The AlHuda Centre of Islamic Banking and Economics (CIBE) has made an optimistic forecast regarding the future of the Islamic finance industry, predicting that total assets will surpass an impressive $5 trillion by 2025. This projection signifies the resilience of Islamic finance and its growing importance in the ever-evolving global financial landscape. While the sector has confronted periods of gradual growth, particularly within Islamic microfinance in the last couple of years, 2025 is anticipated to herald a significant turning point, propelled by escalating demands for financial inclusion, sustainable financing options, and innovative Islamic financial products.
Currently, the Islamic finance industry is valued at approximately $4 trillion and spans over 80 countries, although it remains heavily concentrated in a select number of markets. Saudi Arabia and Iran are the clear frontrunners, each holding a substantial 25% to 30% market share, followed by Malaysia at 12%, the UAE at 10%, Kuwait and Qatar at 5.5%, along with Türkiye and Bahrain at 3.5%, and Indonesia and Pakistan at 2%. The segment of Islamic banking dominates the industry, constituting approximately 70.21% of the overall market with assets totaling $2.37 trillion, particularly flourishing in the GCC region.
Moreover, the Takaful market continues to thrive, with projections indicating growth from $33.14 billion in 2024 to an anticipated $51.75 billion by 2028. The Sukuk market is equally vibrant, with global issuances expected to reach $170 billion in 2024 and outstanding sukuk anticipated to exceed $875 billion. The rise of ESG (Environmental, Social, and Governance) sukuk reflects a notable trend towards sustainable financial instruments, meeting the growing appetite for ethical investment opportunities.
A significant driver of growth projected for 2025 is the rapid advancement of Islamic fintech. The market size is poised to increase from $138 billion in 2022/23 to $306 billion by 2027, exhibiting an impressive compound annual growth rate (CAGR) of 17.3%. The introduction of Islamic environmental fintech, which marries digital innovation with sustainability and adheres to Shariah principles, is expected to catalyze transformative change, expanding the reach and effectiveness of Islamic finance.
Islamic scholars globally have underscored the promising trajectory of the industry, noting its entry into a transformative phase characterized by core principles of innovation, inclusivity, and sustainability. The anticipated achievement of the $5 trillion milestone in 2025 not only reflects the sector’s critical role in enhancing global economic resilience but also in promoting financial inclusion. Islamically compliant banking practices within the GCC, the burgeoning sukuk market, and the rise of Islamic fintech are pivotal contributors to this projected success. Furthermore, Islamic nations are increasingly dedicated to advancing the sector through robust research, product development, training initiatives, and strategic partnerships, ensuring that Islamic finance continues to champion equitable and sustainable progress on a global scale.
As a leading entity in promoting Islamic finance worldwide, AlHuda CIBE has established itself by providing vital consultancy, Shariah advisory, and capacity-building services across various jurisdictions. Over the past twenty years, it has significantly empowered financial institutions to embrace Shariah-compliant frameworks while fostering innovation and expanding access to ethical financial solutions. Through the organization of global forums, comprehensive training programs, and the provision of strategic insights, AlHuda CIBE remains at the forefront of driving innovation and excellence within the Islamic finance sector.
With a keen focus on 2025 and beyond, AlHuda CIBE is resolutely committed to navigating emerging challenges and capitalizing on growth opportunities, particularly in Islamic microfinance and fintech, both of which are set for substantial advancements in the coming years.
The author is the Managing Director and CEO of National Bank Limited. He is a fellow member of the Institute of Cost & Management Accountants of Bangladesh (ICMAB) and the first Certified Sustainability Reporting Assurer (CSRA) in Bangladesh. He also holds a postgraduate diploma from the Institute of Islamic Banking & Insurance (IIBI), United Kingdom.
Messenger/EHM
