Christians and Muslims have united to launch a new ethical financial services initiative to tackle inequality and poverty.

The Church of Scotland and the Islamic Finance Council UK (IFC) announced the venture on Tuesday. It will be the first time Christian and Muslim financial initiatives have joined forces.

The two faith groups will examine the "practical commercial viability" of new models designed to promote ethical banking and fight poverty. They said the initiative arose out of a shared belief that current financial institutions had "lost their social conscience".

The project aims to research, shortlist, test and establish a "viable ethical finance business solution", said the groups.

The Church of Scotland is the country's largest religious body. The IFC is an Islamic group which aims to promote fairer banking.

Rt Rev Dr Angus Morrison, moderator of the General Assembly of the Church of Scotland, launched the initiative on Tuesday in Edinburgh. He said: "Our current system has gone badly wrong, creating massive inequality and the destruction of our shared natural resources by money-making machines overtaking commerce that serves the common good.

"The Christian and Islamic faith traditions share a commitment to economic justice and a call to an equal distribution of the gifts of God.

"By collaborating and 'putting our money where our morals are' we have an opportunity to live out our common values and make a tangible change for those most affected by poverty. Active concern for our communities is an obligation and we look forward to meeting the challenge together."

IFC advisory board member Omar Shaikh said: "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 mutual desire to work collaboratively on a project which brings together the best of our respective faiths.

"The positive message of faith groups working together presents a beacon of light which we hope can inspire many others across the world."

He continued: "Scotland has a proud heritage in ethical finance with the savings bank movement able to trace its origins back to the Rev Henry Duncan of the Church of Scotland. This model was also used as the blueprint for the early Islamic banking attempts in the 1960s, which makes it particularly poignant that this new initiative in being led in Scotland."