EY - World Islamic Banking Competitiveness Report 2014–15

World Islamic Banking Competitiveness Report 2014-15

Participation Banking 2.0

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The World Islamic Banking Competitiveness Report – Participation Banking 2.0 provides a new look into core international markets. It explores how digital innovation is set to positively disrupt traditional banking models.

For the first time in history in 2013, the combined profit of Participation banks crossed the US$10b mark. By 2019, collective profits would touch US$37b as the industry continues its double-digit annual growth.

Highlights

EY – International Participation banking assets

  • EY analyzed the sentiment of over 2.2 million customers’ social media posts on their banking experiences with Islamic banks in Saudi Arabia, Bahrain, Kuwait, UAE, Malaysia, Indonesia, Turkey, Qatar and Oman. The results showed that customer satisfaction is mediocre for many Islamic banks.
  • International Islamic banking assets with commercial banks set to exceed US$778b in 2014.
  • The global profit pool of Islamic banks is set to triple by 2019.
  • Islamic banking assets in six core markets Qatar, Indonesia, Saudi Arabia, Malaysia, UAE, Turkey on course to touch US$1.8t by 2019.
  • Global Islamic banking assets witnessed a compounded annual growth rate (CAGR) of around 17% from 2009 to 2013.
  • Islamic banks in Saudi Arabia, Kuwait and Bahrain represent more than 48.9%, 44.6% and 27.7% market share respectively.
  • Positive progress has been has made in Indonesia, Turkey and Pakistan, with 43.5%, 18.7% and 22.0% CAGR respectively from 2009-2013.

Digitization: the future of Islamic banking

Digital banking is the future with customers of Participation banks showing tremendous interest. Banking is set to evolve towards technology-based, service-driven value propositions.

  • Customers are increasingly active online and vocal about their experiences.
  • Migration from physical to digital channels requires more attention. Half of the banks surveyed did not have a Twitter account and only 1 in 18 banks offered full customer engagement on social media.
  • Banks should invest in analytics, to build rich insights into customers’ delights and pain points and personalize user experience.
  • 4 out of every 10 Participation banks are not “listening.”
  • Fresh retail banking experience could attract a sizeable majority to switch banks.
  • Customers do not just want their bank to have a digital presence. They want it be tailored to their lifestyle relationships and connections.

EY – Digitization of Islamic banks

Country outlook

Bahrain and six of the rapid-growth-markets (RGMs) – Qatar, Indonesia, Saudi Arabia, Malaysia, the UAE and Turkey (QISMUT) – shall continue to drive the future internationalization of the industry. By 2019, QISMUT is expected to represent a US$ 1.8 trillion Participation banking industry.

Explore our country-specific insights by clicking each of the tabs below.

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EY - Country outlook: Bahrain

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EY - Country outlook: Saudi Arabia

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EY - Country outlook: Malaysia

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EY - Country outlook: UAE

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EY - Country outlook: Kuwait

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EY - Country outlook: Qatar

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EY - Country outlook: Turkey

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EY - Country outlook: Indonesia

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EY - Country outlook: Pakistan

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International Participation banking assets

EY – International Participation banking assets

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Digitization of Islamic banks

EY – Digitization of Islamic banks

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World Islamic Banking Competitiveness Report 2014–15: Infographics

EY - Country outlook: Pakistan

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Your talking customers: Moment of truth for Participation banks

EY - Your talking customers: Moment of truth for Participation banks

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