State of Fintech: The Islamic Banking

Executive summary

Islamic financе

  • The basic principles of Islamic banking are prohibiting lending interest, speculation, uncertainty, and financing of Sharia-insulting activities.
  • The key principles of Islamic finance are riba, maysir, gharar, and haram.
  • The main products of Islamic finance are Murabaha, Ijarah, Musharakah, Murabaha, Sukuk, Tawarruq, Mudarabah Wadiah, and Zakat.
  • The main players of Islamic finance by assets are GCC-, MENA-, and South-Eastern countries, such as Iran, Saudi Arabia, Malaysia, South Africa, and Qatar.
  • Islamic finance is better developed in Malaysia, Saudi Arabia, Indonesia, Bahrain, and Kuwait.

The state of Islamic banking

  • Islamic banking accounts for 70% of Islamic finance assets.
  • Islamic banking is growing rapidly: assets have increased from $1.8 tn to $2.8 tn (or +55%) in four years. And the industry is expected to grow to $4 tn by 2026.
  • The leading role in the development of Islamic banking belongs to the GCC countries.
  • The world's largest Islamic banks are in Malaysia, Indonesia, Bangladesh, and Bahrain. Malaysia also had the largest share of total assets.
  • 42 of 100 Islamic banks are located in Asia. These banks held 29% of the total assets of the top 100 Islamic banks but generated only 16% of the net profits.
  • Saudi Arabia-based Al Rajhi Bank topped the ranking of the largest Islamic banks in the world.
  • Factors influencing the demand for Islamic banking: the growth of the Muslim population, digitization of the Islamic economy, and growth of demand and consumption of halal products around the world.
  • Factors influencing the supply of Islamic banking: national strategies, government regulation, and increased trade within the Organisation of Islamic Cooperation (OIC).

Promising digital services in Islamic banking

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