Hejaz Sees Great Potential in Australian Islamic Financial Services | Salaam Gateway


A survey found that 36% of Australian Muslims choose to keep “significant” savings at home due to the lack of Sharia-compliant financial products available in the market.

The study, which was commissioned by Hejaz Financial Services, a Melbourne-based non-bank financial institution that offers Sharia-compliant services, consisted of digital questionnaires with 400 Australian Muslims in October 2021, examining their financial habits and attitudes. . The results highlight the growing demand for Islamic financial products in Australia.

“This study highlights that while Muslim Australians are increasingly aware of the principles of Islamic finance, they still do not have access to products and information,” said Muzzammil Dhedhy, director of operations at Hejaz.

“Traditionally, Australian Muslims have been migrants, but the second or third generation is highly educated, speaks English and has good jobs and good incomes,” he explained. “They demand products like wealth management and real estate financing that match their faith and values. “

Fill the void

To meet this growing demand, Dhedhy said Hejaz is working on new products.

“We are working on various instruments, including three new Islamic exchange-traded funds (ETFs). Hejaz plans to launch the Hejaz Managed Funds which are currently unlisted and are in discussions with the trustees and fund administrators to establish the new listed ETFs.

These ETFs will consist of a global equity fund that will replicate the MSCI Islamic Index. The second ETF will be a property / REIT (real estate investment company) and the third ETF will be an income / credit / mortgage fund.

“These ETFs will be listed on the Australian Stock Exchange and will be available to domestic and international investors,” Dhedy said. Hejaz plans to launch these new ETFs by the end of Q1 2022 or early Q2.

Beyond ETFs, Hejaz is also working on other ancillary services, including robo-advisory.

Robo Advisors are digital platforms that provide automated, algorithm-based financial investments with little to no human oversight. To do this, they collect information from users about their financial situation and their investment goals.

Takaful (Islamic insurance) is also on the cards, but this will require its own legal process. “Takaful services require an insurance license, this is a medium to long term goal for us,” he said.

Hejaz continues to focus on securing his banking license application. In June, Salaam Gateway announced that Hejaz had entered into discussions with the regulator, the Australian Prudential Regulation Authority, as well as the Australian Securities & Investments Commission.

Dhedhy said talks are progressing and hopes the Hejaz will receive its restricted license within the next 12 months. After a two-year period, they hope to obtain a full banking license and become a full-fledged Islamic bank within three years.

“We have a great relationship with Australian financial regulators, who are ready to help us develop more customer-centric products,” he said.

The others in the race

Muslims make up around 2.6% of Australia’s 26 million people, according to the 2016 census. This figure is expected to rise to almost 3% in the next census which took place this year.

Despite the growing Muslim population and the demand for Sharia-compliant products, there is no fully-fledged Islamic bank in Australia. However, that should change. Islamic Bank Australia (IBA) hopes to become the country’s first Sharia-compliant retail lender and is in the process of obtaining its own banking license.

Other more established Islamic players include Crescent Wealth and MCCA as well as non-bank financial institutions like Amanah and Islamic Co-operative Finance Australia.

In addition, conventional banks like the National Australia Bank (NAB) offer Sharia-compliant services. More recently, NAB launched the country’s first sharia structure for construction finance earlier this year.

An Australian banking practitioner said current Islamic product offerings are adequate given the low adoption. “If a major Australian bank offered a product with the same service offering, it would dramatically improve adoption,” he said. “Most of the Islamic players are tiny.”

Dhedhy said Muslims are frustrated with the current limited offers.

“Many educated and wealthy Muslims are looking for good quality products,” he said. “Among the products we want to create are specific savings products for things like home deposits, weddings, college funds, and hajj.”

He also added that Islamic products do not have to be expensive compared to conventional products.

“Muslim customers should only expect to pay a few basis points more than conventional products, otherwise they are not competitive enough,” he said. “In addition, 5% of our customer base is non-Muslim, as we offer competitive products that match the moral values ​​of modern Australians. “

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