Launching new propositions brings many learnings
Paul Stockwell, chief commercial officer at Gatehouse Bank | 14:54 Wednesday 12th June 2019
Whenever a financial organisation launches a new product, despite all the research and insight they may have carried out, there is that sense of nervousness as they wait to see how it will be received.
When you occupy a relatively nascent sector in the UK — such as sharia-compliant finance — that concern is increased because every product involves convincing people to consider and choose something new. In our case, that goes for many Muslim consumers too. While many of the UK’s almost 3.4 million Muslim community would prefer sharia-compliant products, they have for years had to settle for conventional finance in the absence of any real choice or products that fit their religious needs.
So, in December, when we piloted our first home purchase plan (HPP) — a sharia-compliant mortgage alternative — we had a good idea who our proposition would appeal to. However, we have been surprised by the strong response we have seen. Experience tells us that no amount of market research can guarantee how a new financial product will be received. In the end, it is always the market that decides and that can either be exciting or depressing, depending on the response. We are fortunate enough to have been positively surprised by the reaction to our HPP proposition.
When we first rolled out HPP, the generally accepted view was that the main audience would be members of the UK Muslim community, but we knew there were good reasons why others might be interested. We resolved to encourage customers with diverse backgrounds to consider the benefits. We took the decision to also offer our service to UK expats and international residents looking for a home.
Demand from all quarters was a major factor in the bank accelerating the development of a wider range of products. In fact, the first major evolution of HPP occurred last month, well ahead of schedule. Something else we didn’t see coming was the extent to which non-Muslim consumers would be attracted to our offering, although, of course, we had hoped this would take place. Why? The answer lies in the UK’s global workforce. Many will continue to have strong financial ties to the UK and represent a huge opportunity for UK institutions. Despite this, expats have been underserved in recent years and there are a few reasons for this.
Some institutions have focused on domestic markets as regulatory requirements have become more demanding and, therefore, more expensive to administer. KYC checks on those overseas can be more difficult and, because those overseas can often have less conventional earnings patterns, they can struggle to meet the current affordability criteria introduced since the financial crisis. All this meant that when our HPP product for expats went live in December, a captive audience was waiting for us.
A failure of other providers to satisfy demand in this market has forced them to consider other options. Brought to us by necessity, many of these customers are now far more aware of what sharia-compliant finance has to offer, more comfortable with the linguistic differences and a great many will no doubt embrace other sharia-compliant products in the future. Conventional banking’s loss will, hopefully, be our gain.
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