Qatar Islamic fintech market seen to grow to $4bln by 2027

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Qatar’s Islamic Fintech market has been projected to grow to $4bn by 2027, according to Global Islamic Fintech (GIFT) Report 2023/24.

The report released yesterday estimated Qatar’s Islamic fintech market at $2.1bn in transaction volume in 2022/23.

It noted Qatar is also the sixth largest producer of Islamic fintechs, home to some 24 of the 417 Islamic fintech firms identified globally.

The GIFT Index ranks Qatar as the 8th most conducive ecosystem for Islamic fintech.

DinarStandard, a US-based research and advisory firm, and Elipses, a leading ethical digital finance advisory and investment firm, jointly released the Global Islamic Fintech (GIFT) Report 2023/24.

The annual sector report on the Islamic fintech market, encompasses a market sizing of Islamic fintech across the Organisation of Islamic Co-operation (OIC) countries, a GIFT Index assessing 64 countries on their conduciveness to Islamic fintech activity, an industry survey gathering feedback from industry practitioners, and the most comprehensive database of Islamic fintechs globally.

The estimated Islamic fintech market size (based on transaction volume) reached $137bn in 2022/23 and is expected to grow on average by 17% annually to reach $306bn by 2027.

The top six Islamic fintech markets by transaction volume are Saudi Arabia, Iran, Malaysia, UAE, Indonesia, and Kuwait.

Collectively, the top six markets account for 85% of the global Islamic fintech market size, indicating two dominant regional centres emerging in SE Asia and GCC-Mena for Islamic Fintech.

The GIFT index analysed some 64 countries and applied a total of 19 indicators across five different categories for each country. These five categories are talent, regulation, infrastructure, Islamic Fintech market & ecosystem, and capital.

Categories were weighted to derive an overall score, with a heavier weighting given to the Islamic fintech market and ecosystem categories since this is the most indicative by far of a country’s current conduciveness to Islamic Fintech specifically.

Malaysia and Saudi Arabia dominate with 14 of the top 20 countries from among the OIC countries.

The industry survey sought insight from industry practitioners and discovered that access to capital, consumer education, regulation, finding talent, and the complexity of geographic expansion are the biggest hurdles faced by Islamic Fintechs today.

For the first time, the report also includes an in-depth look at 100 notable Islamic fintechs globally using DinarStandard’s proprietary Impactintell platform.

Commenting on the report, Abdul Haseeb Basit, co-founder and principal of Elipses and the report’s co-author, said, “The GIFT Report 2023/24 summarises the strides made by an evolving sector. The number of Islamic fintechs identified globally continues to grow year on year. Significantly, the diversification and consolidation being led by the mature players in the sector sets the precedent from where future growth may emerge.

“Significantly, two dominating regional centres in SE Asia and Mena-GCC led by Malaysia and Saudi Arabia show that ecosystem support initiatives that increase conduciveness to Islamic Fintech continue to bear fruit”.

Rafi-uddin Shikoh, founder and managing director of DinarStandard and co-author of the report, commented, “I am struck by Islamic fintech’s remarkable journey of growth and innovation, now poised to double its market size by 2027. What excites us most is the sector’s ability to cater to a young, digitally-native Muslim as well as an ethical, finance-conscious global demographic.

“As we navigate challenges such as regulatory complexity, it is the sector’s innovative spirit and ethical foundation that excites us of its potential to lead meaningful change of financial inclusion and equity globally.”

Henk Jan Hoogendoorn, chief financial sector officer at the Qatar Financial Centre Authority commented, “Qatar, with its large Islamic banking sector, has a good eco-system for Islamic fintech firms to operate from in the Middle East. The Qatar Financial Center continues to support Islamic Fintech and the Global Islamic Fintech Report.”