Demand for Islamic finance solutions rising

Wednesday 11 December 2019

A new report by Jersey Finance has predicted a rise in demand for Islamic finance solutions in the GCC and Middle East over the next five years.

Produced in partnership with Hubbis, ‘The Evolution of Wealth Management in the World of Islamic Finance 2019’ highlights that promoters of Islamic wealth management – from the providers to the regulators – are gearing up to offer a greater array of Sharia compliant wealth management products and solutions to a client base that is generating private wealth at a rapid rate.

While the 50-70 age bracket currently represents the largest pool of users of Islamic wealth management solutions (59%), 60% of the increase in demand will come from those aged 25-50.

Individuals are forecast to account for more than half (55%) of this increase, versus 33% from family offices and 12% from institutions.

In addition, the report finds that socially responsible investing (SRI) and products offering environmental, social and governance (ESG) standards are driving the increase in demand for Islamic wealth management solutions. 92% of respondents said that incorporating new investment principles such as SRI and ESG would help boost the Islamic finance wealth management market.

Meanwhile, as demand grows, the report points to a need for “better structures and proper governance”, with Islamic finance hubs in the Middle East, such as Dubai and Bahrain, revamping their trust regimes and continuing to improve their regulatory framework and market initiatives.

Today, Malaysia leads the ranks as the largest Islamic finance hub, whilst Dubai is noted as the second ‘most sought-after jurisdiction’ followed by Jersey in third.

Pictured: Joe Moynihan, Chief Executive Officer, Jersey Finance.

“Islamic finance is clearly on a growth trajectory, which will be driven by the next generation of high net worth individuals who are more focussed on socially responsible investment - something that chimes very well with the tenets of Sharia compliant finance," said Joe Moynihan, Chief Executive Officer, Jersey Finance.

“The industry as a whole will need to work together to overcome hurdles to this growth, in terms of governance and the interpretation of laws and principles. However, backed up by a flexible legal system, forward-thinking regulatory regime and tax neutral environment, Jersey's Islamic finance proposition remains highly sought after on the global stage, and we are well placed to meet the needs of an increasingly international client base.”

Richard Nunn, Regional Head – East at Jersey Finance, added: “What the report shows is that Islamic finance is no longer a niche product for Muslim investors alone; rather, we’re seeing more non-Muslim families and institutional investors seeking both performance and long-term value, as an alternative to conventional products and solutions. Jersey’s ability to provide solutions in this space is really exciting.” 

Pictured top - from left: Richard Nunn, Regional Head - East, Jersey Finance; Jacqueline Price, Business Development Officer, Gulf Region, Jersey Finance; Mihaela Cornelia Moldoveanu, Director, Gulf Region, Jersey Finance; and Faizal Bhana, Director, Middle East and Africa, Jersey Finance.