Faith and finance are mixing in consumer banking and advice
- From financial advice to digital banking, religion is seeping into financial services in different ways.
- As religion is just one input in a decision, marketing could be a unique challenge in the future.
Financial services continue to niche down with products and services designed to serve tightly-defined demographics and affiliated groups. From challenger banks serving Black America to financial services targeting the LGBTQ community, people increasingly want to work with firms that understand them. With that, we’re starting to see a bigger emphasis on faith-based financial solutions.
We’re seeing this in the Christian community, for example. Cass Bank, Providence Bank, ECCU Bank, and Devon Bank all serve Christians. Kingdom Advisors, an organization that provides training and supporting community to Christian financial professionals , has over 2200 financial advisors.
Intrepid Eagle Finance is a South Carolina-based financial advice firm that tailors its services for Christian families.
“I think that's part of the next evolution, where financial services and fintechs serve increasingly specific niches,” said Thomas. “Everyone has some individualized needs that are not always served best by the big generalist firms.”
The company creates holistic financial plans that specifically match Christian families’ lifestyles. It does this by first asking for the customer’s top three values, and then examining how their current financial affairs line up with these values.
Building financial services around customers’ faith helps create a sense of harmony between these two aspects of their lives, according to founder, Charles Thomas.
“While these folks can be served by generalists, I think they're often best served by a specialist environment where [the experts] are intimately familiar with their stage of life and their outlook on the world,” said Thomas.
But a religious person could also turn to a financial service when they see that this service not only coexists well with their faith but also helps propel it. A financial tool’s emphasis on a religious values could make people feel their financial choices are an extension of their religious beliefs. That seems to be especially relevant in the world of investing.
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Wahed Invest is an online halal investment platform that helps users make sure their investments are inline with Muslim doctrines.
“Even in the Western world, living in America, Muslims can feel like they don't know how and where to invest in line with their personal values,’ said Saad Zariff, vice president of North America at Wahed. “Like, if I want to avoid interest, which is a big deal for us Muslims in general, how do I avoid interest based bonds, for example, or companies that are highly leveraged?”
Then there’s the fact that faith can be an ingredient for building a sense of community. So when faith comes into finance, so does that sense of community.
The Hebrew Free Loan Association, an interest-free lending organization, was founded on the Jewish principle of lending without demanding interest in return. Part of the reason a lending model like this works could be because there’s trust within the community of lenders and borrowers.
“I think there's a sense that you can rely on your own community. It's like the concept of [reaching out} to your extended family when maybe your own immediate nuclear family doesn't have the means to offer someone support when they need it,” said Cindy Rogoway, executive director of Hebrew Free Loan in San Francisco. “And the larger family structure is that religious community -- a faith based community.”
But it’s interesting to ask what happens when a religion-based financial service stops being just for those practicing the religion.
The Hebrew Free Loan Society, for example, now lends to people who aren’t Jewish, as well. The organization’s model is even disconnected from religion altogether at this point.
“Even though this might have launched with some faith-based background, below market rate lending and micro lending is now a universal global financial term that has no religious connotations,” said David Contorer, executive director of Hebrew Free Loan in Detroit.
For Insha, a financial banking solution founded on Muslim prinicpals, the demographic extends beyond Muslims. Mehmet Burak Dikmen, head of growth at Insha, is even a bit hesitant to use the phrase ‘faith-based finance.’
“Money is money in the end and money has no religion,” said Burak Dikmen. “So I think faith-based finance is the wrong term.”
For Burak Dikmen, a better term is principle-based finance. He likens this to eating at a halal restaurant even if you’re not Muslim. A Christian might simply eat there because they like the food. Similarly, a non-Muslim may open an account at Insha because they like the values.
The challenge for Insha then has been to find a way to clearly express the fact that while its services are founded on Islamic banking, it’s not only for Muslims.
“That’s why we shifted our strategy from ‘interest free Islamic banking’ to ‘principle and ethical banking,’” said Burak Dikmen. “Because this way we can explain ourselves better to our customers.”