Abdullo Qurbonov, one of the founders of the successful fintech bank Alif Bank in Tajikistan, has unveiled plans to expand into the United Kingdom (UK) market. This information was revealed in an interview with Asia-Plus. While the establishment of a full-fledged bank in the UK is still underway, Ayan Capital, reportedly, has already begun offering Islamic financing services for both legal entities and individual entrepreneurs.
Qurbonov highlighted that it is too early to speak definitively about opening an Islamic bank in the UK, stating,
“We are just beginning a long and complex journey toward this goal, but we believe it is possible.”
He explained that their journey began in Tajikistan, where they obtained their first license in 2014 within three months, benefiting from a favorable regulatory environment for fintech and innovation.
Alif Bank's success in Tajikistan was built on a foundation of internal principles and requirements within traditional banking regulations. The bank developed its own banking technology platform, core banking system, CRM, payment systems, and mobile applications from scratch. This innovative approach positions Alif to potentially become a global leader in Islamic fintech.
Qurbonov noted that although Muslims constitute about 25% of the global population, 47% of the 1.7 bn people without access to banking services reside in Muslim-majority countries. The financial sector's strict regulations and the high capital requirements for obtaining banking licenses in most countries present significant barriers. However, the UK offers a more favorable environment with no requirement for a local shareholder and a lower minimum capital requirement of around $5 mn. Additionally, the UK is a major center for Islamic finance in the West, with assets significantly larger than those in the United States.
In the UK, the Islamic finance market remains underserved despite the growing Muslim population, which now accounts for 6.5% of the total population. Qurbonov emphasized that the combined assets of Islamic banks in the UK are about $9bn, compared to the total banking sector's over $9 trillion. This disparity indicates a substantial growth potential for Islamic finance in the country.
To test their hypotheses and minimize risks, Qurbonov and his team established Ayan Capital, focusing on providing business financing without the need for a full lending license. They chose to specialize in financing individual entrepreneurs in the private passenger transportation sector, such as Uber and Bolt drivers. This niche was selected due to the promotion of environmentally friendly vehicles by local transport authorities, the high financing needs for electric and hybrid cars, and the significant percentage of Muslim drivers seeking Sharia-compliant financing.
The market for financing private hire vehicles (PHVs) in the UK is substantial, with over 400,000 PHV and taxi drivers. Uber aims for 100% of its vehicles in London to be electric by the end of 2025, creating a demand for around 40,000 new electric vehicles. Qurbonov estimates that if 70% of these drivers prefer Islamic financing, the market will require over $1bn in financing over the next two years.
Despite the challenges, such as the initial uncertainty and extensive working hours, Qurbonov's team has made progress. They continue to focus on providing high-quality customer service alongside their Islamic finance offerings.
The UK's Islamic banking sector is expanding, with around 20 banks offering Sharia-compliant products, including five fully Sharia-compliant banks. The country ranks highest among European and non-Muslim majority nations in the Islamic Finance Country Index. Institutions such as QIB UK, Gatehouse Bank, and Al Rayan Bank are notable providers of Islamic finance services in the UK, indicating a robust and growing market for Islamic financial products.
Comments (0)