Innovation and product diversification to drive growth of Islamic finance industry
The global Islamic finance industry has been forecasted to touch the AED7.3 trillion (US$2 trillion) mark in the next three to five years. However, Islamic finance has not reached even three percent of the 1.6 billion Muslims globally.
The growth of Islamic finance has been slow but steady. Industry analysts are of the opinion that the sector will witness growth in the areas of retail, consumer banking, small and medium sized enterprises (SME) commercial banking and investment banking towards the end of 2010.
â€œThere has been a growth in Islamic banking among non-Muslim nations as they are more receptive. However, in the next five years, there will be more focus and participation from Muslim nations,â€ said Mohd Razif Abdul Kadir, Deputy Governor, Central Bank of Malaysia.
As per market reports, demand for Islamic banking will come from consumer confidence in the markets. Early 2011 will see a return to normalcy across Islamic finance markets with a focus on innovation and exploring untapped segments. There would also be a greater push towards finding other areas such as fund management, which will attract much attention from the industry.
â€œInvestors are shifting their preferences to more stable and well-grounded fundamentals. Innovation and diversification of our offerings is necessary as investors today are more cautious,â€ added Muhsen Mohammed Al-Haribi, CEO, Sorooh Investments.