• Nayan Raut , AVP & Regional Business Development Director at Compass Plus Technologies


• 29.07.2025 08:45 am
#Banking #ValuesDrivenBanking

The new priorities of the modern banking customer

For years, the banking industry has chased innovation in the form of faster apps, smoother onboarding, and tighter security. And while these continue to matter, a quiet shift has been gaining momentum - one that’s set to redefine what customers value in their financial providers.

Today’s consumers, particularly Gen Z and millennials, are thinking beyond speed and rates. They’re asking deeper questions: Where does my money go? Who does my bank fund? What do they stand for? In short, values like trust, transparency, fairness, and sustainability are becoming as important as interest rates and user interfaces.

This presents both a challenge and an opportunity. As the next generation of financially active consumers gains influence, banks that fail to reflect their customers' values risk losing relevance. But for those ready to act, there’s a clear path to deeper loyalty and long-term growth.

From convenience to conscience: The rise of ethical banking

Ethical banking is no longer niche - it’s becoming mainstream. ESG (Environmental, Social, and Governance) awareness is driving customers to expect more than clever advertising or one-off green initiatives. They want meaningful change.

We’re already seeing the shift: major banks are issuing green bonds, launching inclusive finance programs, and investing in carbon offsets. But ethical banking isn’t just about the environment. It’s also about fairness, integrity, and purpose in how money is managed and invested.

Recent research by Fairer Finance found that over 24% of 18 to 45-year-olds would choose their current account based on a bank’s ethical conduct. That’s a quarter of the most financially active generation actively seeking values-aligned banking.

Customers are increasingly willing to walk away from providers that don’t align with their principles - and toward those that do. For banks, this means the bar has been raised.

Islamic banking: An ethical finance model hiding in plain sight

While many institutions scramble to build ethical offerings from scratch, there’s one model that’s been operating on values-led principles for decades: Islamic banking.
 

Rooted in the principles of fairness, transparency, and shared risk, Islamic finance prohibits interest (riba), speculative investments, and funding of harmful industries like alcohol, tobacco, or weapons. It prioritises real economic activity, ethical partnerships, and social responsibility - making it one of the most structured and scalable models of ethical finance in the world.
 

And yet, outside of Muslim-majority markets, Islamic banking remains underexplored - often perceived narrowly, rather than recognised for its broader potential as an ethical and values-driven financial model.
 

It’s time to reframe that thinking.

For banks, a low-lift, high-impact entry point

The beauty of Islamic banking, especially for conventional banks, is that it doesn’t require a complete overhaul. In fact, many dual-banking countries operate both Islamic and conventional products side by side - proving that the two models can operate seamlessly in parallel.

By introducing just one Islamic banking based product - be it a debit card, credit card, or even Shari’ah compliant BNPL - banks can:

• Serve an underserved yet growing demographic

• Align more clearly with ESG and ethical banking benchmarks

• Build stronger emotional loyalty with socially conscious customers

And there’s evidence to back it up. A 2022 study by Moosa found that in dual banking markets, Islamic banks consistently outperformed their conventional counterparts in empathy, service quality, and reliability - qualities that matter more than ever to today’s customers.

A new kind of relevance

Ethical finance isn’t a buzzword anymore - it’s becoming a customer expectation. And Islamic banking offers banks a ready-made, proven framework to meet it.

Whether you’re looking to differentiate your offering, unlock new markets, or future-proof your customer relationships, values-based finance isn’t just the right thing to do - it’s smart business.

If you're curious about how Islamic banking works, how it aligns with your ESG goals, or where to start - download our ultimate guide to Islamic Banking and discover how a centuries-old model can help shape the future of ethical banking today.