Australia to get its first Islamic bank

  • By Zilla Efrat

Australia’s first-ever Islamic Bank has been authorised overnight as a restricted authorised deposit-taking institution by the Australian Prudential Regulation Authority, allowing the creation of Islamic Bank Australia.

It will be the first Australian bank to be Shariah-compliant and offer a full suite of retail and business banking services – all without interest.

But it is not open for business yet.

APRA’s authorisation allows the bank to build systems, implement processes and test with a small number of customers in 2023.

It will first launch retail/personal banking with an everyday bank account, savings product and home finance, before moving into business banking after a full licence is received.

IBA Group, the group which is creating Islamic Bank Australia, was originally founded by thirteen passionate Muslims who wanted to bring Islamic banking to Australia for the first time. Together with the original founders, IBA Group is owned by Abreco Group, a large UAE-based company.

Islamic banks are growing rapidly all over the world and offer fundamentally different banking products without interest – such as home finance with co-ownership and savings accounts that pay profit-share.

“With the number of Muslims in Australia growing by more than 6 per cent every year, we’re excited to be bringing this new type of banking to the Australian community,” says Islamic Bank Australia CEO Dean Gillespie.

Gillespie was previously head of home loan distribution at CBA and head of mortgages at Bankwest.

Australia’s Muslim population grew from 2.6 per cent in 2016 to 3.2 per cent of all Australians in the recent 2021 Census. Nearly a million Australians identify as being of the Islamic faith.

“Islamic banks are incredibly popular worldwide because of the ethical way they interact with customers. It’s more like a partnership where both the bank and the customers share the benefits,” says Gillespie.

According to Gillespie, Islamic banks are inherently ethical and refuse to deal with certain industries.

“We won’t bank gambling companies. We won’t bank big tobacco. We won’t bank alcohol companies,” says Gillespie.

“We will support charitable organisations for the greater good. We have already started this journey by planting trees and fighting homelessness. We’ll do everything we can to be a fantastic community bank that customers will be proud of.”

Gillespie adds that one doesn’t have to be a Muslim to do bank with Islamic Bank Australia.

Islamic Bank Australia’s chair, Anthony Wamsteker, says the bank’s arrival is a big milestone for Australia as it provides choice, introduces diversity in Australian banking products, and provides financial inclusion for the Islamic community.”

Wamsteker was the CEO that founded ME Bank and is currently CEO at Praemium, which provides technology platforms for managed accounts, investment administration and financial planning.

Products at Islamic Bank Australia will be endorsed by internationally renowned Islamic scholars to ensure they are Shariah-compliant.

“Together with the products, we’re building an incredible digital experience for our customers,” says Gillespie.

“We’re working as fast as we can to achieve our full ADI licence and bring our products to the Islamic community and all Australians.”