Sharia-compliant challenger bank Gatehouse Bank has published a report asking the government to unlock growth and level the playing field between conventional and Islamic finance.
Gatehouse Bank presented the report to the House of Lords today, pointing to a projected growth in the global Islamic finance sector in the future.
This is expected to be backed by strong consumer demand in the UK, with separate research from the lender showing that 88% of UK consumers who were Muslim and 30% who were not would consider Islamic finance.
The report recommended setting up a government-led Islamic finance task force to identify areas of growth, including facilitating inward investment and attracting international investors.
It has also proposed that the government could encourage Islamic finance entrants by removing barriers, such as raising the Bank of England’s Alternative Liquidity Facility.
The Alternative Liquidity Facility opened in 2021 to take deposits from UK-based Islamic banks to allow lenders that do not pay or receive interest to place funds at the central bank.
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Gatehouse Bank has also suggested developing a cohesive UK government strategy on Islamic finance to ensure alternative finance structures are considered when creating policy and proposing legislation.
Lastly, the bank asked the government to encourage global collaboration on Islamic fintech to boost the market and support its growth.
Charles Haresnape, CEO of Gatehouse Bank, said: “Our research shows that the UK is already well-placed to become the Western capital for Islamic finance. However, achieving that goal requires a government commitment to placing alternative finance, including Islamic and ethical finance, on a level playing field with conventional finance.
“The development of Islamic finance is not just a niche within the UK’s financial services sector – it is a marker of the country’s ability to foster ethical innovation and inclusive growth. Ultimately, strengthening the UK’s Islamic finance sector will attract international investment and enhance financial inclusion, ultimately driving innovation and competitiveness in the wider financial services sector.”
