The Gulf’s financial engine is humming louder than ever, but this time it’s tuned for a digital leap. Across the region, Islamic finance is shedding its traditional skin as tokenised sukuk, blockchain rails, and AI-powered Shariah tools gather momentum—quietly but unmistakably reshaping how capital gets raised.
Regional debt markets are already running hot, and forecasts suggest the tempo will carry well into 2026. Against that backdrop, the shift toward “smart” Islamic instruments is not merely timely—it’s transformative.
Voices from inside the sector say the region’s appetite for experimentation is unmistakable. Recent moves, such as the UAE’s retail sukuk rollout and Saudi Arabia’s earlier push into similar territory, hint at where things are heading.
At the heart of this shift is tokenization: breaking sukuk into fractional pieces that trade instantly on blockchain networks. It’s the kind of innovation that could democratize access to Islamic bonds—but it won’t happen overnight. Regulators must open the doors, stakeholders must embrace new methods, and Islamic jurisprudence must weigh in. For now, the pace is deliberate, but the direction is clear.
On the ESG side, expectations are similarly tempered. The region isn’t likely to unveil a wave of “blue sukuk” tomorrow, but the momentum behind sustainability-focused Islamic debt is unmistakable.
The shift didn’t emerge in a vacuum. Bahrain kicked off early experiments in 2021, supporting a platform that let investors access sukuk with as little as $1,000. Since then, the UAE has expanded retail access, allowing individuals to enter the market with modest digital purchases, while one of its major banks launched a “Smart Sukuk” model designed for this new era.
Saudi Arabia has taken its own steps, with regulators clearing pathways for fintechs, and venture capital flowing into homegrown firms building next-generation sukuk infrastructure.
All this comes as global sukuk issuance surges. The first three quarters of 2025 saw an 89% year-on-year jump in core markets—including the GCC, Malaysia, Indonesia, Türkiye, and Pakistan—bringing volumes close to eclipsing the previous year’s total.
The message from the region is unmistakable: Islamic finance is not simply adapting to digital transformation—it’s preparing to redefine itself through it.
