Global participation banking assets reach $924b in ’15: EY
DUBAI, Dec 5: According to EY’s ‘Banking in emerging markets’ report, the assets of global participation banking (also known as Islamic banking) reached $924b in 2015, with growth rates declining across all regions compared to previous years.
The GCC region’s share of participation banking increased to 72 percent, as the size of assets in the Association of Southeast Asian Nations (ASEAN) countries declined during 2015.
Saudi Arabia, the UAE and Malaysia are the three largest participation banking markets, in terms of assets, representing 34.2 percent, 17.2 percent, 13.3 percent of the global market share respectively.
Gordon Bennie, MENA Financial Services Leader, EY, says:
“Today more than two billion adults still do not have a bank account. There are also more than 200 million micro, small and medium size businesses with unmet financing needs. The demand for a responsible, Sharia-compliant financial system is huge. There is also a wealth of business opportunities offered by Fintech innovations for participation banks, particularly in emerging markets.”
In the GCC region, Fintech innovations have the ability to enhance market access and profitability of banks, dramatically. A starting point for participation banks is to activate a bold strategy for the finance function — inclusive of advanced data analytics, robotic process automation, the cloud, artificial intelligence and block-chain.
Ashar Nazim, Partner, Global Islamic Banking Center, EY, says
“The fact that almost one-third of the $3 trillion global Sharia-compliant assets are either reported as ‘informal or ‘best estimates’ demonstrates the limitation of participation banks in making sound strategic decisions. CFOs need reliable information and we are seeing a strong desire to improve data management and analytics at participation banks through Fintech innovations.”
Some of the key areas of Fintech innovations that are relevant for participation banks include: SME and peerto-peer lending platforms, payment related innovations such as person-to-person payments, digital authentication and digital wealth management.
“There has been a clear evolution for CFOs from having the primary role of analyzing historical data to one whose focus will be providing forward-looking insights. In-memory computing and big data are the clear direction forward, with predictive analytics being a key driver of these changes.