Islamic fintech transforms operational models, customer experience


Islamic fintech has emerged as a promising segment that has not only overhauled traditional methods of offering financial services but also transformed business models, operational models, and customer experience.

The implementation of financial technology (fintech) in Islamic finance has increased over the last few years, largely supported by digitalisation of Islamic financial services and the issuance of fintech-related sukuk.

Partnerships and collaborations with fintechs have continued to grow as financial institutions are leveraging the avenue to expand their market presence, according to the latest report on Islamic Finance and Wealth Management, released by Alpen Capital (ME) Limited and Alpen Asset Advisors Limited.

Tala Al Jabri, Partner at HOF Capital, said: “Shariah Finance has taken off in the technology sphere over the past five years.

There has been considerable focus on Robo-advisory for example, but there remains significant white space in other sectors of Shariah fintech.

These include Islamic insurance (Takaful) and platforms supporting the issuance of Islamic assets such as sukuks.

Moreover, there is considerable opportunity for Shariah-focused digital banks that appeal to Muslim populations and beyond and that lay the foundation for ethical finance.

” In the OIC countries, Islamic fintech has become the fast-growing segment of financial technology, with the UAE and Saudi Arabia leading in terms of transaction volume.

As of 2020, Islamic fintech in OIC countries accounted for $49 billion in transaction volume, constituting 0.7 per cent of global fintech transactions.

Governments across the globe have taken measures to support the Islamic fintech ecosystem, encourage digitalisation of banks, boost tokenisation of sukuks, and bolster markets that are rising in prominences such as Islamic social finance and ESG. Such measures are likely to enhance the Islamic finance market and drive growth.

The rise in Islamic fintech’s popularity is also prompting a surge in fintech-focused investment funds, which are likely to accentuate the market and create opportunities for Islamic fintech to expand services.

The Alpen Capital report was launched at Nasdaq Dubai over a panel discussion featuring Dr Amin Fateh, general manager, Minhaj Advisory and Member, Shariah Board, Alpen Capital, and Alpen Asset Advisors; and Hameed Noor Mohamed, executive director, Alpen Capital (ME) Limited, which was moderated by Tahir Mahmood, head of business development of Nasdaq Dubai and DFM.

“Islamic finance and wealth management industry faced the dual shocks of adjusting to the pandemic and historically low oil prices in 2020. While the industry slowed down during the year after experiencing record growth in 2019..—Khaleej Times

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