Islamic banking is growing at a phenomenal rate and expected to have assets under management in excess of $1 trillion by 2010.

That is one of the conclusions of the World Islamic Banking Competitiveness report, which will be unveiled in Bahrain at the 14th World Islamic Banking Conference being held at the Gulf Hotel.

The event kicked off yesterday with pre-conference workshops organised by MTI Consulting of Bahrain, McKinsey and Fitch Ratings.

In the MTI workshop, which looked at marketing effectiveness within the industry, chief executive Hilmy Cader argued that the Islamic banking industry had to improve its marketing and look into product development and service quality within the industry.

He said that ITO research showed that while there were lots of products within the industry there were question marks over how well they met the consumer needs.

'Our research shows that we need improvements in the quality of customer services within the industry,' he said. 'Many customers remain unsure about the real difference between conventional and Islamic finance and that has to change.'

He added that the industry was continuing to expand with money moving from conventional finance to the Islamic model across the region.

That is a view backed by McKinsey's report, which says that that Islamic banks are growing at a faster level than conventional banking across a wide area.

The report, to be published today, also states that the rising interest in Islamic finance corresponds to the increase in the number of players in the market.

While most of the current growth is coming from mainstream businesses and corporate banking three areas of growth stand out, according to McKinsey partner, Ozgur Tanrikulu.

He said that sukuk would continue their fast growth curve, driven by large infrastructure and real estate projects and investors search for diversification from fixed income instruments.

Assets management is also set to boom, he said and the Asian Islamic market was also set to grow, driven by government support and product innovation.

Around 1,000 delegates from both the Islamic and conventional financial industry from across the globe will turn up for the 14th WIBC.--TradeArabia News Service