Al Rayan Bank was the first Islamic high street bank launched outside the Middle East. Starting operations in 2004 and growing a balance sheet in the vicinity of £2bn ($2.8bn) since then, it is part of the crop of UK challenger banks trying to muscle into a market dominated by a handful of global giants. However, when it comes to funding, the bank has been competing with one hand tied behind its back.
Al Rayan runs its business in compliance with sharia law, which means it cannot pay interest. This blocks access to liquidity sources such as the Bank of England’s term-funding scheme (which ended in February 2018), which has helped many challengers keep pace with larger rivals. To survive, it has had to think differently.
