It’s hard enough launching a new bank. That Akmal Saleem chose to launch a shariah-compliant lifestyle bank in the UK in the midst of a global pandemic, must put Rizq in the category of most ambitious startups of 2020.
It was beaten out of the stocks only marginally by newcomer Niyah but, even then, it’s not exactly a crowded market: only a handful of UK providers offer banking services that strictly follow Islamic rules around money management and many of those are underused by British Muslims. The Islamic Finance Consumer Report 2019 from Gatehouse Bank revealed that nearly half have never used a sharia-compliant bank, often because they believe that only those who actively follow the Islamic faith are allowed to.
But now the ethical principles under which those banks operate are suddenly making a lot of sense to many people of all faiths and none. The pandemic has caused many in the UK to question issues to do with financial systems – the principles underpinning first world economies that have driven banking to a precipice before in the West. They are looking for something new, something fairer and more inclusive. And Rizq aims to provide it.
“Essentially, we’re ethical. We want to provide a service for as many customers as possible, from whichever faiths and backgrounds,” says Saleem.
That said, Rizq’s core target, at least initially, are the UK’s 3.4 million Muslim customers whose personal financial management needs are still not being met by most neobanks. They want ethical choices that fit with the tenets of their faith and practical tools to help them achieve their financial aims within that. Rizq is using advanced technology, informed by knowledge of the Islamic faith, to provide modern services within an ancient belief system. The two are not mutually exclusive, insists Saleem.
“We are about building good products at a hybrid level between the traditional and the digital. We can give people using traditional Islamic banks in Europe what they require, but also appeal to a younger generation with different emerging needs, and bring that together in one experience. We understand what Muslims in the West, at this moment in time, want,” he says.
“Rizq is the UK’s first fully alternative Islamic digital banking application. It is extremely simple to sign up to. Users can make lightning-quick payments, set up budgets, donate to charity and collect cashback in some of the most popular retailers.
“Most digital banks within our space are only focussed on mobile,” he adds. “We believe web banking and online banking are still important tools for people, so we’re making sure that works really well and is integrated.”
Tools to help keep the faith
While full details of its specific product offering have yet to be revealed, Rizq will launch with a current account, later joined by a premium account, and features include shared accounts with budgeting help.
At the time of writing, Rizq was awaiting confirmation of its licence from the UK Financial Conduct Authority to operate as an e-money institution under shariah law. That forbids followers of Islam from taking part in any financial service involving paying or collecting interest, on which traditional savings products and mortgages in the West are based.
“We’re developing incredibly innovative ways to solve the credit card issue and developing savings accounts with no interest,” says Saleem. “Our value proposition fundamentally understands the economics that need to go with the business model to make this sustainable. But it’s not just about the interest-free element,” he stresses.
Rather, Rizq uses digital to incorporate Islamic principles at its core.
“It’s about how we use our digital platform to make the paying of Zakat [one of the five pillars of Islam by which every Muslim with the capacity must pay 2.5 per cent of their wealth to help people in poverty] easy. How can we help people during Ramadan, and with their obligations towards things like performing Hajj [pilgrimage]? That’s something that hasn’t been done before. I’m talking about things like developing artificial intelligence functionality, which automatically calculates people’s Zakat, so that they can pay it with a click of a button. That’s really powerful for Muslims. We’re also developing an auto-donation functionality, so every time someone uses their debit card, they can pay a chosen charity a proportion.”
Rizq’s original plans to launch this June to a customer base of 500 to 1,500 people – building to 45,000 customers by the end of this year – may be delayed by the coronavirus pandemic. But Saleem remains hopeful it will be up and running by July, helped rather than hindered by a values shift among the wider population. That places it in direct competition with more ‘vanilla’ challengers like Monzo and Revolut.
“We couldn’t have predicted the pandemic, but people are going to rely more on digital-based products and services after we come out of this situation,” says Saleem.
As well as Rizq and Niyah in the UK and insha in Germany, a plethora of smaller players are springing up, attracted by a sizable opportunity – the International Monetary Fund pegs the value of the Islamic finance industry at $2trillion. But Saleem – a communications expert-turned-finance-entrepreneur who also founded ethical Islamic investment firm Maarij Wealth – believes Rizq has a unique offer because it’s been shaped by a personal need.
Like all the best entrepreneurs, he could be said to share James Dyson’s famous, grumpy frustration: ‘I just want things to work properly’.
“For 10 years, since I started my first business, I was looking at what products and services were available to me to develop my business in a sharia fashion, like micro and SME financing,” says Saleem. “There was virtually nothing. I’ve travelled the world to find something, but found everyone was just wrestling with these complex problems around developing alternatives to interest-based products across the spectrum. So, I’ve been thinking about those next areasthat need developing – beyond tailored products and services.”
He adds: “So far, it’s been a failure of the industry as a whole. From the traditional banking sector to the Islamic banking sector, we can’t see anyone addressing Muslims’ banking problems at the multiple levels we can.”
Iqbal Khan, who founded HSBC Amanah, famously talked, post-financial crisis, about Islamic banking being the benchmark for ethical banking, and the Islamic Bank of Britain saw an influx of non-Muslims looking for its banking products. So, why hasn’t the digital side of their delivery been addressed before now?
“Because of similar problems to those faced by incumbents in digitising mainstream banking,” says Saleem. “The infrastructure wasn’t there. Three, four years ago, it wasn’t easy to build a digital bank. The market is also maturing. Muslims were a few years behind in terms of the products and services they engage with, so there wasn’t the demand. But younger Muslims are more tech-savvy.”
With applications for Rizq accounts in test mode and the app downloadable now from Apple and Google Play, Rizq’s below-the-line social media marketing strategy has already demonstrated there is a pent up need.
“We have been approached by banking groups from the Middle East, Europe and Southeast Asia. Indonesia is a really important market, with 200 million Muslims, and we want to go there, but in the right way,” says Saleem. “We’re completing a small seed fund round at the moment, which is attracting significant interest, so going global is there for us.
“Our values are clear and as we launch and people see what we do and how we operate, even non-Muslim people who want more ethical banking will start to adopt our product.”
The tagline on the fledgling brand’s Facebook page is ‘your Rizq is written’, meaning everyone should seek to achieve what Allah has deemed sufficient for them, sharing the rest with those that need it most. It’s a spiritual and economic levelling up that chimes well in an age when many are seeking a more equitable society. A command handed down 1,400 years ago is shaping the development of a digital bank.