(MENAFN- Khaleej Times) Islamic finance is gaining momentum as more and more consumers are now taking up Shariah-compliant products and services that is fuelling growth in the industry, according to a top banker.
Tooran Asif, chief executive of Mashreq Al Islami, says that Islamic finance is not a niche market anymore, and that there is a huge appetite for Islamic finance across the world. He underlines an important role of banking regulators to promote Islamic finance and said the industry has no choice but to offer high-quality solutions and services to win more customers and sustain the growth in years to come.
"There was a time when Islamic banking was considered niche. However, over the last few years, consumers are increasingly seeking value propositions offered by Islamic proposition providers and solutions and in return financial institutions have responded well," Asif told Khaleej Times on the sidelines of an event held recently.
The Islamic finance industry, which spans more than 70 countries across the world, is expected to double in size in next six years and may hit $4 trillion by 2020. The International Monetary Fund, the World Bank and other global economic bodies said Islamic finance has already doubled in the past four years and is now worth more than $2 trillion as the demand is increasing with every passing day.
UAE sees healthy mix
Asif said the UAE now sees a healthy mix of stand-alone Islamic banks and Islamic windows, which offer competitive solutions that are better or comparable to the best conventional solutions.
"Over the past six or seven years, the UAE and the region has seen an unprecedented rise in the trajectory of Islamic banking. This is led by Saudi Arabia, the UAE, Qatar, Bahrain and now Oman introducing regulations for Islamic finance," he said.
"In most of these countries we will find Islamic banks are amongst the leading banks in the country. More and more consumers are now taking up Islamic products and services which is further fuelling growth."
The latest data indicates that only 40 million of the 1.6 billion Muslim population across the world is now using the products launched by the Islamic finance industry. Despite this meagre share in the global banking industry, leading international organisations including the IMF and the World Bank estimated that the assets of Islamic financial institutions grew nine-fold to $1.8 trillion between 2003 and last year.
About 80 per cent of the assets are now in banks, 15 per cent in sukuk, four per cent in investment funds and one per cent in Islamic insurance known as Takaful. Iran is accounted for about 40 per cent of Islamic banking assets followed by Saudi Arabia and Malaysia, who hold 12 per cent and 10 per cent, respectively.
Positive outlook
Asked if Islamic retail banking can replace conventional mode of banking some time in the future, he said Islamic banking will be playing a dominant role in some markets in the Muslim world.
"In some markets Islamic finance will be the dominant mode - Malaysia, Saudi Arabia, Pakistan and the UAE are on route, while other countries are still in the evolution and emerging status," he said.
Referring to London and Singapore, Asif said non-traditional markets have also shown interest in Islamic finance due to its rising demand in the industry.
"We believe the outlook for Islamic finance is very positive," he said.
To a question about the challenges to promote Islamic finance across the globe, he said most of the Muslim population is still not banking with Islamic banks and this is where the regulators and other related authorities role comes in to promote and encourage Islamic financial industry growth.
"The UAE and Malaysia are progressive examples for other countries to emulate," he said.
Mashreq initiatives
About Mashreq's initiatives to promote Islamic finance in the UAE, Asif said the bank is keen to provide speedy, flexible, competitive and digitally-enabled solutions to its Islamic segment proposition.
"We realised there is significant consumer demand, but there was an opportunity to provide high quality solutions which we did with all our propositions," he said.
"Mashreq's DNA is innovation. Our top priority for Mashreq AI Islami is to offer the most competitive, speedy solutions at the best value to our customers. We are an award winning organisation - Mashreq Al Islami has received the 'Best Islamic Window' award for 2010, 2011 and 2013 and we just recently won the 'Most innovative solutions provider'."
Mashreq Al Islami is the Islamic banking arm of the Mashreq group, which has been providing banking and financial services to millions of customers and businesses since 1967. The bank aims at progressive Islamic banking by launching high-standard, Shariah-compliant products and services to promote the industry.
"We have the best in class personal, auto, home financing and cards/payments solutions. The bank offers the best Takaful savings plans and investment solutions. We also have the best performing fixed- income fund and Islamic equity fund. We are building and promoting our Islamic business banking solutions to business banking clients and wealth solutions for our premier and private banking clients," Asif concluded.
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