The global Islamic Fintech (GIFT) was released a few days ago, here is another optic on it, from the point of view of conventional investors inquiring (as potential investments) about Islamic fintechs in Muslim majority countries, they look beyond rankings…
Truth be told, when the Global Islamic Fintech (GIFT) Index rankings came out, I wasn’t surprised by Saudi Arabia at #1 or Malaysia at #2. What intrigued me was this:
What’s beneath the surface that should actually drive capital allocation decisions?
I’ve learned that rankings tell you where you are, but fundamentals tell you where you’re going. For investors eyeing the top five GIFT countries (Saudi Arabia, Malaysia, UAE, Indonesia, and the UK), three factors matter far more than any index: corruption levels, venture capital ecosystems, and brain drain.
[A few colleagues at (conventional) financial institutions, asked how the GIFT ranking may be viewed from the lens of western institutions looking at the Islamic fintech place amongst the top 4 Muslim majority countries mentioned.]
Related: How To Grow Islamic Fintech Sector in 2026?
The Corruption Question Nobody Asks
Here’s the uncomfortable truth: Islamic finance preaches transparency and fairness, yet some of our strongest markets operate where corruption remains a challenge. According to Transparency International’s 2024 index, the UK scores 71/100, UAE 68, Saudi Arabia 59, Malaysia around 52, and Indonesia sits at 37.
Is it a coincidence that the UK, despite ranking #5 on GIFT, leads globally in Islamic fintech innovation? Or that Indonesia, at #4 GIFT, struggles to convert its massive Muslim population into fintech scale?
The correlation is clear: every 10-point improvement in corruption scores translates to roughly 5-10 rank improvements across competitiveness indexes. For investors, this isn’t just about ethics—it’s about operational efficiency, regulatory predictability, and exit certainty.
In the UAE and Saudi Arabia, anti-corruption reforms are accelerating. Malaysia needs to address the mid-range malaise. Indonesia’s 37 score is a ceiling on growth potential—unless you’re patient capital willing to ride out reform cycles.
SAUDI ARABIA (#1 GIFT)
Metric | Islamic Fintech | General Fintech | Analysis |
Market Size 2024 | Part of $1,316B Islamic finance assets | $39.91B fintech market; projected $125B by 2034 | Islamic finance infrastructure massive but fintech-specific subset emerging |
Companies | Integrated into 224+ fintech firms | 261 companies (2025); 224 (Q2 2024) | 21% YoY growth; exceeded 2025 target of 230 companies |
Funding 2024-25 | Embedded in overall ecosystem | SAR 7.9B ($2.1B) cumulative; exceeds 2025 target by 204% | Strong momentum; nearly $1B raised 2023 (first time) |
Unicorns | None specific | Tamara (BNPL unicorn) | Limited unicorn creation vs regional peers |
Top Verticals | Shariah-compliant payments, sukuk platforms | Digital payments (79% transactions), BNPL, remittances | Both benefit from 97% smartphone penetration |
Jobs Created | Part of overall sector | 11,046 direct jobs (2025); 64% YoY growth | Exceeds 2025 target by 76% |
Regulatory | SAMA FinTech Saudi for Islamic products | SAMA Regulatory Sandbox (70+ participants, 25+ graduated) | World-class regulatory infrastructure |
Digital Adoption | Shariah-compliant wallets growing | 79% cashless rate (2024); exceeded 70% target | Achieved 2025 target 2 years early (2023) |
Key Strengths | Government-led Vision 2030 integration | State capital, infrastructure investment, regulatory clarity | Top-down development model working |
Key Challenges | Limited VC ecosystem for Islamic-specific ventures | Moderate corruption (TI: 59), lacks bottom-up entrepreneurship | Sustainability beyond government funding uncertain |
Verdict: Saudi Arabia dominates through sheer state investment and Vision 2030 alignment. Islamic fintech benefits from integration into national financial infrastructure but lacks standalone VC-backed Islamic fintech unicorns. General fintech is thriving through regulatory support and digital payment surge.
MALAYSIA (#2 GIFT)
Metric | Islamic Fintech | General Fintech | Analysis |
Market Size 2024 | 24% of global Islamic finance ($4.9T projected 2025) | Digital payments 50.72% of market; projected 26.12% CAGR for neobanking | Strong in both Islamic and conventional |
Companies | Islamic offerings by Capbay, Funding Societies, pitchIN | 360 active fintech firms (2025); up from 289 (2024) | 24% growth; 81 payments companies, 43 e-wallets, 32 lending |
Funding 2024-25 | FINODYN JV (Bank Islam + RELDYN); Shariah-focused accelerators | Paywatch $20M top round (vs Singapore’s $300M) | Funding significantly trails Singapore |
Unicorns | None specific | GXBank, AEON Bank, Boost Bank (digital banks, not unicorns) | No Islamic fintech unicorns despite #2 GIFT ranking |
Top Verticals | Islamic wealth management, takaful (insurtech), sukuk crowdfunding | BNPL (6.5M users), payments (DuitNow), digital banking | BNPL concentrated: SPayLater 56.5%, Atome 26.5% |
Regulatory | Securities Commission Islamic fintech initiatives; BNM takaful framework | DITO framework (2025-2026 application period); Fintech Sandbox | Progressive regulation but complex multi-agency oversight |
Digital Adoption | Islamic digital banking gaining traction | Digital payments 34.5B transactions (2024); QRIS 175.1% growth | E-wallet usage 90%+ among surveyed population |
Key Strengths | Largest Islamic finance hub globally; deep expertise | ASEAN payment integration (Project Nexus); 5 digital banks launched | Established ecosystem, regional connectivity |
Key Challenges | Brain drain to Singapore; mid-range corruption (TI: ~52) | Regulatory complexity; talent leakage; funding gap vs Singapore | Losing talent and capital to neighbor |
Verdict: Malaysia’s paradox—#2 GIFT ranking with world-leading Islamic finance expertise, yet the general fintech ecosystem struggles with brain drain and funding gaps. Islamic fintech benefits from government support but lacks VC-backed scale-ups. General fintech shows strong adoption but Singapore overshadows.
