Over thirty years ago, I had my first brush with Islamic finance: a group of bankers from a Middle East Islamic bank presented the concept of Islamic finance to my university Islamic Society. Disappointingly, the evening was not a success: they spoke in impenetrable jargon, focused on technical minutiae and failed to connect with their audience. They missed an opportunity to make the subject relevant to the world we live in and introduce our young minds to the importance of a just, ḥalāl economic system. I strongly believe the reason is that they simply didn’t understand their subject matter well enough. In the words of the physicist Richard Feynman, “If you want to master something, teach it.” They were not masters of their subject.
In the following three decades, I have not seen much improvement in the ability of the Islamic banking industry to appeal to the hearts and minds of their target demographic. Nowhere is this better demonstrated than in the UK, where the UK’s only retail Islamic bank has a 2% penetration rate of its target market and has recently shuttered its last remaining retail branch.
Muslims without any background in finance or economics have started to question whether Islamic banking is truly ḥalāl and indeed whether the bankers themselves understand the Islamic economic model. There is a trust gap between bankers and their customers which we shall examine further in this lecture. We shall also investigate how the Islamic economic model might be better served by looking outside the existing monetary system and consider instead recent advances in cryptocurrency.