Islamic Banking Market in Algeria Surpasses DZD 1 Trillion

The Islamic banking market in Algeria has surpassed DZD 1 trillion, as banks move to expand their services to include international payment solutions, notably Islamic “Visa” cards, amid the growing importance of bank cards in accessing the country’s EUR 750 foreign-exchange allowance.
Customers of Islamic banks can now also benefit from Islamic interbank cards and international payment cards compliant with Islamic banking principles, with some cards reportedly available within 48 hours.

In this regard, Soufiane Mezari, Head of Islamic Banking at Arab Bank and a member of the Islamic Banking Committee of the Algerian Banks and Financial Institutions Association, told Echorouk that the development and growth trajectory of Islamic banking in Algeria, six years after the launch of its first Islamic windows, has been “extremely encouraging,” given the sector’s expansion and the growing range of services and products available.

According to Mezari’s estimates, the Algerian Islamic banking market has now exceeded DZD 1 trillion, with 13 market players, including two fully-fledged Islamic banks and 11 conventional banks offering Islamic banking services through dedicated Islamic windows.

The sector’s progress, he noted, is not limited to growth in volumes. It has also been accompanied by solid geographical expansion and a significant broadening of the range of products and services, making Islamic banking accessible to an increasingly large segment of individual and corporate customers.

Services currently available include current and savings accounts, as well as consumer, real-estate, vehicle and equipment financing. Solutions designed to finance businesses are also gradually expanding, reflecting the sector’s transition from a focus on basic banking services toward a more diversified banking offering.

For Mezari, the significance of this development lies not merely in the figures. Rather, the market has moved within just a few years from an emerging experiment to a sector that has become a genuine component of Algeria’s banking landscape.

He said this trajectory demonstrates the existence of genuine and sustainable demand for Islamic banking products and services, while also highlighting the sector’s ability to contribute to savings mobilisation, strengthen financial inclusion and support the financing of the real economy.

In just six years, Islamic banking has evolved from a relatively new concept into a competitive segment in which banks are vying to attract customers and develop new products, whether through specialised Islamic banks or Islamic windows operated by conventional banks.

According to Mezari, the expansion of the supply base and the diversification of services confirm that Islamic banking has now become a genuine banking option for individuals and businesses, rather than a limited activity aimed at a narrow customer base.

Islamic payment cards gain ground
One of the areas witnessing an expansion in the Islamic banking offering is payment services. According to Mezari, Arab Bank currently provides several types of Islamic banking cards.
These include an Islamic interbank card, as well as an international Islamic payment card issued under the Visa brand, allowing Islamic banking customers to access both domestic and international payment instruments without having to rely on conventional banking products.

International cards have gained additional importance amid the growing reliance on banking payment instruments for travel-related transactions and access to Algeria’s EUR 750 travel allowance. The availability of an Islamic international payment card therefore represents an important service for a segment of Islamic banking customers.

Mezari also said that one of the Islamic cards offered by Arab Bank can be issued within 48 hours, reflecting efforts to accelerate banking services and reduce the time customers have to wait to obtain payment instruments.

The offering extends beyond cards. It also includes Islamic “halal” accounts, as well as foreign-currency accounts, giving customers access to a broader range of banking services within the framework of Islamic banking.

Mezari stressed that funds associated with Islamic banking activities are kept separate from those linked to conventional banking operations. Funds and transactions related to Islamic banking are segregated from conventional activities, he said, in order to preserve the distinct nature and operational independence of Islamic banking.

As for products, Mezari noted that the Islamic banking offering now covers a broad spectrum of services, ranging from accounts and savings products to consumer, real-estate, vehicle and equipment financing, as well as financing solutions for businesses.

He pointed out that business financing is gradually expanding and described it as one of the key areas that should be developed during the next phase, given Islamic banking’s potential to contribute to the financing of economic activity and investment.

The broader the range of products aimed at businesses, he argued, the more Islamic banking will be able to move beyond financing individuals’ needs toward financing projects and economic activities, thereby increasing its weight within Algeria’s financial system.

Islamic banking enters a new phase

The Head of Islamic Banking at Arab Bank believes the sector is now entering a new stage — “the maturity phase” — after the first six years succeeded in establishing the foundations required for sustainable growth.
He said the challenge is no longer limited to increasing volumes and expanding the banking network. Instead, the focus must now shift toward continued product diversification, particularly products targeting businesses, as well as the development of Islamic investment instruments and capital markets and the acceleration of digital transformation.

Islamic banking, he added, must strengthen its contribution to investment and economic growth in the coming phase rather than focus solely on expanding its customer base or increasing deposits and financing volumes.

The development of Islamic investment instruments and capital markets is particularly important, according to Mezari, as it would provide businesses and investors with new financial solutions and open up broader opportunities for Islamic banking beyond conventional banking services and financing.

Digitalisation, meanwhile, represents another major priority for the next phase, given changing customer behaviour and rising demand for fast and flexible banking services, including account opening, money management, card applications and remote payment services.

Mezari stressed that the first six years had laid solid foundations for Islamic banking in Algeria, both in terms of the regulatory and banking framework and the growing number of market players and the diversification of products and services.

The next phase, however, should focus on consolidating these achievements, fostering innovation and fully integrating Islamic banking into Algeria’s broader financial and economic system.

In his view, this means moving beyond simply establishing the sector’s presence and making greater use of its potential to support the economy by mobilising savings, financing businesses, supporting investment and developing new financial instruments.

The challenge, therefore, is no longer simply to increase the number of Islamic windows or expand the size of the market, Mezari said. The objective is to make Islamic banking a more effective contributor to financing the real economy and supporting economic growth.

Six years after the launch of its first Islamic banking windows, Algeria’s Islamic banking sector now stands at more than DZD 1 trillion, with 13 market players and a steadily expanding range of banking products — from accounts and financing solutions to domestic and international payment cards, including Islamic CIB and Visa cards.

The sector is thus entering a new phase defined by maturity, innovation, digitalisation and a stronger role in financing investment.