Industry to grow slowly at 5 per cent in 2018 and 2019
The Islamic finance industry, which is set for a relatively slower growth over the next two years, could tap new opportunities by turning to financial technology, or FinTech, said S&P Global Ratings in a report issued on Tuesday.
Global Islamic financing will grow by an average of 5 per cent in 2018 and 2019, unchanged from last year and dampened by weak economic growth in core markets including the oil-rich Arabian Gulf states, the rating agency said. Fintech may stimulate the industry in the short to medium term.
“Fintech could help unlock new growth opportunities through faster execution and better traceability of transactions,” S&P Global said.
The low single-digit growth expected in the industry stems from “mild” economic recovery in the GCC because of the mega Islamic bond issuances that were announced last year and uncertainty around the performance of the sukuk market this year. Islamic banks have been slower than their conventional peers in the digital race. Fintech start-ups have been on the rise in the region and are expected to more than double by 2020 from 2015, according to Wamda Research Lab. Islamic banks have to develop a clear digital strategy to upgrade their capabilities and take advantage of the technology.
Fintech start-ups are emerging in the Gulf after governments launched initiatives to boost their growth. The Dubai International Financial Centre, the emirate’s financial free zone, launched a US$100 million (Dh367.7m) fund in November to encourage the growth of fintech start-ups in the c