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The Islamic finance industry is lacking a distinct economic value proposition, which will have an adverse effect on the future of the industry, according to a new report.
Released during the 17th Annual Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI)-Islamic Development Bank (IsDB) Conference on Islamic banking and finance at the Crowne Plaza in Bahrain, the Cambridge Global Islamic Finance Report (Cambridge GIFR) says that market studies have shown the Islamic finance industry is lacking a distinct economic value proposition, which will have an adverse effect on the future of the industry.
The focus of the industry has become very narrow emphasising on the Sharia aspect only, says the oldest yearbook in Islamic banking and finance.
The only way forward, it suggests, is to take a step back and revisit the basics, allocating a distinct definition to Interest-free terminology.
Launched by AAOIFI board of trustees chairman Shaikh Ebrahim bin Khalifa Al Khalifa, the report has taken a futurist stance on the industry of Islamic finance, encouraging researchers, practitioners and professionals to predict the possible trends that could shape the industry moving forward.
This theme is in a way an extension of the last year’s theme on Islamic finance in a post-Covid world.
Each year, the report has a central theme that revolves around a specific trend or future prospect such as regulations, social finance, leadership, human resource development, artificial intelligence, socio-economic inclusion, and halal industry.
One major contribution of the report is the size and growth of the industry.
The global Islamic financial services industry nearly touched the historical milestone of $3 trillion at the end of 2020.
The estimated Islamic financial assets under management (AUM) as of end-2021 was $3.178trn, exhibiting an annual growth of 8.06pc.
“We have identified three trends in the global Islamic banking and finance industry; improvement in Sharia governance framework, emphasis on Islamic social finance and increase in the use of technology,” commented Dr Humayon Dar, founding editor of Cambridge GIFR, during the launch ceremony.
avinash@gdnmedia.bh
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