LONDON - Rizq, a UK-based Islamic digital challenger bank is preparing for its launch this summer, Akmal Saleem, the fintech’s co-founder and CEO, told Salaam Gateway.
“We are building Rizq from a different angle,” said Saleem. “We are positioning Rizq from the Muslim lifestyle perspective. We want to solve mainstream banking issues for Muslims in the West, which is in line with their lifestyle."
Muslims in the UK still use interest-based or conventional current accounts because they do not see a true alternative, according to Saleem.
There is no definitive data to support his claim but in July last year, a survey by the Shariah-compliant Gatehouse Bank found that 46% of 1,000 British Muslims polled had never used Islamic finance. Muslims account for around 3 million of the UK’s 63.2 million population, according to the last official Census in 2011.
Established in late February, Rizq will be both an app and web-based digital challenger bank.
It plans to do an alpha or soft launch in April or May with a small group of individuals, followed by a full launch in June. However, this may be pushed to July, because of the current operating environment hit by the coronavirus outbreak.
Building product awareness during the UK COVID-19 lockdown has been limited to podcasts and other online and digital media, with plans to continue a grassroots strategy once movement restrictions are lifted.
Saleem said the company has applied for a license from regulator the Financial Conduct Authority (FCA) and he sees the registration being on track for acceptance by May 29.
The digital challenger will offer a current account to begin with and then launch a premium account at a later stage. According to Saleem, the company is working with a major card provider and will offer a debit card for both accounts.
The platform will offer other features including shared accounts, budget analysis and cashback features and functionality developments such as an auto-donation function which allows users to give to charity.
Rizq is eyeing 500 to 1,500 people at its alpha launch and the goal is to have at least 45,000 customers by the end of the year.
Saleem considers UK-based Niyah, which launched earlier this year, and Germany-based Insha, which has yet to launch in the UK, as direct competitors.
He said in terms of differentiation, Rizq will be both online and mobile unlike its competitors.
Saleem also said branding will play an important role in Rizq’s product differentiation and appeal in attracting customers. “The branding will help make Rizq work as it relates to people and the notion of "Rizq" has been passed down generation after generation,” he said.
Saleem argues that the incumbent Islamic banks in the UK have struggled to communicate and appreciate basic customers who hold current accounts.
Indeed, this was a recommendation from the findings of Gatehouse Bank’s survey in July, which said that the industry needs to better communicate what makes its products Shariah-compliant, after finding that 61% of consumers were sceptical about how Islamic the products really are.
Rizq has appointed well-known Shariah scholar Mufti Faraz Adam as advisor and Umer Suleman to advise on governance and strategy.
“We make it clear that we are Shariah-compliant, but we’re not Shariah-compliant just as a stamp on financial products,” said Saleem.
Without giving any details, he stressed that ESG standards are being developed but that the landscape is evolving.
“On a Shariah level Mufti Faraz is involved on all fronts and reviews all agreements, contracts and counsels us on relationships to ensure that we consider things from all perspectives. These things will show more once we launch.”
So far Rizq has been self-funded by its founders.
By mid-May it is set to close £600,000 ($756,420) of investment from private investors. So far it has secured around 60% of this, with most of the funds coming from UK-based Muslim individuals.
The funds will be used to ensure they don't have to cap growth, according to Saleem.
The company plans to raise more money to help with growth. It plans to launch crowdfunding in October as well as Series A funding at the end of the year or beginning of next year.
The Rizq team, currently comprised of 4 full-timers, is likely to expand, according to Saleem.
In addition to growth and hiring, Rizq also has international ambitions.
“We will start in the UK and then look to expand into Europe in 2021,” said Saleem.
(Reporting by Hassan Jivraj; Editing by Emmy Abdul Alim [email protected])
*A correction was made under the sub-header GROWTH PLANS. The crowdfunding round is scheduled for October and not May, as Akmal Saleem originally informed Salaam Gateway.
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