Islamic finance is growing fast, which is inarguably demonstrated by the numbers. Global assets are set to rise more than 60% between now and 2029, reaching USD 9.7T from a 2025 base.
This level of growth changes things. It changes what is expected of institutions, what products need to exist and which internal functions can no longer afford to stay in the background.
Treasury is one of them and arguably the most consequential given that it is the backbone function of any Islamic bank. Treasury leads the transformation of product offerings, drives capital market development and sets the standard for how Shariah-compliant balance sheets are managed at scale.
Islamic Banking Dominates
The latest Islamic Finance Development Report shows how far the industry has already come. What began as a largely bank-centric model in 2010 has since expanded into Sukuk, Takaful and Islamic funds. However, Islamic banking remains the dominant force, accounting for 72% of total Islamic finance assets globally.
The Gulf Cooperation Council accounts for just over half the total Islamic finance market (USD 1.8T) globally and the UAE reflects that momentum clearly, with Islamic finance now capturing a sixth of the domestic banking market.
Government support, rising demand for Shariah-compliant products and genuine interest in ethical banking from a broader customer base have all played a part in this development.
So has the growing use of Sukuk as a tool for economic development and capital market deepening. The result is an industry that looks and operates very differently from where it started and one that is still in the middle of that transformation.
Institutions are Critical
However, sustained growth requires more than the right products and the right demand; it requires institutions that can actually manage the complexity that comes with scale, and that is where Treasury earns its keep.
Treasury’s function is deceptively straightforward on paper: ensuring that funds are in the right place at the right time, managing risk, investing surplus funds wisely and do all of it in a way that is Shariah-compliant.
That kind of compliance is not self-defined; it is overseen by the Internal Shariah Supervision Committee (ISSC), which reviews and approves structures, transactions and instruments to ensure they meet Islamic principles.
In practice, it is one of the most demanding functions in any Islamic financial institution. Every financial instrument must be asset-backed. Every transaction must reflect genuine economic activity.
Islamic Finance as Compliance
In cases where institutions face liquidity shortages, markets rely on tools such as commodity Murabaha, Wakala placements and Shariah-compliant repos, all of which require careful structuring, a clear legal footing and proper Shariah oversight.
Even familiar instruments like Mudaraba and Sukuk take real expertise to use effectively within those constraints.
Every new product, every transaction type and every market move goes through a rigorous review and approval process. That kind of rigor matters; not as a compliance exercise, but because it is the basis on which customers trust these institutions in the first place.
UAE Treasury Actions
The UAE government has demonstrated a clear and strategic commitment to the importance of building a market that gives Treasury teams better tools to work with. The 2024 launch of the Dirham-denominated Islamic Treasury Sukuk programme was a meaningful step followed by the retail initiative launched in 2025 by lowering the entry barrier for individual investors to as low as AED 4,000. The process is fully digital, covering onboarding, subscription, settlement and custody via licensed platforms.
Sukuk also signals a structural shift in a market that is maturing in ways that gives Treasury departments actual room to operate strategically, not just reactively. When the instruments available to you improve, so does your ability to make good decisions with them.
Expansion of Treasury Involvement
That strategic dimension is expanding in other ways as well. Islamic Treasury teams are increasingly involved in both product innovation and system development, helping close the long‑standing gap between conventional and Islamic product suites. This now spans the full spectrum—from hedging solutions to liquidity management tools—positioning Islamic Treasury as a true enabler of balance‑sheet and risk management parity.
New products come from people who understand both the technical requirements and the practical constraints, and treasury sits at the intersection between the two. Risk management, central to banking operations, has taken on new importance. Managing market, liquidity and balance sheet risk within Shariah constraints is not simple.
Getting it right is a genuine competitive advantage. Getting it wrong carries consequences that go beyond the balance sheet.
The industry’s growth trajectory makes one thing clear in that the demands on Treasury are only going to continue in an upwards direction. Institutions that have treated it as a support function will need to rethink that positioning.
The ones that have already invested in building Treasury into a strategic capability are better placed for what is coming – a market that is getting bigger, more competitive and less forgiving of institutions that are not properly equipped to operate in it.
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