Christoph Koster, Chief Executive of the newly launched Ajman-headquartered ruya Bank, is betting big on a surge in demand for Islamic finance driven by increasing “ethical consumerism” in the UAE.
In an interview with Arabian Business, the veteran Gulf banker outlined his digital-first bank’s strategies to capitalise on the rapidly expanding Islamic finance market by positioning ruya as a transparent and community-focused Shari’ah-compliant lender.
“The UAE market showcases a growing inclination towards ethical consumerism, with an increasing number of individuals prioritising Shari’ah-compliant financial practices,” Koster said.
“The fusion of innovative technology with Islamic finance principles caters directly to this demand, providing tailored solutions for both individuals and businesses seeking ethically aligned financial services.”
He cited a recent Deloitte report which found 71 percent of consumers favouring banks with a positive social impact as evidence of this shift in the UAE’s increasingly ethical banking landscape.
Ruya, which obtained a specialised banking licence from the UAE Central Bank earlier this year, has strategically fused financial technology with strict adherence to Islamic jurisprudence in its products and services. The bank’s community-centric model includes open-door branches serving as educational hubs promoting financial literacy.
“Rather than traditional branches, ruya’s community centre serves as a collaborative hub – a place for informal interactions between customers, community members and the bank,” Koster explained. “This model enhances financial literacy and also promotes inclusivity within the community.”
This emphasis on inclusivity and transparency is a key brand pillar differentiating ruya from incumbent Islamic banks, according to its CEO. “We prioritise transparency in our financial solutions, so we don’t believe in the complexities of fine print…We emphasise big print —making our terms and conditions as well as fees openly accessible.”
Koster claimed existing Shari’ah-compliant lenders often bury complicated fees and conditions in dense legalese, contrary to Islam’s risk-sharing principles of ethical conduct and transparency. Ruya displays all charges on large video walls at its community centres to avoid “overlooked details in the fine print [that] can lead to overspending.”
UAE: Fourth-largest Islamic finance hub
The digital upstart is tapping into the UAE’s position as the world’s fourth-largest Islamic finance hub, with the sector’s assets comprising 23 percent of total banking assets in the country. More broadly, the global Islamic finance industry topped $2.3 trillion in 2022 and is forecast to reach $3.5 trillion by 2027, according to the Islamic Development Bank.
“The proactive integration of Islamic banking into the digital space acknowledges and addresses the burgeoning market demand for Shari’ah-compliant financial services,” Koster stated. “Our streamlined approach aligns with our goal to cater to the expanding market, capturing opportunities as the Islamic finance sector continues to grow.”
Since its April launch, ruya has already seen very strong initial traction and user engagement metrics exceeding expectations, according to its CEO. “In our first few weeks, we’ve seen substantial growth in user sign-ups…This strong early traction is a clear indicator of the demand for a digital-first, ethical Islamic banking experience.”
Koster was keen to dispel the common misconception that Islamic banking products are only for Muslims. “What many people might not know is that while Islamic banking products adhere to Islamic principles…they are available to anyone who wishes to use them, regardless of religious affiliation.”
ruya aims to capture a new breed of ethically-minded customers across the UAE. The bank’s CEO is bullish on the opportunity as sustainability moves into the mainstream.
“The issuance of sustainability guidance by the Higher Shari’ah Authority highlights a trend towards ethical consumerism within Islamic financial institutions,” he said. “Digital banks, such as ruya, that champion ethical values and social impact are set to attract a substantial customer base.”
However, disrupting the UAE’s powerful incumbent Islamic lenders won’t be easy. Koster acknowledged the challenges: “In a competitive landscape, the inclusion of Islamic banking in the digital world serves as a unique selling proposition, enabling digital banks to differentiate themselves and expand their customer base.”
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