UK Islamic Finance Market Number of Financial Services by Sector 2021
Dublin, Sep 22, 2022 (GLOBE NEWSWIRE) — The report ‘UK Islamic Finance Market – Growth, Trends, COVID-19 Impact and Forecasts (2022 – 2027)’ has been added to from ResearchAndMarkets.com offer.
The pandemic has provided a new opportunity for Islamic finance to prove its potential and shine. The Islamic financial system is based on the principles of risk sharing, ethics and morality, which enable it to act as a potential warrior to safeguard the interests of the poor and vulnerable in times of crisis.
Islamic finance has grown 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 standalone 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 evident in 2021 when the government issued its second £500m sovereign sukuk, which was sold to institutional investors in the UK UK, Middle East and Asia.
Islamic finance will continue to grow over the next decade across all regions and asset classes. From a market of just $200 billion in 2003, the Islamic finance industry is expected to grow to over $4 trillion in assets by 2030.
Main 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. As a result, traditional financial institutions are now competing with challenger brands and neobanks to win over consumers, investors and businesses.
In the UK, fintech challenger brands like 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 digital disruption led by startups initially focused on the provision of traditional financial services. The success of this first wave of fintech has encouraged a new generation of start-ups, which are applying technology to provide products and services designed specifically for certain demographic groups.
The creation of Sharia-compliant tech banks is on the rise in Western and Islamic jurisdictions. Especially in regions like Central Asia where countries are in the process of economic modernization, fintech companies are playing an important role in giving consumers and investors the digital tools needed to effectively manage their finances. As more investments flow into 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 issues are hybrid, with debt representing no less than 30%.
According to Fitch, the overall amount of Sukuk in circulation reached $754.1 billion in the second quarter of 2021, 5% more than the same figure recorded in the first quarter. As the first Western country to issue a Sovereign Sukuk, the UK has raised over $50 billion through 68 Sukuk issues on the London Stock Exchange.
Although there is general knowledge of Islamic finance, actual knowledge of its basic principles is generally not high among finance professionals based in non-Muslim jurisdictions. This is a question that has come up many times in the UK.
The government has attempted to make the financial environment more religiously inclusive in the UK, but the general lack of Sharia-compliant products available has been the subject of recent debate. Calls are being made for the introduction of Shariah-compliant student loans by September 2022, enabling more students to access university education in the UK.
Measures to make the UK financial system inclusive and diverse will remain a major focus in 2022 and beyond. Part of this is due to the growing customer base. In the UK, it is estimated that there are over 100,000 Islamic finance retail customers. The government also puts the net asset value of Islamic funds in the UK at £600m, with that figure set to rise in coming years.
Competitive landscape
The report covers major international players operating in the UK Islamic finance market. In terms of market share, some of the major players currently dominate the market. However, with advances in technology and product innovation, small and medium enterprises are increasing their market presence by winning new contracts and tapping into new markets.
Companies cited
For more information about this report visit https://www.researchandmarkets.com/r/h4xz3e
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