Rapid Rise in Islamic Finance in Asia Pacific
Financial Insights has released a new report series looking at the development of Islamic banking and finance (IBF) in Asia Pacific. IBF has been growing rapidly over the past few years. Though estimates vary, there is little dispute that annual global growth is consistently in the double digits and that Islamic finance assets under management are currently valued at more than US$400bn. The report shows that, as IBF matures, the industry is seeing a shift from Islamic banking products that merely imitate conventional ones – shariah-compliant products – to completely new, shariah-based products. This should help IBF establish its own unique identity, independent of conventional banking and finance. It is also interesting to note that IBF products in general are attracting a large non-Muslim client base. For example, several large Malaysian banks that offer IBF products and services have stated that more than 50% of their IBF customers are non-Muslims. The results of the report show that the IBF industry has reached a point where, in some product areas, it can provide a credible alternative to traditional banking products. However, the relationship between these two systems is likely to become more complementary than competitive. IBF allows financial institutions to provide capital to the Muslim community and does so in a manner that is fair, transparent and respectful of their beliefs. It is a powerful instrument to assist the Islamic world with its development objectives and will help large numbers of individuals get access to the products and services that non-Muslims have been enjoying for decades.