US: Fair, a Shariah-certified challenger bank based in Houston, has officially launched mobile banking services, bringing Islamic financial products to the retail market of the US.
Joining the AAOIFI in May, Fair kept to its timeline of launching in the first half of 2021. Positioning itself as an ethical and socially responsible digital bank, the start-up – through its sponsor bank, Washington’s Coastal Community Bank – is now offering Shariah compliant banking accounts, payment and remittance services.
The next phase of growth involves the roll-out of interest-free equity financing as well as investment opportunities which are aligned with socially responsible investing (SRI) and environmental, social and corporate governance (ESG) principles in early fall, which takes place late September to December this year.
“Fair was created to provide an equitable option for any individual to take control of their finances and have wealth-building opportunities within their reach,” Fair CEO and Founder Khalid Parekh explained. Khalid, an immigrant to the US over two decades ago, built Fair through the lens of a non-native speaker with restricted access to a seemingly complex traditional banking system that did not cater to the religious.
Operating in a market increasingly saturated with neobanks, Fair very early on identified its unique selling proposition: to deliver social impact particularly among the unbanked segment, immigrant communities and minorities, with ethical financial services. It has pledged to channel 2.5% of its profits to the United Nations Refugee Agency and has collaborated with the agency and World Relief to develop financial literacy programs. The platform will also be multilingual in the near future.
Fair operates on two membership models: a US$99 lifetime membership or US$9.99 monthly membership, both of which offers unlimited access to every platform feature, including supplemental life insurance.
“The average American spends about US$329 in bank fees every year, and the average US worker loses up to US$40,000 in their lifetime without a low-cost savings account,” the neobank noted.
At 3.45 million, Muslims account for about 1.1% of the total US population, according to Pew Research Center. There are a handful of Islamic financial services providers including Devon Bank, University Islamic Finance and Guidance Residential, but more tech start-ups are entering the space to meet demand. The US is home to 16 Islamic fintech start-ups as at the 30th June 2021, according to the IFN Islamic Fintech Landscape, making it the sixth largest market globally.