As the 2015 World Islamic Economic Forum kicks off in Kuala Lumpur, a new Islamic finance report published today by TheCityUK reveals the continued rapid worldwide growth of the industry and its significant potential for further expansion. The global market for Islamic financial services topped $2 trillion in 2014, up 12% on the previous year, and has tripled since the start of the economic slowdown in 2007. TheCityUK projects this figure to reach $3trillion by 2018, driven by a growing domestic demand in emerging markets.
The report, The UK: Leading Western Centre for Islamic Finance, also reinforces London’s pre-eminence as the leading Western centre for Islamic finance, with the UK trailblazing a number of significant industry developments. Assets of UK financial institutions offering Islamic financial services totalled $4.5bn at the end of 2014; over 20 banks in the UK – of which five are fully Sharia compliant – offer Islamic financial services, nearly double that of the US; and there are now over 100,000 Islamic finance retail customers in the UK.
Chris Cummings, Chief Executive of TheCityUK, said, “The global Islamic finance industry is a vibrant, dynamic and rapidly expanding part of the worldwide financial system. It also boasts considerable growth potential. Sharia-compliant assets make up only 1% of the world’s financial assets today, yet 1 in 5 people globally are Muslim.
“As the leading Western centre for Islamic finance, the UK has been at the forefront of key developments for the industry in Europe and is well positioned to capture a growing share of Islamic finance business in the coming years. We are already a Western leader in the supporting infrastructure and environment for Islamic finance, with services offered by financial intermediaries, asset managers, insurance providers, and over 30 international law, accountancy and consultancy firms. The UK is also a world leader in developing skills in Islamic finance, with around 70 educational institutions offering Islamic finance courses at both undergraduate and postgraduate level.”
TheCityUK’s report highlights the important role supportive Government policies implemented over the last decade have played in developing the UK’s position as a centre for Islamic finance, creating a fiscal and regulatory framework to broaden the market for Islamic finance products. The work of the UK’s Islamic Finance Task Force in 2013 and the relaunch of the Financial Services Trade and Investment Board (FSTIB) has also supported the development of the sector, helping to increase inward investment and strengthen the economy.According to Mr Cummings, to ensure the UK maintains its leading position in Islamic finance and becomes a leading player in setting international Sharia compliant standards, it will be important for the Government, regulators and the industry to work together.
“Major developments such as the UK sovereign sukuk – the first outside the Islamic world – and other UK Government initiatives to create a level playing field for Islamic institutions and their clients have been enormously important. It is part of what makes the UK the leading international financial centre. There is so much opportunity to develop this market and we look forward to continuing our work with the UK Government to encourage inward investment through Islamic finance and help create a political environment where innovation is encouraged,” Mr Cummings concluded.