Challenges and opportunities for Islamic retail banking in the European context: Lessons to be learnt from a British–German comparison

The purpose of this article is to identify major challenges and opportunities for Islamic retail banking (IRB) in the European context. We present insights gained from the comparison of two European markets for IRB: the mature British and the relatively undeveloped German market. Based on this information, we propose a framework of four major attributes of a nation's socio-economic environment that determine to a large degree the evolution of a domestic market for IRB in Europe: demand conditions, supply conditions, regulatory conditions and societal conditions. We review each of these attributes, demonstrate how they can either be an opportunity or a challenge for IRB, and develop a number of suggestions for European countries and financial institutions seeking to participate in the growing market of IRB.