DUBLIN–(BUSINESS THREAD)–The “UK Islamic Finance Market: Growth, Trends, Impact of COVID-19 and Forecasts (2022-2027)” the report has been added ResearchAndMarkets.com’s offers
The pandemic has provided another opportunity for Islamic finance to demonstrate its potential and shine. The Islamic financial system is based on the principles of shared risk, ethics and morality, which equip it to act as a potential warrior to safeguard the interests of the poor and vulnerable in crisis situations.
Islamic finance has developed rapidly in the UK over the past decade (2011-2021) and the government has been very supportive of its development and promotion. The UK hosted the first independent Islamic financial institution in the European Union and has the highest value of Sharia-compliant assets of any non-Muslim country.
The success of the government’s initiative to develop Islamic finance in the UK was demonstrated in 2021 when the government issued its second sovereign sukuk of £500 million, which was sold to institutional investors in the UK, Middle Middle and Asia.
Islamic finance will continue to expand over the next decade across regions and asset classes. From a market of just $200 billion in 2003, the Islamic finance sector is expected to grow to more than $4 trillion in assets by 2030.
Key market trends
Digital disruption of financial services
Five years ago, Western economies saw a rise in fintech start-ups offering more effective and efficient services through the creative application of software. Consequently, traditional financial institutions are now competing with challenger brands and neobanks to attract consumers, investors and businesses.
In the UK, fintech challenger brands such as Monzo and Revolut have become part of the banking landscape. Established banks like JPMorgan have responded by launching their own challenger brands to compete with the new competition.
The scale and pace of startup-led digital disruption initially focused on traditional financial service delivery. The success of this first fintech wave has encouraged a new generation of startups, which are applying technology to offer products and services designed specifically for certain demographic groups.
The creation of Sharia-compliant technology banks is on the rise in both Western and Islamic jurisdictions. Particularly in regions such as Central Asia, where countries are undergoing economic modernization, fintech companies are playing an important role in providing consumers and investors with the digital tools they need to effectively manage their finances. As more investment goes to these Islamic fintech companies, we are likely to see the sector grow.
Growing market awareness of Islamic finance by major financial institutions
Take Sukuk (an Islamic financial bond that effectively acts as a trust certificate) as an example. The supply of sukuk has increased in both Islamic and non-Islamic markets. Most Sukuk issuances are hybrid, with debt not reaching 30%.
According to Fitch, the global amount of Sukuk outstanding reached $754.1 billion in the second quarter of 2021, up 5% from the same figure recorded in the first quarter. As the first Western nation to issue a sovereign Sukuk, the UK has raised over $50 billion through 68 Sukuk issues on the London Stock Exchange.
Although there is a general awareness of Islamic finance, actual knowledge of its basic principles is not usually high among financial professionals based in non-Muslim jurisdictions. This is an issue that has been raised on numerous occasions in the UK.
There have been attempts by the government to make the financial environment more religiously inclusive in the UK, but the general lack of Sharia-compliant products has been a topic of recent debate. They are calling for the introduction of Sharia-compliant student loans by September 2022, enabling more students to access university education in the UK.
Moves to make the UK’s financial system inclusive and diverse will remain a key focus in 2022 and beyond. Part of this is due to the growing customer base. In the UK, there are estimated to be over 100,000 retail Islamic finance customers. The government also puts the net asset value of Islamic funds in the UK at £600m, with this figure set to rise in the coming years.
Key topics covered:
2 RESEARCH METHODOLOGY
3 EXECUTIVE SUMMARY
4 MARKET DYNAMICS
5 MARKET SEGMENTATION
6 COMPETITIVE LANDSCAPE
7 MARKET OPPORTUNITIES AND FUTURE TRENDS
8 DISCLAIMER OF LIABILITY
GateHouse Bank AI Rayan Bank Abu Dhabi Islamic Bank QIB United Kingdom Bank of London and the Middle East ABC International Bank Ahli United Bank Bank of Ireland Barclays BNP Paribas Bristol & West Citi Group IBJ International London J Aron & Co*