Islamic fintech market projected to reach US$128bn by 2025
Confidence in the industry itself appears to be high: 56% of surveyed Islamic fintechs expect to raise an equity funding round of at least $5m. However, there still remain three core challenges facing the industry:
- Lack of capital
- Consumer education
- Talent acquisition
While these are, perhaps, not dissimilar to the strains encountered by fintechs everywhere, these countries’ relatively low scores on the (the UAE is the highest at #34) could enhance the difficulty of attracting talent.
Saudi Arabia is taking the lead
One of the best performing Islamic fintech markets currently is Saudi Arabia, a lead which the GIF Report expects it to maintain in the medium-term. Currently worth an estimated $17.8bn, it could reach $47.5bn in just four years.
However, rather than emphasising strong individual performers, the report finds the net improvement of the sector particularly encouraging:
“Most encouraging are the developments in OIC (Organisation of Islamic Cooperation) countries where large target markets exist,” said Abdul Haseeb Basit, Co-Founder and Principal at Elipses.
“The number of fintechs identified is more than double the amount first identified three years ago, demonstrating the rapid expansion in this sector which is set to continue growing at an accelerating pace.”
In fact, according to metrics like growth and conduciveness, the UAE and Malaysia are actually accorded more status as industry leaders, whereas Saudi Arabia, Iran, Bahrain and Indonesia are still ‘maturing’.
Cooperating for scale
BNI Syariah, Bank Syariah Mandiri and BRI Syariah announced that they would launch Bank Syariah Indonesia, a three-way merger which was fulfilled on 1 February 2021.
Hery Gunardi, Head of Project Management Office for the Integration and Value Improvement of BUMN (state-owned) Sharia Banks, hailed the move as “a milestone in the revival of the Islamic economy and finance in Indonesia.”
Equally, Abdullah Firman Wibowo, President Director of Bank BNI Syariah, believed that the new development would “make Bank Syariah Indonesia an anchor in the halal industry ecosystem and support the vision to position Indonesia as one of the world's Islamic economic centres.”
Findexable: COVID-19 hasn’t slowed down fintech investment
The release of Findexable’s 2021 Global Fintech Rankings report seems to confirm that the COVID-19 pandemic has had no deleterious effect on sector growth.
Compiled annually, Findexable’s report provides one of the most comprehensive surveys of global fintech. From regions to countries and individual cities, it compiles and analyses key performance data and gives insight into the leaders and up-and-comers.
In total, the company explored 264 cities across 83 countries and incorporated data from various media outlets, SEO databases, and over 60 fintech associations. CEO Simon Hardie spoke enthusiastically of the findings:
“The level of investment and activity in the fintech sector is hugely gratifying for those of us who have been championing the industry. It is especially good to see that the pandemic didn’t slow down, and may have in fact accelerated, the adoption of fintech in parts of the world that have previously been underserved.”
The leading hubs
Notably, there has been no movement in the 2021 list’s top three fintech hubs. While most others made incremental gains, it was Tel Aviv that made the most significant leap from 20th to 5th. Meanwhile, in a surprising shift, Singapore slipped from 4th to 10th:
- San Francisco Bay (same as 2020)
- London (same as 2020)
- New York (same as 2020)
- São Paulo (+1)
- Tel Aviv Area (+15)
- Berlin (+3)
- Boston (+1)
- Los Angeles (-2)
- Hong Kong (+2)
- Singapore (-6)
The leading countries
Findexable’s top 10 countries for fintech reflect the generally incremental shift observed among the hubs:
- US (same as 2020)
- UK (same as 2020)
- Israel (+9)
- Singapore (-1)
- Switzerland (same as 2020)
- Australia (+2)
- Sweden (same as 2020)
- The Netherlands (-2)
- Germany (+3)
- Lithuania (-6)
UK fintech has continued to ramp up at an accelerated pace: three new cities entered Findexable’s index for the first time, bringing the country’s total up to 13. The country remains fairly secure as Europe’s fintech leader, particularly as strong competitors like Lithuania fell in the rankings. However, Germany’s ascendance to the top 10 could indicate the beginning of a new challenger.
In North America, the US remains practically unchallenged by Canada. Meanwhile, both Australia and China have gained on Singapore, with the former seeming to be a likely APAC leader by 2022 if current trends continue.
As can be observed from the top countries and hubs, Israel’s fintech output has been proportionally one of the most impressive exhibited. It has claimed the top spot for MEA, followed by the UAE and Kenya - both of which also made significant gains. Finally, Brazil and Uruguay lead Latin America and the Caribbean.
Fintech: The global revolution
Reviewing the statistics compiled in Findexable’s report lends credence to Hardie’s words: fintech is greater than ever before and not even one of the world’s most disruptive events (COVID-19) has been able to prevent its growth.
Elliott Limb, Chief Customer Officer of Mambu, which sponsored the report, called every fintech part of a “global revolution” that is transforming financial services for the better.
“They are changing the way we save, spend, borrow, and invest money. Whether competing, cooperating or supporting traditional financial institutions, they are reshaping digital services for a real-time, on-demand world.
“Whether it is an aspiring unicorn, a neobank seeking new markets, a provider that wants to go digital, or a financial institution that wants to act like a fintech, you need a roadmap [...] a guide to where to begin and where to go. This is why a ranking system is important.