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The expansion of Islamic finance around the world: opportunities in in Europe and Spain
From May 03, 2024 until May 12, 2024
In Spanish and English.
The Observatory of Islamic Finance in Spain SCIEF - Casa Árabe is publishing this socio-economic memorandum devoted to the topic. You can read it now online.
The Observatory of Islamic Finance in Spain SCIEF - Casa Árabe is publishing this socioeconomic memorandum on the current status of Islamic finance around the world and the opportunities it can provide to Spanish companies, with the latest advancements and developments by sectors and markets of Islamic finance at a global level, all broken down by regions and countries, including Europe and Spain, while identifying those areas in which it has reached substantial structural importance and others where there are significant business opportunities.
In recent years, Islamic finance has experienced major growth in terms of both volume and geographic expansion, thus demonstrating its robustness and ability to offer financial solutions adapted to today’s economic reality in many different industries and markets.
Islamic financial assets as a whole reached an estimated total value of USD 4.5 trillion in 2022, a figure which is expected to rise to USD 6.7 trillion in 2027 (ICD, 2023), thus demonstrating their resilience and strength at the present time, given that there are many countries in which they have come to hold substantial structural importance.
The countries in the Gulf Cooperation Council (GCC) stand out as having the largest volume of assets in Islamic finance, accounting for 53.6% of the global total. By sectors, Islamic banking remains the most important, since it combines 72% of all assets. The increase recorded by this segment was 13% in 2022 (GIFR 2023). In all, 77 countries currently operate with Islamic banking, the latest addition to the list being Australia, whose first Islamic bank -a digital neobank- began operations in July 2022.
In fact, one of the segments with the greatest potential for growth in both commercial banking and insurance, are Islamic Fintechs, with 375 companies identified, and an estimated volume of 79 billion dollars (ICD 2022), which is projected to reach USD 179 billion by 2026. The countries with the highest transaction volumes are Saudi Arabia, United Arab Emirates (UAE), Malaysia, Indonesia and the United Kingdom. In terms of the number of companies, Saudi Arabia once again leads the list and has launched a strategic development plan to become a hub for Islamic Fintech. It is followed by Indonesia, the United Kingdom, Malaysia and Kazakhstan. These five countries account for 70% of Islamic Fintechs, which shows how heavily concentrated they are.
Knowledge and mastery of Islamic financial products is increasingly necessary for companies seeking to do business in countries where Islamic finance is gaining systemic importance. The economic diversification of the Gulf Cooperation Council (GCC) countries and growth in Southeast Asia are creating business opportunities which increasingly require companies to design their projects in line with Islamic finance, or even use it to finance part or all of the projects.
The results of the report were presented within the framework of a meeting of the Observatory members with attendance by the report’s author and several experts on the topic.
The memorandum is available in Spanish and English.
The SCIEF - Casa Árabe Observatory of Islamic Finance in Spainis a group for analysis and consultation that gathers knowledge about current affairs in Islamic finance. It includes the main experts, consultancies, law firms and banking institutions working in or specializing on this subject in Spain. Created in 2017 by Casa Árabe and IE University’s SCIEF (Spanish-Saudi Center for Islamic Economics and Finance), its activities include a periodic meeting by its members to discuss specific topics related to the industry’s development in Spain, conducting case studies and holding expert conferences, as well as producing an annual report on the state of Islamic finance in Spain.
Related publications:
“Islamic finance in Spain 2017,” Socioeconomic Memorandum 13 / 2017.
“Islamic finance in Arab transition processes,” Issue number 14 / 2016 of the “Awraq” journal published by Casa Árabe
“Islamic finance today: Outlook and keys to growth” - Socioeconomic Memorandum 09 / 2010 of Casa Árabe.
In recent years, Islamic finance has experienced major growth in terms of both volume and geographic expansion, thus demonstrating its robustness and ability to offer financial solutions adapted to today’s economic reality in many different industries and markets.
Islamic financial assets as a whole reached an estimated total value of USD 4.5 trillion in 2022, a figure which is expected to rise to USD 6.7 trillion in 2027 (ICD, 2023), thus demonstrating their resilience and strength at the present time, given that there are many countries in which they have come to hold substantial structural importance.
The countries in the Gulf Cooperation Council (GCC) stand out as having the largest volume of assets in Islamic finance, accounting for 53.6% of the global total. By sectors, Islamic banking remains the most important, since it combines 72% of all assets. The increase recorded by this segment was 13% in 2022 (GIFR 2023). In all, 77 countries currently operate with Islamic banking, the latest addition to the list being Australia, whose first Islamic bank -a digital neobank- began operations in July 2022.
In fact, one of the segments with the greatest potential for growth in both commercial banking and insurance, are Islamic Fintechs, with 375 companies identified, and an estimated volume of 79 billion dollars (ICD 2022), which is projected to reach USD 179 billion by 2026. The countries with the highest transaction volumes are Saudi Arabia, United Arab Emirates (UAE), Malaysia, Indonesia and the United Kingdom. In terms of the number of companies, Saudi Arabia once again leads the list and has launched a strategic development plan to become a hub for Islamic Fintech. It is followed by Indonesia, the United Kingdom, Malaysia and Kazakhstan. These five countries account for 70% of Islamic Fintechs, which shows how heavily concentrated they are.
Knowledge and mastery of Islamic financial products is increasingly necessary for companies seeking to do business in countries where Islamic finance is gaining systemic importance. The economic diversification of the Gulf Cooperation Council (GCC) countries and growth in Southeast Asia are creating business opportunities which increasingly require companies to design their projects in line with Islamic finance, or even use it to finance part or all of the projects.
The results of the report were presented within the framework of a meeting of the Observatory members with attendance by the report’s author and several experts on the topic.
The memorandum is available in Spanish and English.
The SCIEF - Casa Árabe Observatory of Islamic Finance in Spainis a group for analysis and consultation that gathers knowledge about current affairs in Islamic finance. It includes the main experts, consultancies, law firms and banking institutions working in or specializing on this subject in Spain. Created in 2017 by Casa Árabe and IE University’s SCIEF (Spanish-Saudi Center for Islamic Economics and Finance), its activities include a periodic meeting by its members to discuss specific topics related to the industry’s development in Spain, conducting case studies and holding expert conferences, as well as producing an annual report on the state of Islamic finance in Spain.
Related publications:
“Islamic finance in Spain 2017,” Socioeconomic Memorandum 13 / 2017.
“Islamic finance in Arab transition processes,” Issue number 14 / 2016 of the “Awraq” journal published by Casa Árabe
“Islamic finance today: Outlook and keys to growth” - Socioeconomic Memorandum 09 / 2010 of Casa Árabe.
Front page of the document