The recent Global Islamic Fintech (GIFT) Index revealed that Malaysia and Saudi Arabia are leading with their respective number of fintechs in the industry. Other international hubs include Indonesia, the United Arab Emirates (UAE) and the United Kingdom. Increasing consumer demand and investor appetite continue to propel the global Islamic fintech industry forward.

Islamic banking in MENA

Islamic banking is distinctive from conventional banking based on key features. Conventional banks operate on the basis of borrowing and lending with pre-determined interest rates. Islamic banks do not offer nor charge interest. Rather, Islamic banks are funded by current accounts (without interest) and profit-sharing investment accounts (PSIA) where account holders receive a return of the bank’s profitability.

Islamic banking assets form a prominent feature of the MENA financial landscape. Within MENA, 14% of total banking assets are related to Islamic banking and over 25% of the Gulf Corporation Council's (GCC) total banking market share is attributed to Islamic banking¹³.

The Dubai Islamic Bank was set up in 1975 - the first of its kind globally -  and is still a key player in the industry today. Other market leaders in offering sharia-compliant solutions for customers in the region include:

• Bank Al-Rajhi

• Abu Dhabi Islamic Bank

• Kuwait Finance House

• Qatar Islamic Bank

• National Commercial Bank Saudi Arabia

Myths we’re busting:

Myth 1. Sharia compliance is restrictive to economic development:

Trade is encouraged. Sharia law simply provides principles to ensure business activities align with public good and in an ethical manner to promote transparency, fairness and sustainability.

Myth 2. Sharia compliance is only available for Muslim-majority countries and communities:

Sharia law is a guide for the behaviour of all Muslims. However, sharia-compliant products and services are accessible to anyone who is looking for an ethical alternative to conventional banking and finance. Plus, Islamic finance is gaining popularity across various secular communities across the globe.

Myth 3. Sharia compliance is mandatory to operate in MENA:

With a significant Muslim population in the region, there is a strong demand for Sharia-compliant solutions. However, conventional financing and banking houses exist across the region.

Myth 4. Sharia compliance affects payments in MENA:

While it is important for local payment companies to understand the broader context of the financial landscape and the principles of Sharia law, Sharia has no impact on payments in the region. Payment systems and processing operate under the guidance of local regulators. These forward-looking regulators - such as CBUAE in the UAE and SAMA in Saudi Arabia -  enable local payment innovation in line with international standards.

Sharia compliance in the MENA payment industry is often misunderstood, leading to misconceptions about the region. By debunking myths and understanding the fundamentals of Sharia law, we can gain a clearer understanding of how Islamic finance promotes innovation, transparency, and sustainability. Embracing Sharia principles can not only foster trust among consumers but also contribute to a more inclusive and sustainable financial landscape.