UK Islamic Finance Market - Growth, Trends, COVID-19 Impact and Forecasts (2022 - 2027)

The UK Islamic Finance market can be segmented By Financial Sector (Islamic Banking, Islamic Insurance ‘Takaful’, Islamic Bonds ‘Sukuk’, Other Islamic Financial Institutions (OIFL’s), and Islamic Funds).

Market Snapshot

Study Period: 2018-2027
Base Year: 2021
CAGR: >3 %

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Market Overview

The pandemic has 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.

Islamic Finance has developed rapidly in the United Kingdom during the past decade (2011- 2021) and the government has been very supportive of its development and promotion. The United Kingdom hosted the first stand alone Islamic financial Institution in 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 2021 when the government issued its second sovereign sukuk of £500 million, 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 $200bn in 2003, the Islamic Finance sector is expected to grow to over $4trillion in assets by 2030.

Scope of the Report

A complete background analysis of the UK Islamic Finance Market, which includes an assessment of the National accounts, economy, and the 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 can be segmented By Financial Sector (Islamic Banking, Islamic Insurance ‘Takaful’, Islamic Bonds ‘Sukuk’, Other Islamic Financial Institutions (OIFL’s), and Islamic Funds).

By Financial Sector
Islamic Banking
Islamic Insurance 'Takaful'
Islamic Bonds 'Sukuk'
Other Financial Institutions (OIFL's) and Islamic Funds

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Key Market Trends

Digital Disruption of the Financial Services

Five years ago, Western economies experienced a surge in fintech start-ups 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 own 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 start-ups, 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 modernisation, 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.


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 per cent.

According to Fitch, the global amount of outstanding Sukuk reached $754.1bn in Q2 2021, which is 5 per cent higher than the same figure recorded in Q1. 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.

There have been attempts by the government to make the financial environment more religiously inclusive in the UK, yet the overall lack of available Sharia-compliant products has been a topic of recent debate. There are calls 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 top objective in 2022 and beyond. Part of this is due to the growing customer base. In the UK, there is estimated to be more than 100,000 Islamic finance retail customers. Government also puts the value of net assets of Islamic funds in the UK to £600m, with this figure set to rise in the ensuing 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 technological advancement and product innovation, mid-size to smaller companies are increasing their market presence by securing new contracts and by tapping new markets.

Recent Development

  • Jan 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.
  • Nov 2021: An interesting development in Islamic consumer financing has been the establishment in the UK of Beehive, a peer-to-peer financing platform that includes a shariah-compliant window. Beehive's shariah-compliant window uses commodity murabahah financing backed by the Dubai Multi Commodities Centre's Tradeflow commodities trading platform, which is based in the Dubai International Financial Centre (DIFC).

Table of Contents


    1. 1.1 Study Deliverables

    2. 1.2 Study Assumptions

    3. 1.3 Scope of the Study




    1. 4.1 Market Overview

    2. 4.2 Market Drivers

    3. 4.3 Market Restraints

    4. 4.4 Value Chain / Supply Chain Analysis

    5. 4.5 Porters 5 Force Analysis

      1. 4.5.1 Threat of New Entrants

      2. 4.5.2 Bargaining Power of Buyers/Consumers

      3. 4.5.3 Bargaining Power of Suppliers

      4. 4.5.4 Threat of Substitute Products

      5. 4.5.5 Intensity of Competitive Rivalry

    6. 4.6 Impact of COVID-19 on Industry


    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


    1. 6.1 Overview (Market Concentration and Major Players)

    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


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Frequently Asked Questions

The UK Islamic Finance Market market is studied from 2018 - 2027.

The UK Islamic Finance Market is growing at a CAGR of >3% over the next 5 years.

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

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