Expanding Inclusion with Islamic Finance &

Transcript:Expanding Inclusion with Islamic Finance &:
Expanding Inclusion with Islamic Finance & Technology Blake Goud CEO, Responsible Finance & Investment Foundation, C.I.C. North America Conference on Islamic Finance October 18-19, 2024 Houston, Texas How has Islamic finance developed in the U.S.? Islamic finance in the U.S. and in North America broadly focused on addressing some key gaps in financial inclusion that affect the Muslim community in unique ways. The growth of Islamic finance in North America has travelled in parallel with few explicit intersections with the socially responsible, sustainable & responsible investment world despite bringing a lot to the table. The features of the U.S. market for financial services makes it difficult to serve Muslims as a whole, except for a few relatively narrow financial needs where market conditions come together in just the right way for Islamic finance to grow. Technology provides a better way to address some of the gaps, but technology along is not enough to have an impact on the financial inclusion gaps that exist. What do we mean by “financial inclusion”? The World Bank defines financial inclusion as “individuals and businesses having access to useful and affordable financial products and services that meet their needs—transactions, payments, savings, credit, and insurance—delivered in a responsible and sustainable way”. By top-line metrics, the United States is among the world’s leading countries on financial inclusion, ranking 4th in the Global Financial Inclusion Index compiled by the Principal, a large insurer and asset manager behind only Singapore, Hong Kong and Switzerland. Access to financial services in the US is highly unequal, and Muslims are excluded in different ways from finance in ways that have real consequences on their lives. Even though home finance is one of the most successful areas of Islamic finance in North America, only 37% of American Muslims own their home compared to 57% of Americans as a whole. How are Muslims financially excluded? If you asked someone familiar with Islamic finance why Muslims in the U.S. face financial inclusion, they would probably start by talking about the lack of Islamic finance options. Consumer choice to avoid certain financial products is a different type of financial exclusion than what is usually associated with “financial inclusion” “Financial inclusion” is usually tackled as the involuntary exclusion of people from the financial sector especially those living outside of urban areas and people with low-incomes. All of these explanations are relevant for a discussion of financial exclusion