GCC, Southeast Asian countries dominate global Islamic fintech landscape

Saudi Arabia, Indonesia, Malaysia and the UAE have produced more than half of the 490 Islamic fintech firms present globally, a new report has revealed. 

A total of 248 Islamic fintech firms are based out of the four countries, constituting a shade over half of the global Islamic fintech pool, according to the Global Islamic Fintech Report (GIFT) 2024/25, co-produced by DinarStandard and Elipses.  

The UK, with 52 firms, rounded off the top five.

Meanwhile, the top ten countries, including Qatar (26), United States (21), Pakistan (19), Singapore (13), and Egypt (11), house 79% of the Islamic fintech enterprises globally. 

Saudi Arabia, Iran, Malaysia, the UAE, Indonesia and Türkiye were the largest markets in terms of estimated transaction volumes in 2023/24, comprising 83% of the global Islamic fintech market. Each country had an estimated market size of more than $7.5 billion during the same period, the report identified. 

The global Islamic fintech market was estimated at $161 billion in 2023/24, and is projected to reach $306 billion by 2028, at a compound annual growth rate (CAGR) of 13.6%. It represents a modest 1.4% of the global fintech market size at present, but its growth rate eclipses the conventional fintech CAGR of 11%. 

Abdul Haseeb Basit, co-founder and principal of Elipses said that the rise of Saudi Arabia as the dominant hub, overtaking Malaysia for the first time sets the stage for regional dominance in the GCC. Other regional players such as the UAE, Qatar, Kuwait and Bahrain are already playing their part. 

“Whilst emerging technology areas such as AI and digital assets/blockchain are hot topic areas, challenges persist with access to capital for the sector. Addressing these in time to capitalise on emerging tech areas will be key to the sector’s future growth trajectory.”

The report published the GIFT Index for 2024/25, listing Saudi Arabia, Malaysia, Indonesia, the UAE and the UK, as the top five Islamic fintech conducive ecosystems globally. 

The index used 19 indicators across five different categories for each country, namely talent, regulation, infrastructure, Islamic fintech market & ecosystem, and capital.

In addition to the top five strongest ecosystems, the report identified Bahrain, Pakistan, Qatar and Türkiye as ecosystems growing in conduciveness to Islamic fintech.

The study, which surveyed Islamic fintech practitioners and service providers, identified key obstacles that stymie sector growth.

These include capital access, regulatory compliance requirements, lack of customer education, geographic expansion complexities and the customer acquisition associated costs.  

“With Islamic fintech fast moving from a niche segment to a mainstay of Islamic finance, the report illuminates both the challenges and the extraordinary opportunities ahead,” said Rafi-uddin Shikoh, founder of DinarStandard. 

“Access to capital remains a defining challenge. We also observed a widening gap between market demand and service provision, particularly in South Asia and emerging jurisdictions.”