Why London Is the Leading Hub for Islamic Finance in the West — And What’s Missing

• Post by: wp-islamicfinancereviewcouk
• September 11, 2025
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“وَأَوْفُوا بِالْعَهْدِ ۖ إِنَّ الْعَهْدَ كَانَ مَسْئُولًا”

“And fulfill [every] commitment. Indeed, the commitment is ever [that about which one will be] questioned.”
— Surah Al-Isra (17:34)

This verse reminds us that Islamic finance is built on trust, integrity, and accountability — principles that are now shaping one of the world’s most influential financial centres.

Introduction: A Global Leader With Local Gaps

The United Kingdom has emerged as the top non-Muslim country for Islamic finance, home to over 65 listed sukuk, specialist banks, and Shariah-compliant funds. London’s position as a global Islamic finance hub is undisputed.

But here’s the paradox: while London promotes Islamic finance to the world, domestic engagement remains weak — particularly among British Muslims.

🏦 Why the UK Leads in Islamic Finance

✅ 1. Strong Regulatory Support

Since 2003, UK regulators have actively supported Islamic finance by removing legal and tax barriers — including equal treatment of Islamic mortgages.

✅ 2. Islamic Finance Infrastructure

• 5 fully or partially Shariah-compliant banks

• Over 65 sukuk listings on the London Stock Exchange, valued at over $50 billion

• Home to the UK Islamic Finance Council (UKIFC) and the Islamic Finance Task Force

✅ 3. Global Education Hub

• 80+ university-level Islamic finance courses

• Research centres at Durham, Aston, and other top institutions

• Preferred destination for Islamic finance scholars and students

🇬🇧 But Why Is Uptake Among British Muslims So Low?

Despite being home to nearly 4 million Muslims, the UK sees low adoption of Islamic finance domestically.

🚫 Common Barriers:

• Affordability: Islamic mortgages and savings plans are often more expensive

• Lack of Awareness: Many are unaware of halal finance options

• Trust Deficit: Concerns over whether “Islamic windows” in conventional banks are truly Shariah-compliant

• Limited Product Range: Few options beyond housing finance — especially for business, pensions, and insurance

🌱 The Missed Opportunity: Islamic Finance & SDGs

Islamic finance has the potential to contribute significantly to the UN Sustainable Development Goals (SDGs), particularly:

• SDG 1 – No Poverty: Through zakat, microfinance, and ethical banking

• SDG 10 – Reduced Inequalities: By offering inclusive financial tools

• SDG 11 – Sustainable Cities: Via fair housing finance and ethical investing

But in the UK, this potential is underutilised — especially in underserved communities across London, Birmingham, and Bradford.

🧭 A Call to Action: How to Boost Islamic Finance in the UK

🏛 For Policymakers:

• Introduce tax parity and home finance subsidies for halal products

• Support financial literacy in Muslim communities

🏦 For Islamic Banks:

• Offer digitally accessible, cost-competitive products

• Increase transparency in Shariah compliance and profit models

🕌 For Community Leaders:

• Educate the youth about Islamic finance principles and options

• Advocate for inclusion in mainstream economic planning

🤝 For Investors and Scholars:

• Collaborate on new Islamic fintech solutions

• Build investment products beyond real estate — pensions, student finance, SME loans

📢 Final Reflection

“And cooperate in righteousness and piety, but do not cooperate in sin and aggression.”
— Surah Al-Ma’idah (5:2)

The UK has built a global Islamic finance reputation — now it must focus inward and ensure that its own Muslim citizens can access ethical, affordable, and inclusive financial solutions.

The next chapter for London is not about leading globally — it’s about delivering locally.

🔗 Learn more about ethical Islamic finance systems and their role in global development at:
👉 www.islamicfinancereview.co.uk

#IslamicFinance #LondonFinance #ShariahBanking #HalalFinanceUK #UKIslamicBanking #SDGFinance #Sukuk #FaithAndFinance #IFRVoice #FinancialInclusion