Global Islamic Finance Grows 14.9%, Reaches US$3.9 Trillion in Total Assets

Fintech News ME

2 days ago

In 2024, the global Islamic financial services industry continued to expand, growing by 14.9% year-on-year (YoY) to reach US$3.88 trillion in total assets, according to a new report by the Islamic Financial Services Board (IFSB).
Growth was observed across all major sectors, including Islamic banking, Islamic insurance, and sukuk, which are Islamic financial certificates, similar to bonds in Western finance, highlighting deepening market participation, and expanding geographic reach, especially in non-traditional markets.
In 2024, total assets in Islamic banking grew by 17.05%, marking a significant increase. The segment remained the cornerstone of the industry, accounting for 71.6% of Islamic finance assets. Although assets remained concentrated in mature, systemically significant jurisdictions, there were signs of growing momentum in emerging markets, particularly in Africa and Central Asia.
The Islamic capital markets also delivered strong gains, driven primarily by a surge in sukuk issuance. Global sukuk issuances rose by a remarkable 25.6% to reach US$230.4 billion, making it the fastest-growing segment in 2024. Sukuk outstanding accounted for 23.3% of total Islamic finance assets, further reflecting favorable financing conditions and growing demand from both sovereign and corporate issuers
Within the Islamic capital markets still, the Islamic funds industry also recorded growth, with total assets under management (AUM) increasing by 9.2% to US$193.6 billion. This increase was largely supported by robust performance in global equity markets, and marked a recovery following a decline in 2023.
Islamic insurance, referred to as takaful, recorded asset growth of 16.9% and an increase of 15.4% in gross written contributions. Despite the significant increase, the industry continued to account for a small portion of the market, accounting for 1.4% of the global Islamic finance assets.
The report highlights that while traditional markets continue to dominate Islamic finance, the industry is steadily expanding into non-traditional regions.
As of the end-of-year 2024, the Gulf Cooperation Council (GCC) region accounted for the largest share of global Islamic finance assets at 53.1%. This was followed by East Asia and the Pacific (EAP) with 21.9%, driven by Malaysia and Indonesia's well-established Islamic finance ecosystems.
The Middle East and North Africa (MENA, excluding GCC) contributed 16.9%, while other regions such as Europe and Central Asia (ECA), South Asia (SA), and Sub-Saharan Africa (SSA) held relatively small shares, but represent emerging growth frontiers.
The rise of Islamic fintech
In addition to traditional growth drivers, fintech is another trend that's driving structural shifts within the Islamic finance, offering new avenues for growth, efficiency, and financial inclusion.
For example, digital financing platforms, including Islamic equity crowdfunding and peer-to-peer (P2P) lending, are emerging as important sources of financing, particularly for small and medium-sized enterprises (SMEs) and underserved market segments.
Cryptocurrency-related activity is also growing in popularity within the Islamic finance landscape covering trading, investments, and tokenization. Examples include Rain and CoinMENA, two crypto exchanges licensed by the Central Bank of Bahrain which offer crypto trading and custodial services that meet Islamic standards.
Artificial intelligence (AI) is also gaining ground in Islamic finance, with institutions increasingly deploying the technology. An IFSB survey as part of the report highlighted identity verification (67%), chatbots and virtual assistance (56%), and digital footprint analysis (44%), as the most common uses of AI among Islamic banks.
Despite benefits including improved operational efficiencies, customer experiences, and new business opportunities, technology also introduces new risks. Digital financing platforms and crypto-related solutions, for example, require close attention to issues of investor protection, sufficient transparency and disclosure, and appropriate Sharia governance frameworks.
Finally, the adoption of AI introduces a unique set of risks. One particular concern is the potential lack of interpretative judgment in AI systems when applied to complex Sharia rulings and jurisprudential differences across jurisdictions. Moreover, the opaque and evolving nature of AI models poses significant challenges for supervisory authorities and Sharia boards in exercising effective oversight and informed judgment.
Islamic finance outlook
The Islamic fintech sector was valued at US$138 billion 2024. It's projected to exceed US$300 billion by 2027.
Standard Chartered projects that the global Islamic finance sector will grow by 36% between 2024 and 2028, with sukuk outstanding expected to surge 54.5% and Islamic banking by 30%.
The bank, which surveyed 26 leaders from various Islamic banking providers in Q1 2025, revealed a positive outlook for the industry, with 87% of respondents holding an optimistic view of the sector over the next five to ten years. The majority expect significant growth and expansion, along with increased adoption and innovation of Islamic finance products and services.
Economies including China, the Middle East, and Africa are expected to offer the greatest opportunities over the next two to three years.