Islamic Banking in the UK Market Size & Share Analysis - Growth Trends & Forecasts (2024 - 2029)

The UK Islamic Finance Market is Segmented by the Financial Sector (Islamic Banking, Islamic Insurance 'Takaful, ' Islamic Bonds 'Sukuk, ' Other Islamic Financial Institutions (OIFLs), And Islamic Funds). The Report Offers the Value (USD) for the Above Segments.

UK Islamic Finance Market Size

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UK Islamic Finance Market Summary
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Study Period 2020 - 2029
Base Year For Estimation 2023
Market Size (2024) USD 7.5 Billion
Market Size (2029) USD 8.74 Billion
CAGR (2024 - 2029) 3.12 %
Market Concentration Low

Major Players

UK Islamic Finance Market Major Players

*Disclaimer: Major Players sorted in no particular order

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UK Islamic Finance Market Analysis

The UK Islamic Finance Market size is estimated at USD 7.5 billion in 2024, and is expected to reach USD 8.74 billion by 2029, growing at a CAGR of 3.12% during the forecast period (2024-2029).

The UK made up just 0.3% of global Islamic banking assets. However, in Europe, the UK stands out as it made up 85% of total European Islamic banking assets, with the most Islamic banking assets of any single European country (excluding Turkey).

Islamic Finance has developed rapidly in the United Kingdom during the past decade (2011- 2022), and the government has been very supportive of its development and promotion. The United Kingdom hosted the first stand-alone Islamic financial Institution in the European Union and has the highest value of Shariah-compliant assets of any non-Muslim country.

The success of the government's initiative to develop Islamic Finance in the UK was shown in 2022 when the government issued its second sovereign sukuk of EUR 500 million (USD 533625000), which was sold to institutional investors in the UK, the Middle East, and Asia.

Islamic Finance will continue to expand in the next decade across regions and asset classes. From a market of just USD 200 billion in 2003, the Islamic Finance sector is expected to grow to over USD 4 trillion in assets by 2030.

The COVID-19 pandemic provided another 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 equip it to act as a potential warrior to safeguard the interest of the poor and vulnerable under crisis.

UK Islamic Finance Market Trends

Digital Disruption of the Financial Services

Five years ago, Western economies experienced a surge in fintech startups offering more effective and efficient services through the creative application of software. Consequently, traditional finance institutions are now competing with challenger brands and neobanks to appeal to 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 challenger brands to rival the new competition.

The scale and pace of digital disruption led by startups initially focused on the delivery of traditional financial services. The success of this first fintech wave has encouraged a new generation of startups, which are applying technology to deliver products and services designed specifically for certain demographics.

The creation of tech-enabled Sharia-compliant banks is on the rise in both Western and Islamic jurisdictions. Particularly in regions like Central Asia, where countries are undergoing 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 investment is directed into these Islamic fintech companies, we are likely to see the sector grow.

UK Islamic Finance Market : Number of Financial Services, By sector, 2023

Growing Market awareness of Islamic Finance by big Financial Institutions

Take Sukuk (an Islamic financial bond that effectively acts as a trust certificate) as an example. Sukuk supply has been rising in both Islamic and non-Islamic markets. Most Sukuk issuances are hybrid, with debt making up no less than 30 percent. As the first Western nation to issue a sovereign Sukuk, the UK has raised more than $50bn through 68 Sukuk issuances on the London Stock Exchange.

While there is general awareness of Islamic finance, actual knowledge of its basic principles is not typically high among financial professionals based in non-Muslim jurisdictions. This is an issue that has been raised on numerous occasions in the UK.

UK Islamic Finance Market : Growth Rate of Financial Institutions, By Sector, 2019-2022

UK Islamic Finance Industry Overview

The UK Islamic Finance Market is fragmented with many players. 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, which includes Gatehouse Bank, Al Rayan Bank, Abu Dhabi Islamic Bank, QIB UK, Bank of London, and The Middle East. However, with technological advancement and product innovation, mid-size to smaller companies are increasing their market presence by securing new contracts and tapping new markets.

UK Islamic Finance Market Leaders

  1. Gatehouse Bank

  2. Al Rayan Bank

  3. Abu Dhabi Islamic Bank

  4. QIB UK

  5. Bank of London and The Middle East

*Disclaimer: Major Players sorted in no particular order

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UK Islamic Finance Market News

  • April 2023: London-based Nomo Bank has announced an innovative new partnership with Abu Dhabi-based banks ADCB and Al Hilal Bank to bring digital UK banking to UAE nationals and residents.
  • January 2022: Non-core market sovereigns such as the UK, Maldives, and Nigeria also issued sukuk. Fitch-rated sukuk reached USD132.4 billion in 2021, 80.1% of which were investment-grade. Outlooks improved with the share of sukuk issuers, with Negative Outlooks falling to 8.8% in 4Q21 from 23.4% in 4Q20.

