Islamic finance, with its ethical principles and alternative financial instruments, has witnessed impressive growth in Malaysia. However, despite its potential, a crucial gap remains the disconnect between the industry’s complex offerings and the understanding of the public. This gap is further amplified by communication challenges, hindering wider adoption and the industry’s full potential.
Islamic finance operates with terms like Shariah compliance, Sukuk, and Takaful, unfamiliar to many Malaysians. This jargon creates a barrier, leaving people confused and hesitant to engage. Furthermore, the diversity of Islamic financial products from investment banking to microfinance often remains unexplored by ordinary citizens. This challenges lead to limited public knowledge about available options restricts their financial choices.
Diving in traditional media channels may not effectively reach diverse demographics, particularly rural communities, and youth. The rise of social media creates both opportunities and challenges, with potential for misinformation and unregulated content. To add on, a general lack of financial literacy amongst Malaysians further exacerbates the problem. Understanding basic financial concepts, even beyond Islamic finance, is crucial for informed decision-making.
The survey conducted by Bank Negara Malaysia in 2020 indicates a significant gap between awareness and understanding of Islamic finance among Malaysians. While a substantial 88% of the respondents were aware of Islamic finance, only 54% claimed to have a basic understanding of its principles. This disparity suggests that although the term is familiar to many, the comprehension of the underlying concepts remains a challenge.
The survey further revealed that only 39% of the respondents had used Islamic financial products. This suggests a hesitancy or lack of inclination among the Malaysian public to actively engage with Islamic finance, despite being aware of its existence. The reasons behind this limited uptake could stem from various factors, such as perceived complexity, unfamiliarity with available options, or a preference for conventional financial instruments.
The 2022 report by the Securities Commission Malaysia sheds light on the specific challenges faced by Shariah-compliant investment funds. The low uptake of these funds is attributed to limited awareness and product information. This suggests that potential investors may not be sufficiently informed about the features, benefits, and performance of Shariah-compliant investment options, leading to a reluctance to include them in their investment portfolios.
The findings from both the survey and the report underscore the existence of educational and awareness deficits within the Malaysian population regarding Islamic finance. The disconnect between awareness and understanding, coupled with limited knowledge about specific financial products, indicates a need for targeted educational initiatives to bridge these gaps.
The low uptake of Shariah-compliant investment funds may have broader implications for the growth and sustainability of the Islamic finance industry in Malaysia. If a significant portion of the population remains hesitant or uninformed about these products, it could impede the industry’s ability to fully realize its potential as a viable and ethical alternative within the financial sector.
In summary, the survey and report underscore the importance of addressing educational and awareness challenges in Islamic finance to promote greater understanding, utilization, and ultimately contribute to the industry’s sustainable growth in Malaysia.
To clear these up, the industry and stakeholders need to adopt a multi-pronged approach to address these issues like simplifying communication using plain language, infographics, and relatable examples to explain complex concepts. Tailoring communication to different segments like rural communities, youth, and specific financial needs. Utilizing social media, interactive platforms, and financial technology (FinTech) applications to increase accessibility and engagement. Integrating Islamic finance concepts into financial literacy initiatives at all levels like schools, communities, and media campaigns. However, building partnerships with media outlets, religious institutions, and NGOs to amplify outreach and build trust is also important.
By taking these steps, Islamic finance can move beyond jargon and technicalities, effectively communicating its value proposition to the Malaysian audience. A more informed and engaged populace can then make conscious choices about their finances, contributing to the industry’s sustainable growth and financial inclusion in Malaysia.
The rise of FinTech startups in Islamic finance holds promise for innovative solutions, such as mobile apps and gamified learning platforms, to further bridge the communication gap. Ethical marketing practices are crucial to avoid misrepresentation and maintain trust amongst consumers. Measuring the success of communication efforts through data and feedback is essential for continuous improvement and adapting strategies.
By addressing these issues, Malaysian Islamic finance can truly unlock its potential, offering ethical financial solutions that cater to the needs of all Malaysians, regardless of their financial background or understanding.
Going beyond the broad strokes, let’s delve deeper into some specific examples and potential solutions for the communication challenges in Malaysian Islamic finance.
Imagine farmers in rural areas, familiar with traditional agricultural practices, being bombarded with terms like “Sukuk” or “Musharakah.” Without accessible explanations and relatable examples tailored to their context, these financial tools remain beyond their reach.
Tech-savvy millennials and Gen Z might be intrigued by the ethical principles of Islamic finance, but current communication might feel stodgy and irrelevant. Engaging infographics, social media campaigns with relatable influencers, and gamified learning apps could bridge the gap.
Furthermore, explaining structured Sukuk instruments or Shariah-compliant investment strategies using traditional financial jargon can alienate the average consumer. Visualizations, animations, and simple analogies can break down these complexities into bite-sized, understandable chunks.
Other than that, partnering with local radio stations or community newspapers in rural areas to provide information sessions on basic Islamic financial concepts in local languages. Developing mobile apps with localized content and interactive quizzes to educate rural populations.
Also, exploring partnerships with FinTech startups developing gamified platforms or mobile apps specifically designed to educate youth about Islamic finance in a fun and engaging way. Utilizing social media influencers who resonate with younger audiences to promote awareness and financial literacy.
Create an interactive platforms like web-based platforms with interactive infographics, explainer videos, and personalized financial planning tools, allowing users to explore different Islamic financial products and find options suited to their specific needs and risk appetites.
Integrating Islamic finance modules into school curriculums and adult education programs. Partnering with religious institutions to conduct workshops and seminars on basic financial concepts within the framework of Islamic values.
However, to track the impact of communication strategies is crucial. Key metrics could include analysing downloads of educational materials, views of explainer videos, and user interactions on interactive platforms, monitoring social media mentions of Islamic finance, analysing sentiment, and identifying potential misinformation or areas of confusions and regularly conducting surveys to assess audience awareness, understanding, and utilization of Islamic financial products.
Mass communication students can play a crucial role in promoting Islamic finance to society by leveraging their skills in communication, media, and outreach. Here are several initiatives they can undertake, develop informative and engaging content explaining the basics of Islamic finance, its principles, and the range of products available, launch social media campaigns across platforms like Facebook, Twitter, Instagram, and LinkedIn to raise awareness about Islamic finance. Share relevant content, success stories, and real-life examples to make the information more relatable. Also collaborate with influencers or figures who resonate with the target audience to amplify the reach and credibility of the message.
Other than that, produce podcasts or host webinars featuring experts in Islamic finance, industry practitioners, and scholars. These platforms can provide in-depth discussions and insights, making the information more accessible to a wider audience.
Collaborate with Syariah student to bring Islamic banks, financial institutions, and industry experts to ensure the accuracy and credibility of the information being communicated. These partnerships can also provide access to resources and experts for educational initiatives.
By implementing these initiatives, mass communication students can contribute significantly to bridging the communication gap in Islamic finance and promoting a better understanding of its principles among the wider society because for sure, it is not only Syariah student’s obligation.
By constantly evaluating and adapting communication strategies based on data, the industry can refine its approach and address the evolving needs of diverse audiences. Remember, addressing the communication gap in Malaysian Islamic finance isn’t just about raising awareness but, it’s about empowering financial inclusion and providing individuals with the tools to make informed choices based on their values.
Syahrul Adam Salleh Ibrahim,
(LLB and Shariah)(Hons.),
Universiti Sains Islam Malaysia.