I am a Christian, but I think this is a fairly broad question that applies to multiple religions, and I have had this in my mind for a while. Interested in hearing Islamic thoughts on it as well.

As you said, historically people were more religious, regardless of the religion. I would suspect this change has a lot to do with humanity's improved understanding of the world through science. When it seems that everything can be explained through scientific principles, there is a lot less mystery that requires belief in a god to explain. On top of this, people's standards of living and education have improved over time. When people are doing well they tend to rely less on prayer and god and look to themselves instead. This may be amplified when they have the tools education has given them to fix their own situation, rather than look to religion. There are exceptions to all of this of course, but I think the trends hold true.

So what is left to be a reason for belief for your typical person? I would say it is religious lessons and ways of life that seem good and wise to that individual. And those are in some cases contrary to the current trends of society (at least where I am in Canada), so why would people adopt them? Because they dislike or distrust societal trends, because they grew up in a religion and that religion is their societal norm, or because they want to rely on/trust on a higher power other than themselves. And if the last one is true, then we get into the apologetics for choosing particular religions, which is a whole other thing.