Market Trends of UK Islamic Finance Industry
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.
Growing Market awareness of Islamic Finance by big Financial Institutions
The UK stands out as a prominent Western hub for Islamic finance, boasting a robust ecosystem of banks, financial institutions, asset managers, and advisory firms that specialize in Sharia-compliant offerings. The sector has witnessed consistent growth, buoyed by both a supportive regulatory landscape and an increasing awareness of Islamic finance tenets. The UK has proactively established a regulatory framework that fosters the growth and diversification of Sharia-compliant financial products and services. Overseeing these activities is the Financial Conduct Authority (FCA), which ensures adherence to pertinent laws and standards. Islamic banks in the UK provide a gamut of Sharia-compliant products, spanning current and savings accounts, home financing (Murabaha), and investment accounts. These institutions strictly adhere to Islamic principles, eschewing interest (riba) and upholding ethical benchmarks.
