usual method of bill payment

Usual method of bill payment

3%

4%

9%

24%

47%

73%

0% 10% 20% 30% 40% 50% 60% 70% 80%

Other

PayPoint

Cheque

Standing Order

Direct Debit

Cash

Base: 206


Sources used to meet unexpected bills

Up to £500

£500-£1000

£1001-£2000

>£2000

% % % %

Borrow from friends/family

54 74 76 78

Bank loan 5 7 11 12

Credit card 8 5 5 6

Borrow from an unlicensed loan provider

1 2 3 5

From existing savings

41 27 23 21

Base 206


Ever taken a loan from a non–regulated source

Ever taken a loan from non-regulated source

21%

16%

3%

59%

0% 10% 20% 30% 40% 50% 60% 70%

Yes, longer ago

Yes, 2-5yrs ago

Yes, in last yr

No, never

Base: 206


Relative importance of financial product features

Very

important

Quite

Important

Neither

Nor

Not very important

Not at all important

% % % % %

Interest charges

63 22 16 - -

Trust 52 30 18 - -

Compliant with Shariah Law

44 33 18 3 1

Location of service provider

21 42 24 13 -

Used them before

30 35 32 3 -

Base 206


Knowledge and attitudes to Credit Unions


Knowledge of credit unions

Do you know what a credit union is?

17%

43%

40%

0% 10% 20% 30% 40% 50%

Not sure

No

Yes

Base: 206


Knowledge of credit unions

True False Don’t know

% % %

You can save and borrow money with a credit union

78 3 19

Credit unions are just like banks 42 40 19

You can repay a credit union loan early without a penalty

60 8 32

You have to have savings to take out a loan

58 8 34

I don’t know much about credit unions

18 53 28

Base: 118


Interest in Shariah Compliant Credit Union Product


Interest in a Shariah compliant credit union product

Interest in a Shariah compliant credit union product

6%

10%

15%

41%

28%

0% 10% 20% 30% 40% 50%

Not at all interested

Not very interested

Neither nor

Quite interested

Very interested

Base: 206

Reasons for interest:borrow/save within confines of Shariah Law (97%), money would be safe (57%)


Reasons for not being interested in Shariah compliant credit union product

Reasons for not being interested in Shariah compliant credit union product

25%

35%

51%

0% 10% 20% 30% 40% 50% 60%

Wouldn't use anorg I don't know

Don't trust anyoneelse w ith my

money

Not concerned w ithbeing Shariah

compliant

Base: 63 (Those not interested)


Preferred locations to access Shariah compliant credit union product

Preferred locations to access Shariah compliant credit union product

11%

17%

24%

41%

41%

73%

100%

0% 20% 40% 60% 80% 100% 120%

Housing Association

Local Council Off ice

PayPoint at a local shop/post off ice

Credit Union off ice in city centre

Online

Community Centre

Mosque

Base: 143 (Those interested)


Should Shariah compliant credit union be authenticated

Should Shariah compliant credit union account be authenticated

1%

5%

21%

76%

0% 10% 20% 30% 40% 50% 60% 70% 80%

Muslim credit union off icial

MP/local councillor

No need

Imam of local Mosque

Base: 206


Interest in other Shariah Compliant Products

Interest in other Shariah compliant products

20%

1%

7%

25%

41%

5%

20%

3%

4%

24%

41%

7%

0% 10% 20% 30% 40% 50%

Don't know

Not at all interested

Not very interested

Neither nor

Quite interested

Very interested

Base: 206

Mortgage

Loans -£2k


Level of borrowing interested in

%

Up to £500 2

£500-£1000 3

£10001-£1500 3

£1501-£2000 14

Don’t know 74

Base 95


Conclusions and Recommendations


Opportunity to increase access/ uptake of a wider range of

financial services amongst the Muslim community current accounts are held by a majority, lower

incidence of mortgages, savings and loans Based on our findings we believe there is a need for a

Shariah Compliant Product. Essential for this product to have a number of specific

characteristics namely products on offer must be within the confines of

Shariah Law prefer to access through the Mosque authenticated by the Imam of the Mosque cash must be one of the payment methods on offer

Conclusions and Recommendations (1)


To optimise product appeal and uptake awareness and

knowledge of how a credit union works must be improved differences from more traditional providers develop trust for long term relationship

Conclusions and Recommendations (2)


Shariah Compliant Credit Union Product Research

Presentation of Findings

Prepared for: DWP Financial Inclusions Champion Initiative (West of Scotland)

Date: June 2010

Documents

Www.assenti-research.co.uk Shariah Compliant Credit Union Product Research Presentation of Findings Prepared for: DWP Financial Inclusions Champion Initiative