Opportunities Within the Growing Islamic Finance Industry

This editorial was originally published in International Business Magazine.

The modern Islamic finance industry globally has grown rapidly since its inception around 50 years ago and is now one of the fastest growing sectors in financial services.[1] This trajectory is expected to continue, with the industry projected to grow to over US$4 trillion in assets by 2030, from a market of US$200 billion in 2003. Not only does this provide a wealth of opportunities for ethical innovation within financial services but it also highlights the strong consumer demand present, especially within the UK, for products and services which more closely align with consumers’ values.

Research from Gatehouse Bank’s Islamic and Ethical Finance Report 2024 found that three in 10 (30%) UK residents who do not follow the Muslim faith would be willing to switch to an Islamic finance provider if it offered comparable services to a conventional provider. Among UK consumers of the Muslim faith, this sentiment was echoed by 88% of respondents.[2] This highlights that, while misconceptions remain around who can access Islamic finance and how it differs from conventional finance, there is a real appetite among consumers of all faiths and none to find out more.

The Importance of Choice

At Gatehouse Bank, we believe the voice of the consumer must guide the future of Islamic finance in the UK and that providing a variety of options for people’s finances is an important factor within a thriving financial ecosystem.

As our recent survey conducted in 2024 reveals that almost half (45%) of UK homebuyers would consider using an ethical finance provider that follows Islamic principles, it is clear that there is a real interest among those seeking to purchase property within the UK for a wider range of options that align with their values. [3] Further data from Gatehouse Bank’s Islamic and Ethical Finance Report 2024 showed that just under two fifths (37%) of UK homebuyers would be most attracted to Shariah-compliant providers because they do not invest in unethical sectors, such as alcohol, tobacco, adult entertainment, gambling and the arms industry. [4]

At Gatehouse Bank, we offer savings products for UK residents as well as residential property finance in England and Wales for customers based in the UK and overseas. We have found that the UK remains an attractive market for investors, as highlighted by UK Finance’s recent market data showing that the number of Buy-to-Let (BTL) deals rose by 39% by Q4 in 2024, compared with the same quarter in the previous year. [5] In addition, UK Finance has reported an uplift in the average gross BTL rental yield, which rose from 6.53% to 6.93% in Q3 of 2024. [6]

Our expertise within the international market strengthens our ability to cater to a diverse range of customers, making our offering not only competitive, but globally appealing too. Additionally, we understand that not all intermediaries are familiar with the differences between conventional and Shariah-compliant finance, so our Business Development Managers are on hand to offer training for our broker partners to ensure that alternative finance options are not overlooked.

As a Shariah-compliant home finance provider, our range of Home Purchase Plans (HPP), and Buy-to-Let Purchase Plans involve the customer and the Bank forming a partnership to purchase the property together. The customer then pays monthly acquisition payments and rent on the share of the property they do not yet own. With every payment, the customer acquires an increasing share of the property until they become the sole homeowner.

For savings customers too, more choice is becoming a welcoming addition. Our research shows that, even when confronted by challenges around the cost of living, consumers are increasingly prioritising ethical savings options. According to a study we conducted in 2022, over half (52%) of respondents stated that they would review the ethical credentials of a savings account before committing capital.[7] The main difference between conventional savings products and Shariah-compliant savings products, such as those offered by Gatehouse Bank, is that they do not offer interest. Instead, customers’ deposits are invested carefully, with profits then being shared from the returns generated. This is known as the expected profit rate.

The Future of Islamic Finance

As a Shariah-compliant ethical bank, Gatehouse Bank has been working to ensure that Islamic finance is placed on a level playing field with conventional finance since 2007. We have recently published a report titled, Striving for Growth: Fostering the UK’s Islamic Finance Sector, which provides a comparative look at other countries and highlights how the UK government can help unlock further growth in the sector and break down barriers to access. As Charles Haresnape, CEO of Gatehouse Bank, notes, “The UK has an opportunity to strengthen its international leadership in this sector, enhance its reputation as a global financial hub and contribute to a more diverse and resilient economic landscape.”[8]

Within the report, we have included four key recommendations to continue prioritising growth amid increased consumer demand and are working closely with relevant parties to make this a reality. These recommendations establishing a government-led Islamic finance taskforce, developing a cohesive UK government strategy, attracting new entrants to the market and fostering global collaboration on Islamic fintech. We believe that through this direct action and our continued efforts to raise awareness of the benefits of Islamic finance for all, we can best serve the needs of consumers within the UK and globally.

We see being recognised as the ‘Leading Shariah-Compliant Bank UK 2025’ and ‘Most Trusted Islamic Bank UK 2025’ by International Business Magazine as a welcome recognition of the hard work and dedication that all colleagues and stakeholders associated with the Bank have been displaying to help realise this potential.

1. British Embassy, https://assets.publishing.service.gov.uk/media/5a806aaeed915d74e622e547/2015047_Is_Fin_A5_AW_ENG_WEB.pdf
2. Gatehouse Bank, https://assets.gatehousebank.com/production/downloads/Gatehouse-Banks-Islamic-and-Ethical-Finance-Consumer-Report-2024.pdf
3. Gatehouse Bank, “Almost half (45%) of UK homebuyers would consider using an ethical finance provider that follows Islamic principles, finds Gatehouse Bank.”
4. Gatehouse Bank, “Islamic and Ethical Finance Consumer Report”
5. Property Industry Eye, https://propertyindustryeye.com/buy-to-let-loans-surge-by-39-as-mortgage-rates-fall/
6. UK Finance, Buy-to-Let Mortgage Market Update Q3 2024
7. Gatehouse Bank, Over half of UK adults review ethical… | Gatehouse Bank plc
8. Gatehouse Bank, https://assets.gatehousebank.com/production/downloads/Striving-for-Growth-Fostering-the-UKs-Islamic-Finance-Sector-V1.pdf