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Islamic Finance

OIC markets key players in global Islamic fintech space 

Key Organisation of Islamic Cooperation (OIC) economies continue to dominate the global Islamic fintech space, with Southeast Asia and GCC regions emerging as strong regional centres for Islamic fintech activity, a recent report has revealed. 

Saudi Arabia, Iran, Malaysia, the UAE, Indonesia, and Kuwait have emerged as top six Islamic fintech markets by transaction volume and assets under management, accounting for 85% of the global market size, according to the Global Islamic Fintech (GIFT) Report 2023/24 launched on Thursday.  

Abdul Haseeb Basit, co-founder and principal at ethical digital finance advisory and investment firm Elipses and co-author of the GIFT 2023/24 report, said that diversification and consolidation being led by the mature players in the sector sets the precedent from where future growth may emerge. 

“Two dominating regional centres in SE Asia and MENA-GCC led by Malaysia and Saudi Arabia show that ecosystem support initiatives that increase conduciveness to Islamic fintech continue to bear fruit.”

The global Islamic fintech market is forecast to record $306 billion in transaction volumes by 2027, up from $138 billion in 2022/2023. The ecosystem currently consists of 417 such companies around the world. 

Countries like Indonesia, Malaysia, and the Saudi Arabia have emerged as hotspots, leveraging their supportive regulatory frameworks and strong Islamic finance ecosystems. 

The GIFT Index 2023/24, which is part of the report, lists Malaysia, Saudi Arabia, Indonesia, the UAE and the UK as the top five Islamic fintech conducive ecosystems in the world. 

The index ranks 64 OIC and non-OIC countries on their conduciveness to the Islamic fintech market and ecosystem in their jurisdictions. It uses 19 indicators across five categories – talent, regulation, infrastructure, Islamic fintech market and ecosystem, and capital.

Oman made it to the GIFT Index's top 10 countries for the first time. 

However, challenges remain that continue to stymie the sector’s growth.

The findings identified access to capital, consumer education, regulation, talent, and the complexity of geographic expansion as the sector’s biggest pain points. 

“As we navigate challenges such as regulatory complexity, it is the sector's innovative spirit and ethical foundation that excites us of its potential to lead meaningful change of financial inclusion and equity globally,” adds Rafi-uddin Shikoh, founder of DinarStandard.

The sector's ability to cater to a young, digitally native Muslim as well as an ethical, finance-conscious global demographic, is most exciting, he adds.  
The Global Islamic Fintech Report 2023/24 can be downloaded here