Islamic banking is growing at more than twice the rate of conventional banking in the UAE and the sector is on track to achieve USD 263 billion of Sharia- compliant assets by 2019, according to a report.
The UAE Islamic financial sector, estimated to be worth USD 127 billion in 2014, is the third largest Islamic banking market by value after the Saudi Arabian and Malaysian markets, said the World Islamic Banking Competitiveness (WIBC) report compiled by the Ernst & Young Global Limited (EY), a UK-based multinational firm.
The report released yesterday said Sharia-compliant assets, which meet all the requirements of Shariah law and the principles articulated for Islamic finance, in the UAE crossed the USD 100 billion milestone for the first time.
The current penetration of Islamic banking in the region stands at 21.4 per cent and represents a 14.6 per cent share of the global market.
The industry in the UAE is growing at more than twice the rate of conventional banking. Due to high demand, there is increased pressure on efficiency as more Islamic banks attempt to go mainstream, it said.
"Islamic banks in the UAE, are eyeing revenue growth through experience-led transformation of their domestic business. 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," said Ashar Nazim, Global Islamic Finance Leader at EY.
The company monitored 55,884 Islamic banking customer sentiments in the UAE on social media as part of a wider study, which looked at 2.2 million customer sentiments dispersed across various online sources in nine key markets (Saudi Arabia, Bahrain, Kuwait, the UAE, Malaysia, Indonesia, Turkey, Qatar and Oman).
The study of social media comments has revealed an improvement opportunity for Sharia-compliant banks with respect to products and services, which were ranked the lowest in terms of customer satisfaction.
"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," Ashar said.
"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," he said.