UK Islamic Finance Market Report - Table of Contents

  1. 1. INTRODUCTION

    1. 1.1 Study Deliverables and Market Definition

    2. 1.2 Scope of the Study

  2. 2. RESEARCH METHODOLOGY

  3. 3. EXECUTIVE SUMMARY

  4. 4. MARKET DYNAMICS

    1. 4.1 Market Overview

    2. 4.2 Market Drivers

      1. 4.2.1 Increase in International Business and Trade

      2. 4.2.2 Increase in Muslim Population

    3. 4.3 Market Restraints

      1. 4.3.1 Limited Availability of Islamic Banking

    4. 4.4 Market Opportunities

      1. 4.4.1 Diversification for Conventional Banks

    5. 4.5 Porter's Five Forces Analysis

      1. 4.5.1 Bargaining Power of Buyers/Consumers

      2. 4.5.2 Bargaining Power of Suppliers

      3. 4.5.3 Threat of New Entrants

      4. 4.5.4 Threat of Substitute Products

      5. 4.5.5 Intensity of Competitive Rivalry

    6. 4.6 Insights of Technology Innovations in the Market

    7. 4.7 Impact of COVID-19 on Industry

  5. 5. MARKET SEGMENTATION

    1. 5.1 By Financial Sector

      1. 5.1.1 Islamic Banking

      2. 5.1.2 Islamic Insurance 'Takaful'

      3. 5.1.3 Islamic Bonds 'Sukuk'

      4. 5.1.4 Other Financial Institutions (OIFL's) and Islamic Funds

  6. 6. COMPETITIVE LANDSCAPE

    1. 6.1 Market Concentration

    2. 6.2 Company Profiles

      1. 6.2.1 GateHouse Bank

      2. 6.2.2 AI Rayan Bank

      3. 6.2.3 Abu Dhabi Islamic Bank

      4. 6.2.4 QIB UK

      5. 6.2.5 Bank of London and The Middle East

      6. 6.2.6 ABC International Bank

      7. 6.2.7 Ahli United Bank

      8. 6.2.8 Bank of Ireland

      9. 6.2.9 Barclays

      10. 6.2.10 BNP Paribas

      11. 6.2.11 Bristol & West

      12. 6.2.12 Citi Group

      13. 6.2.13 IBJ International London

      14. 6.2.14 J Aron & Co*

    3. *List Not Exhaustive
  7. 7. MARKET OPPORTUNITIES AND FUTURE TRENDS

  8. 8. DISCLAIMER

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UK Islamic Finance Industry Segmentation

Islamic banking, also referred to as Islamic finance or Shariah-compliant finance, refers to financial activities that adhere to Shariah (Islamic law). Two fundamental principles of Islamic banking are the sharing of profit and loss and the prohibition of the collection and payment of interest by lenders and investors. A complete background analysis of the UK Islamic Finance Market, which includes an assessment of the National accounts, economy, and emerging market trends by segments, significant changes in the market dynamics, and the market overview, is covered in the report. The UK Islamic Finance market is segmented By the Financial Sector (Islamic Banking, Islamic Insurance 'Takaful,' Islamic Bonds 'Sukuk,' Other Islamic Financial Institutions (OIFLs), and Islamic Funds). The report offers the value (in USD) for the above segments.

By Financial Sector
Islamic Banking
Islamic Insurance 'Takaful'
Islamic Bonds 'Sukuk'
Other Financial Institutions (OIFL's) and Islamic Funds
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UK Islamic Finance Market Research FAQs

The UK Islamic Finance Market size is expected to reach USD 7.5 billion in 2024 and grow at a CAGR of 3.12% to reach USD 8.74 billion by 2029.

In 2024, the UK Islamic Finance Market size is expected to reach USD 7.5 billion.

Gatehouse Bank, Al Rayan Bank, Abu Dhabi Islamic Bank, QIB UK and Bank of London and The Middle East are the major companies operating in the UK Islamic Finance Market.

In 2023, the UK Islamic Finance Market size was estimated at USD 7.27 billion. The report covers the UK Islamic Finance Market historical market size for years: 2020, 2021, 2022 and 2023. The report also forecasts the UK Islamic Finance Market size for years: 2024, 2025, 2026, 2027, 2028 and 2029.

Islamic Banking in UK Industry Report

Statistics for the 2024 UK Islamic Finance market share, size and revenue growth rate, created by Mordor Intelligenceā„¢ Industry Reports. UK Islamic Finance analysis includes a market forecast outlook to for 2024 to 2029 and historical overview. Get a sample of this industry analysis as a free report PDF download.

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Islamic Banking in the UK Market Size & Share Analysis - Growth Trends & Forecasts (2024 - 2029)