UAE (#3 GIFT)
Metric | Islamic Fintech | General Fintech | Analysis |
Market Size 2024 | $198B Islamic finance assets | $3.56B fintech market (2024); projected $5.71B by 2029 | Rapid growth trajectory in both |
Companies | MENA leader in Islamic fintech transactions | 329 active fintech companies (2024); up 128.5% from 144 (2021) | Dubai: 62%; Abu Dhabi: remainder |
Funding 2024-25 | $2.5B VC overall (MENA leader); Islamic share undisclosed | $265M (H1 2024); 32% of total UAE startup funding | UAE: 25% of all MENA fintech companies |
Unicorns | None purely Islamic | Tabby (BNPL) | Strong unicorn pipeline forming |
Top Verticals | Shariah-compliant payments, Islamic neobanking | Payments (29%), wealthtech, neobanking, crypto/virtual assets | Most diversified fintech ecosystem in region |
Regulatory | ADGM FSRA Islamic finance frameworks | DIFC Innovation Hub, ADGM RegLab, VARA (virtual assets) | Gold standard regulatory innovation |
Digital Adoption | Dubai Cashless Strategy: 90% by 2026 | BNPL projected $2.84B by 2025; 15.6% annual growth | Leading regional digital transformation |
Key Strengths | Low corruption (TI: 68), governance reforms, Golden Visa talent attraction | DIFC + ADGM dual hubs; regulatory sandboxes; brain gain | Convergence strategy working |
Key Challenges | Smaller domestic market vs Saudi/Indonesia | Reliance on expatriate talent; regional competition | Scale limited by population size |
Verdict: UAE executes deliberate convergence—governance reform + VC ecosystem + talent attraction = rapid rise. Both Islamic and general fintech benefit from world-class infrastructure (DIFC/ADGM), progressive regulation, and capital availability. Most balanced performer across all metrics.
INDONESIA (#4 GIFT) MSCI CRISIS
Metric | Islamic Fintech | General Fintech | Analysis |
Market Size 2024 | $761B Islamic finance assets (2nd globally) | Fintech-dominated startup funding: 32-41.8% of total | Massive potential constrained by governance |
Companies | Limited Islamic-specific; conventional players dominate | 1,925 fintech companies; 324 funded; 6 unicorns | 25% of ASEAN fintech ventures (2022) |
Funding 2024-25 | Minimal disclosed Islamic-specific funding | Fintech: $1.68B (2024); 36.8% of Southeast Asia total | DOWN 75% from 2022 peak of $2.28B due to crisis |
Unicorns | None Islamic-specific | Xendit, OVO, Akulaku, Ajaib (4 fintech unicorns) | Unicorns created pre-crisis; now frozen |
Top Verticals | Shariah-compliant lending, takaful potential (2.7% penetration) | Payments (34.5B txns), digital lending ($13.5B disbursed), BNPL, e-wallets | QRIS payments surged 175.1% YoY |
Regulatory | OJK supervision for Islamic products | CRISIS: Transparency failure; free float raised to 15%; May 2026 MSCI deadline | Regulatory credibility shattered |
Digital Adoption | 14.16M crypto investors (April 2025); Shariah-compliant instruments emerging | 90%+ e-wallet usage; 230M Muslims (largest Muslim population globally) | Adoption high but governance blocks scale |
Key Strengths | World’s largest Muslim population; enormous TAM | 270M population; young, digital-native workforce; high smartphone penetration | Unmatched market size |
Key Challenges | Corruption (TI: 37); MSCI downgrade threat; $10-11B capital flight risk | Governance crisis; brain drain (GTCI: 75); frozen VC; investor exodus | Perfect storm: governance + corruption + capital flight |
Verdict: Indonesia is a cautionary tale. Despite #4 GIFT ranking and $761B Islamic finance assets, the MSCI crisis exposes fatal governance weaknesses. Both Islamic and general fintech face existential threats from potential Frontier Market downgrade, corruption ceiling, and brain drain. Market frozen until May 2026 MSCI decision. Investors treat it as frontier, not emerging.
