Islamic finance finds a rapidly growing niche in the secular world

The past few years haven't been the best of times for the international banking sector. Aberrant behaviour by certain banks - and the contagion that followed - are the abiding memories of the financial crisis. More recent allegations, issues and proven misdeeds have arguably undermined the credibility and reputation of the global financial sector as a whole.

Well, not quite all of it. Because one sector growing significantly is Islamic finance.

Islamic finance remains widely misunderstood and, by many, significantly underestimated. The reality is that it is a US$1.3 trillion global industry - growing annually between 15 per cent and 20 per cent in the past decade - and in markets you may not expect.

The face of Islamic banking has changed markedly in just the past several years. Only five or so years ago, when I would seek views on Islamic finance, inevitably I would find myself talking to a researcher or an academic. Today, the insights come from CEOs and senior bankers busily expanding their Islamic finance infrastructure and portfolios. Significantly, this is happening not just within financial institutions based in predominantly Muslim countries - because for many conventional international banks, development of sharia-compliant services in global financial centres is a priority.

There is already an arguably ready-made customer base for Islamic finance among the world's 1.5 billion Muslims. Yet there also is clear scope for broader appeal to non-Muslims seeking an alternative form of ethical and responsible banking.

Interestingly, Islamic banks emerged from the financial crisis with their balance sheets relatively unscathed - in large part because their business model, including those things Islam precludes them from doing, afforded a certain level of protection from the general meltdown.