Determinants of Young Generation’s Interest in Islamic Financial Products: Addressing the Issue of Low Youth Engagement in the Islamic Finance Industry

Abstract

This study aims to examine the determinants of the younger generation’s interest in Islamic financial products in response to the persistently low level of youth engagement in the Islamic finance industry. The research employs a qualitative approach using a descriptive–interpretative research design, which is considered appropriate for capturing in-depth perceptions, motivations, and contextual factors underlying youth financial behavior. The study was conducted in an urban metropolitan area where Islamic and conventional financial institutions operate simultaneously, providing a relevant setting for exploring comparative perceptions among young consumers. Data were collected through in-depth interviews with twenty young respondents and six key informants consisting of academics and practitioners in the field of Islamic finance, selected purposively based on their relevance and expertise. The findings reveal that youth interest in Islamic financial products is influenced by a combination of ethical awareness, perceived technological convenience, trust in institutions, and social influence, rather than religious considerations alone. Limited digital integration and weak social visibility were identified as major barriers to engagement. The study recommends that Islamic financial institutions strengthen youth-oriented digital services, enhance financial literacy initiatives, and adopt more inclusive communication strategies to improve youth participation and ensure the sustainable development of the Islamic finance industry.