With a diverse but tiny total population of fewer than five million people, New Zealand has a Muslim population of just over 1% of the total population (around 62,000 people) (Massey University NZ, Ethnic Profile, 2018 Census data).
With such a small Muslim market, Islamic businesses have been hesitant to launch in New Zealand, with the business case a challenge to envisage. And while the Muslim population is growing, it is not growing quickly, with the latest projections estimating that the number of Kiwi Muslims will reach 3% by 2050 (‘4 facts about religion in NZ’, Pew Research Center, March 2019).
However, alongside this slow-growing Muslim population, there is also a global shift toward more ethical banking and financial solutions, particularly among younger demographics, which may increase the number of people — not necessarily Muslims — seeking Islamic finance solutions in New Zealand.
There are currently very limited financing options for Muslims in New Zealand to access. None of the major banks offer Islamic products and it is not seen as a priority area by the Ministry of Finance of New Zealand.
Consequently, it has been reported that many Kiwi Muslims are either unable to purchase a home, as they cannot access Shariah compliant lending services in New Zealand, or they must choose financing that goes against their faith.
Review of 2022
While the New Zealand fintech industry overall has experienced a significant boom in recent years [jumping 15 places to be ranked No 30 in the Global Fintech Rankings 2021(IT Brief NZ: ‘Fintech innovation exploding, NZ jumps in rankings’, June 2021)], Islamic fintech innovation has been somewhat slower off the mark. Despite this, there are a few innovative Islamic finance solutions available in New Zealand today.
June 2022 saw the launch of the New Zealand chapter of the National Zakat Foundation, which uses the latest fintech solutions to offer a modern Zakat calculation and collection service, as well as transparent local distribution, helping to meet the need for financial assistance being experienced by many due to rising inflation.
EFCO — a financial services company that has offered a limited range of Islamic financial services to Kiwi Muslims since 2016 and received formal Shariah certification in 2021 — has continued to grow, and now offers its customers a range of Shariah compliant Murabahah products for personal and business needs.
Amanah Ethical is another organization offering Islamic finance to Kiwi Muslims, with its Shariah compliant investment products and a Shariah compliant retirement savings account.
Across the ditch, 2022’s big news was the launch of Australia’s first Islamic bank, Islamic Bank Australia (IBA), which was granted ‘Restricted Authorised Deposit-taking Institution’ authorization in July 2022. IBA hopes to be authorized as an (unrestricted) ‘Authorised Deposit-taking Institution’ and be fully operational by 2024.
IBA’s CEO, Dean Gillespie, has expressed a desire for the bank to eventually service New Zealand as well.
“Even though we are based in Australia currently, we receive many enquiries from Muslims in New Zealand,” explains Gillespie. “Much like in Australia up until now, New Zealanders of the Islamic faith have been forced to bank with conventional banks, meaning they have had to take out loans that carry interest in order to buy a home.
“While we are obviously focused on Australia for the next couple of years, we absolutely want to help Muslims in New Zealand, as well as other countries; we are building our tech-stack so that we can potentially lift-and-shift into other markets easily. Ideally, I’d like to see us enter New Zealand within the next five years, after we have obtained the necessary regulatory approvals.”
Preview of 2023
Considering New Zealand’s growing reputation as an innovative fintech hub, the country appears to be ripe for disruption when it comes to Islamic fintech and finance.
Worldwide, there has been a significant surge in new fintech innovation providing Shariah compliant financial services, with the global Shariah compliant fintech industry estimated to be worth upwards of US$128 billion by 2025. With the cost-effectiveness and agility enabled by next-gen technologies, there is no reason that New Zealand cannot also see an increase in activity in the Islamic fintech space.
Conclusion
New Zealand has been deemed a challenging prospect for Islamic fintechs and financial service providers to date. However, as New Zealand’s Muslim population grows, and the case for ethical finance becomes more mainstream, there is a growing opportunity for Islamic fintechs and tech-enabled financial service providers to capture a consumer market that is crying out for culturally-appropriate financial services.
By capitalizing on application programming interface-first, cloud-native and composable technology, Islamic providers can attract Kiwi Muslims with personalized, Shariah compliant products and services delivered where, when and how consumers want them.
Paul Apolony is the general manager of Australia and NZ at SaaS cloud banking and financial services platform Mambu. He can be contacted at [email protected].