This article was published by Islamic Finance News on 07/09/2016. I was one of the “movers and shakers in the Islamic fintech space” that the author Lauren Mcaughtry talked to for this article. The following are some of the highlights.
“Fintech is on the rise — on that much, everyone is agreed. But what does it actually mean for the Islamic market — what is happening, what advantages will it bring and why should we get excited? It’s easy to start a trend, but we need to see real progress before we believe it can actually change the world. LAUREN MCAUGHTRY talks to the movers and shakers in the Islamic fintech space to ask whether these big promises will ever be more than just the latest buzzword…”
Othman Abdullah, the managing director of Malaysian software organization Silverlake Group, agrees. “The growth markets for Islamic fintech will follow the growth markets of Islamic finance itself. The key leading markets for Islamic finance are Malaysia, Saudi Arabia, UAE, Qatar, Kuwait, Indonesia and Turkey.”
“The most exciting recent developments, however, are still coming from the leading markets of Dubai and Malaysia. The Islamic Fintech Alliance in Dubai was a big step forward, while in Malaysia the Islamic industry has come out strongly in support of the sector with a new bank intermediated platform linking lenders, banks and enterprises seeking funds. Bank Negara Malaysia also recently issued a Fintech Regulatory Sandbox Paper that it hopes will encourage more collaborations
between traditional Islamic finance providers and fintech companies to come up with more innovations to benefit the wider industry.”
“Threat or opportunity?
The game changer here will be innovation, which Othman identifies as “the main challenge that is currently holding back development within the Islamic space”. But once this connection occurs, could Islamic fintech have the potential to truly disrupt the traditional banking sector? Or could it instead offer a new path of opportunity for an industry that has so far struggled to make an impact? Islamic banking, especially retail banking, has struggled to gain traction in many markets and
continues to suffer from misconceptions and barriers such as the added complexity of Shariah contracts, which can add to the costs of doing business. Islamic fintech certainly has the opportunity to make a real impact on this market — through widening availability, offering cheaper and better products, improving transparency and increasing the access to funding for a wider range of customers.”