Last year, the 590,000 tourists that flocked to London for the Olympics undoubtedly took the opportunity to visit the city’s landmarks: Buckingham Palace, Big Ben, and the London Eye among others. Had the tourists paid the roughly $25 U.S. it costs to rotate in London’s landmark ferris wheel for 30 minutes, they surely would have noticed a new building towering above the London skyline: the Shard.

Costing approximately $2.3 billion U.S. to build and standing 310 meters tall, the Shard is now the tallest building in the European Union. It consists mostly of offices but is also home to a five-star luxury hotel and apartments for those who are willing to pay more than $15 million U.S. Although some may see the Shard as a symbol of the West’s recovery from the global financial crisis, it is also representative of the Islamic banking sector’s burgeoning influence on global markets.

The beginning of the global financial crisis generated doubt over the construction of this ambitious project. In the midst of uncertainty, Qatari investors stepped in and financed a substantial amount of the construction; Qatar now owns 95 percent of the 82-floor building. Controversy surrounded the project, for some believed that, by virtue of being financed through Islamic banking, the Shard could not host businesses involving gambling or alcohol.

Islamic financial instruments have not only been used to finance the construction of buildings in London. Such agents have financed many different aspects of Western society,  including car manufacturing giant Aston Martin. The leveraged buyout consortium, organized by English Premier League chairman Dave Richards, used Islamic bonds to purchase the former Ford Motor subsidy.

Islamic banking, the institutions through which Islamic financial instruments are issued, is a growing sector in the global economy. According to a European Central Bank study, average annual growth of this sector is approximately 15 to 20 percent: in 2011, global Islamic banking assets totaled $1.334 trillion U.S.; this year, they are expected to total $1.811 trillion. Of course, compared to the estimated $700 trillion global market of derivatives this is not much, but the rate of growth asserts an increasing importance of this particular sector.

Even more astonishing is the resilient nature of the Islamic banking sector to the global financial crisis. An IMF study conducted in 2010 compared the profitability of Islamic banks and conventional banks during three distinct periods. Islamic Banks were more profitable between 2005 and 2007, the years before the crisis, and after the initial effect between 2007 and 2008. This resilience is attributable to the fact that the Islamic banking sector is asset-based and centers on risk sharing, as opposed to conventional banks, which are debt-based and allow for risk transfer. This simple feature makes Islamic banking more attractive to investors and governments alike.

Recently, the Turkish government announced that it will be seeking to tap into the Islamic finance industry to counter the effects of the international economic crisis. Over the summer, London mayor Boris Johnson announced that his city will host the World Islamic Economic Forum in October. As of now 22 traditional banks in the United Kingdom, including HSBC and Barclays, provide Islamic banking services.

So two questions arise: What exactly is islamic banking, and is it a viable alternative to conventional banking?

Islamic banking is a component of the Islamic Economic System with its principles derived from the Quran. Islamic economics is different from, for example, capitalism and socialism in that Islamic economic theory allows individuals the right to private property, but the right itself is neither absolute nor unconditional. This is because, according to the Islamic doctrine, wealth is created by Allah. This fact implies that individuals have an obligation to be responsible with their wealth. Therefore, individuals should not hold monopolies over resources and should aim to circulate wealth as widely as possible in order to reduce the inequality gap.

Simply put, Islamic banking refers to financial and banking activity that is in compliance with Sharia law. The fundamental difference between Islamic banking and conventional banking is that the former does not charge riba, or interest and centers on a theory of profit-sharing between banks and investors. Depending on the various financial instruments, the bank can be the only party in an investment agreement to incur losses for a failed investment. As a result, the bank has an incentive to scrutinize investors’ plans before loaning money.

Despite the promising aforementioned statistics and features, Islamic banking, like any other industry, has contemporary problems that seem to hinder its potential growth. First and foremost is the lack of information and research on this sector. Despite the eye-popping growth rates and its resilient nature, not many scholars have devoted resources to the study of this sector. In conducting my research, I had to dig through academic papers published intermittently, sometimes years apart. The seemingly promising nature of Islamic banking simply demands that more research be done.

However, beyond this missing knowledge lies another impediment that may hamper the growth of this financial industry: its structural problem. Because each institution has its own Sharia Council that interprets Islamic law in its own way, there exists a fundamental lack of standardization among Islamic banking institutions. Consequently, fatwa shopping, the practice of going from Islamic scholar to Islamic scholar in hopes that one will deem a certain financial practice in accordance with the principles of Islam, tends to be widespread. Fatwa shopping creates great uncertainty, which puts off many potential investors. Furthermore, claims that institutions do not adhere to Sharia law results in disharmony within the industry.

However, there is hope. The World Islamic Economic Forum in London will provide a platform through which standardized rules and regulations can be discussed and drafted. Indeed, Malaysia has already attempted to do something similar. Ernst & Young estimates that Islamic Banking assets will grow beyond $2 trillion in 2014 and has outlined potential solutions in regulatory transformation, risk transformation and retail banking transformation, which should increase profitability by an additional 25 percent. The institutions of Islamic banking are, to use a cliché, at a crossroads. We shall see soon whether this incredible potential and expansion can be realized.