Kuala lumpur: Malaysia has achieved an impressive 48 percent growth in Islamic banking market share between 2000 and 2024, ranking second globally after Saudi Arabia, as stated in a report by Standard Chartered (StanChart).
According to BERNAMA News Agency, Islamic banking has transitioned from a niche offering to a mainstream financial sector, now spanning over 80 countries with assets exceeding US$5 trillion (US$1=RM4.13). However, the report titled ‘Islamic Banking for Corporates: Broadening Horizons’ highlights challenges faced by corporate leaders due to ambiguities around Islamic finance principles, structures, and market dynamics. A significant 65 percent of corporates interested in Shariah-compliant solutions lack prior experience in Islamic banking.
StanChart identifies a lack of product familiarity as a key barrier preventing corporates from tapping into the global Islamic finance assets, currently valued at US$5.5 trillion and projected to reach US$7.5 trillion by 2028. The number of corporate sukuk issuers has nearly doubled since 2020, leading to a 38 percent increase in issuance volumes to US$58.8 billion in 2024.
The report emphasizes digital innovation’s role in accelerating the momentum, with tokenised sukuk, blockchain-based settlements, and AI-enabled Shariah-compliance tools poised to revolutionize capital raising and management. These innovations are expected to reduce issuance costs and enhance cross-border governance. Regionally, Malaysia is at the forefront of integrating digital assets into Islamic finance through initiatives like the Digital Asset Innovation Hub and the Malaysia Blockchain Infrastructure.
Standard Chartered Saadiq Malaysia’s CEO, Bilal Parvaiz, highlighted the evolution of Islamic finance into one of the world’s fastest-growing capital sources. He also noted Malaysia’s strategic focus on strengthening its position as a global leader in Islamic finance and environmental, social, and governance (ESG), which will enhance access to green and sustainable funding solutions, including sukuk, to aid corporates in their global expansion.
The existing knowledge gap among corporates regarding Islamic banking presents a promising opportunity for Islamic banks, Parvaiz added.