Following last week’s World Islamic Banking Conference (WIBC) in Manama, Bahrain, a report published today by Falak Consulting’s Research Department (FCRD) has highlighted that Islamic Banking could be the more economically viable and sustainable model of financing going forward.
The report looks at the financial crisis of 2009 where conventional banks witnessed far greater levels of exposure in comparison to their Islamic banking counterparts and recognizes the overall potential Islamic banking and finance is able to offer the existing market.
With discussions at this year’s WIBC event highlighting similar themes including looking at “Business in the Middle East and the Role of Islamic Finance”, or “New Strategic Approaches to Revitalize Global Growth”, the potential for Islamic banking is certainly there.
The FCRD report highlights recent statistics which indicate that Islamic banking is currently the fastest growing segment in the international financial system with an estimated asset size of $1.1 trillion in 2011, representing 80.9 per cent of Islamic Finance assets and 1 per cent of total banking assets worldwide. Building on the same, the report goes on to establish a risk and return framework for “a healthy and transparent growth of the Islamic financial architecture” in the region.
Commenting in light of the WIBC event and the published FCRD report, Suhail Ghazi Algosaibi, Co-Founder and Chairman of Falak Consulting, said, “The 2009 financial crisis has taught us a number of things, the first being that conventional banks and current models are not invincible.
It has also opened our eyes to the need to consider other options of banking that are safer, sustainable and viable, which at this point Islamic banking could potentially offer. As a result, we are now witnessing a growing number of global conventional banks exploring this potential as well as increased discussions around the future and way forward for Islamic Finance and Banking, as seen last week at the 20th WIBC event in Bahrain.”
At present there are a number of global retail banks introducing Islamic banking options including Lloyd’s Bank, HSBC, Standard Chartered and the Islamic Bank of Britain. In Bahrain alone, there are over 26 Islamic banks currently in operation making up a total of $26.2 billion in assets, as of August 2013, according to the Central Bank of Bahrain.