Islamic banking assets with commercial banks globally are set to cross US$1.7t in 2013 suggesting an annual growth of 17.6% over last four years. However, there is a noticeable slowdown caused by two major developments
- The continuing economic and political setbacks in some of the frontier Islamic finance markets
- The large-scale operational transformation that continues to consume focus and investment
Six rapid growth markets, together with Bahrain, are important to the future internationalization of the Islamic banking industry:
- Saudi Arabia
We refer to these markets as QISMUT. They hold a large pool of financial and intellectual capital of the industry that will drive the next wave of development across existing and new markets. Islamic banks are already serving c. 38 million customers globally, two-thirds of whom reside in QISMUT.
We expect Islamic banking assets with commercial banks to grow at a CAGR of 19.7% over 2013–18 across the QISMUT countries to reach US$1.6t by 2018 (2012: US$567b). Internationalization will be an important growth driver, bringing in new challenges to these Islamic banks.
Trade patterns are shifting decisively in favor of RGMs, and QISMUT will be the major beneficiaries.
- Connectivity: key to sustainable growth
- Customers: with growth comes added complexity
- Operational transformation: long-term value to Islamic banks