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UAE’s Islamic Banking Assets To Reach $263bn By 2019

UAE’s Islamic Banking Assets To Reach $263bn By 2019

Islamic banking assets in the Emirates crossed $1 billion in 2014, a new report says.

The UAE is predicted to record sharia-compliant assets worth $263 billion by 2019, according to a report by audit firm EY.

In 2014, sharia complaint assets in the UAE crossed $1 billion while the industry itself was estimated to be worth $127 billion.

The UAE was the third largest Islamic banking market by value after Saudi Arabia and Malaysia, the report said.

Meanwhile, Islamic banking penetration in the UAE stood at 21.4 per cent last year, representing a 14.6 per cent share of the global market.

The industry was also estimated to have been growing at more than twice the rate of conventional banking, the report said.

“Islamic banks in the UAE, also known as participation banks, are eyeing revenue growth through experience-led transformation of their domestic business,” said Ashar Nazim, global Islamic finance leader at EY.

“Stronger capital position is also driving their international expansion. Initiatives in mobile payments are likely to cause positive disruption to banks’ traditional operating models.

“Looking at the positive performance of Islamic banks in the UAE, the country is expected to be one of the main markets that drive the future internationalisation of the Islamic banking industry.”

The study also gauged customer satisfaction with the UAE’s Islamic banks by monitoring social media feeds.

According to EY, Islamic lenders scored positively among their clients for their customer service. But customers showed dissatisfaction with products offered by sharia-compliant banks in the country.

“The call to action for Islamic banks in the UAE is to build rich insights into customers’ delight and pain points, and break operational silos,” said Nazim.

“The time is right for analytics; banks need to challenge their channel capabilities and push for more customised products and services.

“Regulatory intervention on product design can help to both attract and protect consumers. The reputations of Islamic banks today will depend on the way banks engage with their customers.”

Dubai is aiming to be an Islamic finance hub, as it staves off intense competition from other upcoming Islamic finance hubs such as London and Luxembourg in Europe.

In order to promote its position among Islamic economies, the emirate also established the Dubai Islamic Economy Development Centre in 2013.

The centre will also work towards promoting sharia compliant goods and will help in building a database of Islamic economic activities while encouraging arbitration in the same.

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