Islamic banking industry in KSA set to reach $683 billion by 2019

Islamic banking industry in KSA set to reach $683 billion by 2019
Updated 26 April 2015
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Islamic banking industry in KSA set to reach $683 billion by 2019

Islamic banking industry in KSA set to reach $683 billion by 2019

The Islamic banking industry in Saudi Arabia is set to achieve $683 billion of Shariah-compliant assets by 2019, according to EY’s World Islamic Banking Competitiveness report.
Saudi Arabia has been a key market for growth in the Islamic banking industry. The first Islamic bank with equity in excess of $10 billion is headquartered in Saudi Arabia.
A strong demand from customers, both retail and corporate, has led to significant growth in Islamic banking in Saudi Arabia resulting in 54 percent of all financing being Shariah-compliant in 2013.
Overall, the size of Islamic banking assets in Saudi Arabia has nearly doubled from 2009-2013.
Ashar Nazim, global Islamic finance Leader at EY, says:
“The Islamic banking industry is preparing to go mainstream globally. Saudi Arabia is the largest Islamic banking market in the world, representing 31.7 percent of the global market share. The country has been a pioneer in the Islamic banking industry and we expect it to continue being a driving market for the industry, as Malaysia, Turkey and Indonesia also establish themselves as populous Islamic banking centers.”
Branch experience rated highest in terms of customer satisfaction
In the study, EY monitored 567,071 Islamic banking customer sentiments in Saudi Arabia on social media as part of a wider study, which looked at 2.2 million customer sentiments dispersed across various online sources in nine key markets (Saudi Arabia, Bahrain, Kuwait, the UAE, Malaysia, Indonesia, Turkey, Qatar and Oman).
Out of the sentiments analyzed in the Kingdom, one in three of the positive sentiments were about branch experience, indicating that customers were generally satisfied in this area of service.
“The experience however varies by banks and types of customers. The younger customers are openly challenging the status quo and asking for more digital solutions,” says Muzammil Kasbati, director, Global Islamic Banking Center of Excellence, EY.
While online and mobile banking services has taken off well in Saudi Arabia, it’s sustainability remains a cause of concern.
“The retail banking proposition of several banks was found struggling between the legacy people culture and the tech-savvy business model required to win new customers. Islamic retail proposition of conventional and Islamic banks still appears to be operating in silos, which unfortunately hampers their customer satisfaction ratings,” says Muzammil.
“Saudi retail banking customers like the fact that some banks are investing to improve the branch experience,” said Ashar.
“There appears to be a healthy take-up of digital banking on offer, and there is anticipation for more. Islamic banks will need to increasingly shift their expenditure from running the bank to developing the bank. Learning from the customer’s journey can provide very important insight that can be applied in everyday operations. Digital adaptation will be vital when upgrading services,” he said.