The Lord Mayor of the City of London, Alderman Peter Estlin, certainly believes so. But this could only be achieved with the help of allies.
Widely acknowledged as the Islamic finance hub of Europe, the UK’s credentials speak for itself: it hosts more fully-fledged Islamic banks than any other European countries (five) along with over 20 financial institutions offering Shariah compliant financial services; it is one of the region’s most popular destination for Sukuk listings; and its government remains one of two in Europe to have printed sovereign Sukuk (the other being Luxembourg).
In recent years, the UK has gained another advantage: it is home to one of the largest communities of Islamic fintech start-ups. According to the IFN Islamic Fintech Landscape, there are 18 Muslim-friendly fintech start-ups in the UK, which is top three in the world.
“We have 1,600 fintech [companies], but of that, we are seeing a growing population of Islamic fintech [start-ups],” the Lord Mayor shared with IFN Fintech. “And [building this community] is something the UK wants to do by partnering with markets such as Malaysia, the Gulf and Indonesia – I’ve been traveling to those markets to boost that connectivity.”
Partnerships or collaboration would be the lynchpin of the UK’s Islamic fintech narrative.
The sophistication of the UK’s financial system, let it be from a regulatory standpoint or talent perspective, coupled with the country’s advancement in technology, has catapulted the nation to the global forefront of fintech. In 2018 alone, the UK saw GBP6 billion (US$7.4 billion) in total venture capital investment for tech, more than any of its European peers, according to a Tech Nation 2019 report. Fintech firms specifically attracted over GBP4.5 billion (US$5.55 billion) in investments from 2015-18.
“The UK has an incredibly pivotal role in the global tech scene. Nowhere is this more evident than in the fintech sector where the UK is ranked number one in the world, an enviable position that has been established with decades of hard work, entrepreneurial talent, innovation and supportive policymakers,” commented Tech Nation Chair Eileen Burbidge during the release of its report.
But can the UK lead the Islamic fintech agenda as an international Shariah fintech hub?
“This is where the UK has a role to play in the sense that it has that depth of expertise and it is connected to the other components of the financial markets. But it is a role that needs to partner with other countries, hence my personal and ongoing visits to the likes of Malaysia and Indonesia,” explained the Lord Mayor.
In other words, with internationally recognized regulations and deep talent pool, the UK would be an ideal springboard for fintech start-ups to foray into other markets. And we have seen this pattern with a number of UK Islamic fintech start-ups. Islamic crowdfunding platform Yielders for example, has secured licenses from other markets, thanks in no small part, to its Financial Conduct Authority license.
With less than 6% of its population Muslim (about 2.6 million), the room for Muslim-focused fintech solutions to expand may be limited, making larger Muslim markets critical for local start-ups to scale up.
“The scale of Islamic needs is across the global in those markets – Malaysia, Indonesia, the Gulf and increasingly in Africa. So, while product development and expertise will come from the UK, the actual distribution clearly needs to involve engaging the broader population,” agreed Lord Mayor Estlin. “We are liaising with different countries through regular dialogues, exploring partnerships and creating expertise, to leverage incubators and accelerators here. Frankly the scale of innovation is brilliant – it is startling. It almost defies imagination, and that is the point – if you can imagine it, then you can deliver it.”