Understanding Islamic finance is critical to benefit from its growth

BearingPoint Institute reveals great potential for East-West business collaboration

Paris, July 2, 2015 - New research from BearingPoint Institute shows that the Islamic finance sector has grown by a factor of five over the last decade, driven in large part by the financial downturn, geopolitical instability and revelations of corruption and graft in the global banking industry.

Islamic finance - the delivery of banking services in accordance with the tenets of Islamic Law - is a key player in the global financial landscape with USD 1.8 trillion in estimated assets. Yet a fundamental lack of understanding of the system is at the center of many of the difficulties found in existing business relationships, hurting opportunities for greater collaboration.

Islamic finance lends itself to transparency and the formation of strong partnerships through the key concept of Profit & Loss Sharing (PLS). It forbids usury, uncertainty, speculation and interest on loans, instead placing emphasis on shared risk/reward. These central tenets lead to strong supplier-customer relationships and a ‘participative’ system.

Understanding the changing dynamics of Islamic finance

Western financial institutions willing to develop and introduce Islamic finance products and services face a number of critical challenges, chief of which is the development of a cohesive brand strategy. The changing dynamics of Islamic finance makes this particularly important.

According to the authors of the report, Jean-Michel Huet, Partner at BearingPoint, and Saleh Cherqaoui, Senior Manager at BearingPoint, the best way for Western financial institutions to successfully enter the Islamic finance sector is by creating a subsidiary within a specific brand. Another key challenge for financial institutions is meeting the requirements of applicable regulations, both national and global, while at the same time operating within the letter and the spirit of the Islamic finance model.

Organizations looking to capitalize on the rise of Islamic finance must therefore make concerted efforts to understand the dynamics of Islamic finance. Developing offerings and working practices that align with the tenets of Islamic Law is the key to richer business relationships - and greater long-term profitability.

Jean-Michel Huet

To read the full article, please download the BearingPoint Institute paper, “The Rise and Rise of Islamic Finance”, which can be found at: The rise of Islamic finance

About the BearingPoint Institute

Founded in 2009, the BearingPoint Institute is an incisive, authoritative voice on business-critical topics, bringing together the finest minds from both within and outside the BearingPoint organization. We strive to:

• Advise business leaders to understand the evolution of the global economy at a deeper level
• Explore new thinking, going beyond straightforward “Thought Leadership”
• Propose new points of view about strategy and organizational change, and stimulate debate

This is achieved by offering practical, real-world advice from:

• A leadership team composed of senior BearingPoint Partners, representing geographical diversity and a wealth of capabilities
• An independent Advisory Board formed by recognized business leaders and academics
• Studies made by experts illustrated with real-life examples

About BearingPoint

BearingPoint consultants understand that the world of business changes constantly and that the resulting complexities demand intelligent and adaptive solutions. Our clients, whether in commercial or financial industries or in government, experience real results when they work with us. We combine industry, operational and technology skills with relevant proprietary and other assets in order to tailor solutions for each client’s individual challenges. This adaptive approach is at the heart of our culture and has led to long-standing relationships with many of the world’s leading companies and organizations. Our global consulting network of 9,700 people serves clients in more than 70 countries and engages with them for measurable results and long-lasting success.

For more information, please visit: www.bearingpoint.com