As per the NFT marketplace platform red_mad_robot, the Gulf countries will be the main drivers of the USD 4 trillion global growth in the Islamic banking sector by 2026.
According to red_mad_robot’s ‘State of Fintech: The Islamic Banking Industry’, the assets in the Islamic banking industry have increased from USD 1.08 trillion to USD 2.08 trillion over the past four years.
The development of the Islamic financial system will be fuelled by digitalisation, with fintech companies leading the way in implementing new technologies and establishing new benchmarks for communication in the financial industry.
In terms of transactions, the study predicts that the global Islamic fintech market is projected to reach approximately USD 79 billion by 2021. By 2026, the market is projected to have grown by 18% annually on average, to a total value of USD 179 billion. The biggest fintech markets will be in Malaysia, Indonesia, UAE, Saudi Arabia, Iran, and Turkey.
The most innovative fintechs from the Islamic economies’ participating nations have also found a use in a number of subsectors. These consist of insurtech, other fintech products, blockchain and smart contracts, cryptocurrencies, payment services, digital banks, investment platforms, robo-advisors, and information security in the financial industry.
The primary obstacles to the digitalisation of Islamic banking and Islamic fintech are related to the general ignorance of Islamic products, the report noted further.
The Islamic economy has a relatively small market share. According to the report, there are continued and significant obstacles for the sector in the form of the lack of trained human resources and regulations, along with the requirement for widespread and high-quality internet coverage, which can give customers access to new digital financial products.
Islamic finance, in the last few years, has emerged as a crucial component of the Islamic economic system, involving business dealings that comply with Islamic law with regard to the allocation and application of funds. Islamic banking, which first appeared in rural and agricultural economies, has developed into a logical system of financial services, goods, and ideals.
“It should be noted that in recent years it is fintech companies that have set new standards of interaction in the financial world: ease of use, quick access, and continuous improvement to maximise customisation. The Islamic financial system will get an additional impetus for development by financing innovative Islamic fintech companies,” the red_mad_robot report concluded.