The Church of Scotland and the Islamic Finance Council have launched an initiative to create ethical financial services in a fresh approach to financial exclusion.

They cite a “shared belief that existing financial institutions have in recent years lost their social conscience”.

The project will “research, shortlist, test and then establish a viable ethical finance business solution”, investigating areas including lending, saving, banking, crowdfunding, and digital finance.

It follows five years of discussions in Edinburgh led by the IFC and involving Scottish asset managers, banks, credit unions, voluntary groups, charities and academics, which also led to the plans for Europe’s first ethical finance hub, supported by the Scottish Government.

The historic interfaith initiative was unveiled as news was emerging of the terrorist attacks in Brussels. Rt Rev Dr Angus Morrison, Moderator of the General Assembly of the Church of Scotland, said it highlighted as never before “the need to build bridges not walls”.

Shaykh Ruzwan Mohammed, Scotland's leading Sunni theologian and ‘religious advocate of the year’ at the 2014 British Muslims Awards, said it demonstrated that Muslims wanted to engage with society and countered the “extremist view that we have been disenfranchised and marginalised”.

Omar Shaikh, member of the IFC Advisory Board, said the initiatives had been a response to the “complete disarray” of the banking crisis and bail-out, and the “ongoing series of scandals which highlights a moral bankruptcy”.

He added: “A lot of banking and financial products have been not only morally questionable and somewhat toxic but also inherently exclusive.”

Mr Shaikh went on: “In recent years we have developed a strong relationship with the Church of Scotland and this project is a result of that positive engagement and the desire to work collaboratively on a project which brings together the best of our respective faiths.”

He said Scotland has a proud heritage in ethical finance, with Victorian kirk minister Rev Henry Duncan the founding father of the world’s first savings bank movement, a model also used as the blueprint for the first attempts at Islamic banking only 50 years ago.

Dr Morrison said: “By collaborating and ‘putting our money where are morals are’ we have an opportunity to live out our common values and make a tangible change for those most affected by poverty.”

Sally Foster-Fulton, convener of the Kirk’s Church and Society Council, said the project would aim to offer access to financial help for “the folk who are most excluded and have been discriminated against most”.

Skaykh Ruzwan said that from a Muslim community perspective, extremists could be challenged through theology. “The other way is to show alternatives which actually provide a positive message that faith communities have something to offer secular society, at a time when religion is being sidelined.”

He added: “I can’t remember any time when people have come together not just to dialogue but to provide practical solutions and it is happening in Scotland with its history of ecumenical involvement.”