UK strengthens its position as Islamic Finance Centre


Islamic finance in the UK has continued to grow despite the economic uncertainty in the aftermath of the Brexit vote last year and the snap election in June. Islamic banks continued to demonstrate continued strength with record earnings from the Al-Rayan Bank, the country’s largest Islamic financial institution by assets. The first Shariah-compliant crowdfunding company, Yielders was approved by the Financial Conduct Authority, opening the way for other Islamic start-ups to meet the investment, banking, and financing needs of over three million Muslims across the country.

2017 Review

Boardroom conversations over the past year have swirled around the impact of Brexit on the financial services industry as an exit from the European Union (EU) could result in tens of thousands of job losses in the sector as firms shift operations into the EU. However, concerns about London losing its dominance as a global financial centre appear to be overblown as the sector continues to show resilience and particularly the Islamic finance industry is growing stronger by the day.

The UK made history in the summer of 2017 with the Royal Mint becoming the world’s first mint to achieve compliance with the Shariah Standard on Gold set out by the Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI). Considering the standard was developed in cooperation with the London-based World Gold Council (WCC), the UK clearly leveraged its leadership in commodity trading to attract Islamic investors. Who can now use the service to buy, store, and sell the Royal Mint’s bullion coins and bars securely online.

The Islamic banking footprint in the UK grew in 2017 led by Birmingham based Al-Rayan Bank opening a dedicated commercial banking office in London as well as three retail branches, including Wembley, Bradford, and its first branch in Scotland (Glasgow). The expansion was on heels of a robust earnings report in which Al-Rayan delivered a 32% increase in pre-tax profits and increased the bank’s’ balance sheet by an astounding 43% year-over-year with total assets of the bank reaching £1.4 billion.

In addition to traditional Islamic banks, innovative financial technology (FinTech) companies are also starting to take shape in the UK with the first Shariah-compliant FinTech company Yielders getting approval to provide online property crowdfunding investments. Another start-up Ummah Finance is planning to launch the country’s first completely digital bank and would effectively become the first Islamic challenger bank in the UK if successful.

2018 Preview

Outlook for the sector remains strong as the CityUK report issued at the IFN Islamic Forum in London in September titled “Global trends in the Islamic finance and UK market” further reinforced the sector’s confidence in London remaining the leading western centre for Islamic finance despite the uncertainty poised by Brexit.

It was at the forum in London that Mr Stephen Barclay, the economic secretary to the Treasury announced in his keynote speech, the government’s commitment to Islamic finance with the intent to reissue the country’s sovereign Sukuk when it renews the following year.

Additionally, there are trials underway for a commodity Murabaha financing product to provide shariah-compliant funding to small-medium enterprises (SME) across the country. The product is being developed by Liberis and backed by the UK government-supported British Business Bank. This would be one of the first Islamic SME short-term finance products in the UK and breaks new ground in Islamic finance for UK firms.

Shariah-compliant student financings, as well as the potential of regeneration projects across the UK, remain promising areas for Islamic finance to solve in the coming years. We may also see initiatives in Islamic insurance which has remained low-key despite the formation of the Islamic Insurance Association of London several years ago to promote the sector.

Expect to see further breakthroughs in commercial financing and investment products next year with Islamic FinTech startups taking root to bring innovative solutions to the marketplace. Supporting the over twenty banks in the country already providing Islamic products including the five fully shariah-compliant institutions.


Islamic finance has much more room to grow in the UK and offer Muslim consumers and businesses a greater choice. The regulations continue to be accommodating and will evolve to allow more innovative FinTech solutions to provide digital low-cost alternatives in the marketplace as consumer awareness and adoption of Islamic finance grows.

The UK no doubt will continue to be a Western centre for Islamic finance despite Brexit. And it can be argued the distinctiveness of London can perhaps be enhanced by Brexit as it unshackles itself from EU regulation and leverages the depth of its Islamic finance expertise and talent to continue supporting the development of the sector.

This article was written by Suhail Ahmad and first published in the IFN Annual Report 2018 (pg. 104) which can be downloaded free of charge at https://www.islamicfinancenews.com/download/229912/