UK (#5 GIFT)
Metric | Islamic Fintech | General Fintech | Analysis |
Market Size 2024 | Niche; UK not in top 10 Islamic finance globally | £7.97B ($9.9B) investment (2024); ecosystem worth $1.3T | Fintech powerhouse globally; Islamic niche |
Companies | Islamic windows in conventional fintechs | 53 fintech unicorns (4x more than any European country) | Europe’s dominant fintech ecosystem |
Funding 2024-25 | Minimal disclosed Islamic-specific | $23.6B total VC (2025); 35% YoY growth; $4.9B fintech-specific | 50% of EMEA fintech funding |
Unicorns | None Islamic-specific | Revolut ($45B), Checkout.com ($40B), Monzo ($5.2B), 50+ others | Global fintech leadership |
Top Verticals | Shariah-compliant banking windows, halal investment platforms | Payments, neobanking, wealthtech, open banking, regtech | Most mature fintech verticals globally |
Regulatory | Limited Islamic-specific frameworks | FCA Regulatory Sandbox, Open Banking, GFIN, AI Sector Deal | Best-in-class regulation globally |
Digital Adoption | Limited Shariah-compliant options vs MENA | 69% UK fintechs profitable; 16 new unicorns (2025) | Profitability focus replacing growth-at-all-costs |
Key Strengths | Low corruption (TI: 71), deep capital markets, brain gain (GTCI: 12), legal stability | $11.3B VC dry powder; 200+ unicorns; talent magnet | Gold standard fintech ecosystem |
Key Challenges | Tiny Muslim population limits Islamic fintech TAM | Brexit regulatory fragmentation; US/Asian competition | Leading but not guaranteed |
Verdict: UK dominates general fintech (3rd largest ecosystem globally, 53 unicorns) but Islamic fintech is negligible due to small Muslim population (5M vs Indonesia’s 230M). Low corruption, brain gain, and deep VC pools create an ideal environment for conventional fintech exits. Islamic finance remains niche play despite #5 GIFT ranking—evidence that GIFT rankings may not reflect actual Islamic fintech scale.
Venture Capital: Beyond Petro-Liquidity
Islamic finance has historically been tied to oil wealth—a “petro-liquidity” model that worked during boom years but created fragility. The UK attracted $9.4 billion in VC in 2024, ranking third globally. The UAE pulled in $2.5 billion, emerging as MENA’s leader. Malaysia sits around $500M-$1B. Saudi Arabia and Indonesia? Limited data, mostly government-led initiatives.
Here’s what bothers me: where’s the Islamic venture capital actively financing Muslim entrepreneurs at scale? We’ve built sukuk markets worth hundreds of billions, yet our VC ecosystems for halal startups and Shariah-compliant platforms remain fragmented.
The UAE is showing us the path—combining sovereign wealth with private VC to build ecosystems. But sustainable innovation requires bottom-up entrepreneurship, not just top-down mega-projects.
The Brain Drain Reality
The UK and UAE are “brain gain” countries, attracting global talent. Their Global Talent Competitiveness Index rankings reflect this—#12 and #25 respectively. Malaysia at #46 is losing talent regionally. Indonesia at #75 suffers chronic outflows.
Countries experiencing brain drain rank 20+ positions lower on talent competitiveness. The multiplier effect is real: talent attracts capital, capital creates opportunities, opportunities retain more talent. For Islamic fintech investors, this matters acutely. Fintech requires specialized talent—blockchain developers, regulatory experts, UX designers. If your target market can’t retain these skills, your portfolio company will struggle to scale.
What This Means for Your Capital
The UK combines low corruption, massive VC capital, and global talent pools—delivering consistent returns. The UAE is executing a deliberate convergence strategy: governance reforms, VC ecosystem buildout, and golden visa programs. Watch the Emirates closely.
Saudi Arabia achieves #1 GIFT through state-driven investment despite moderate corruption scores. Can this sustain without bottom-up entrepreneurship? Malaysia faces a choice: continue losing talent to Singapore or double down on reforms. Indonesia is the sleeping giant—but until corruption drops and brain drain reverses, investors will treat it as a frontier, MSCI Pressure Mounts on Billionaire-Held Indonesia Shares – Bloomberg, not emerging.
Before deploying capital, ask:
Corruption trajectory: Is it improving or entrenched?
VC ecosystem depth: Are there follow-on investors locally?
Talent availability: Can I hire and retain the team I need?
Countries scoring well on all three—UK and UAE—deliver consistent returns. Those scoring well on one or two offer asymmetric opportunities with higher risk. Those struggling on all three require missionary, not mercenary, capital.
Conclusion
Islamic fintech isn’t just about Shariah compliance anymore—it’s about building globally competitive platforms that happen to be compliant. The convergence of low corruption, robust VC ecosystems, and talent retention creates that foundation.
The question isn’t where Islamic fintech is today. It’s where corruption, capital, and talent will take it tomorrow. Choose accordingly.
Author
Help Us Empower Muslim Voices!
Every donation, big or small, helps us grow and deliver stories that matter. Click below to support The Halal Times.
They’ve Been in Business for 1,450 Years. Here’s What They Know That You Don’t
Leave a Reply