The UAE and Bahrain push Islamic fintech forward
The Islamic financial community can afford to wait no longer to integrate fintech, and must push ahead even faster than conventional for secure its promising future.
The Islamic finance world has seen a lot of change and development in the past few decades, growing from something nascent into a key part of the global financial landscape. Its relationship with the conventional finance world has always been complicated, as not everything that affects one affects the other. But for any that don’t think that fintech will be a major disruptive force that will move not just the conventional finance industry but the entire financial industry, including Islamic finance, as well, they are likely mistaken.
This is, of course, conventional finance’s fault. After all, if conventional finance hadn’t engendered so much mistrust, culminating in the financial crisis last decade, the fintech revolution may have never come about. But because so many were unsatisfied, innovation pushed finance forward. Now, things such as blockchain 1.0—cryptocurrencies, blockchain 2.0—smart contracts, crowdfunding, robo-advisors and much more, have evolved to the point that no financial institution on earth—conventional or Islamic—can afford to wait any longer to begin integrating.
Thankfully, the leaders of the Islamic economy are well aware of this fact. Both Bahrain and the UAE have both set up respective initiatives to nurture the growing fintech industry, including Islamic fintech. In fact, just this month, the DIFC’s FinTech Hive tied up with the Dubai Islamic Economy Development Centre (DIEDC) to ensure that Islamic fintech start ups get the leg up they deserve.
Arif Amiri, Chief Executive Officer of DIFC Authority, had this to say at the launch of this initative:
“With the global Muslim population expected to grow by 73 per cent between 2010 and 2050, there will undoubtedly be a subsequent increase in the demand for Islamic Finance services both in the region and beyond. We are continuously investing in our world-class ecosystem at DIFC and that includes an infrastructure that is compliant and in line with best practice for Islamic Finance institutions. FinTech Hive at DIFC is committed to revolutionising financial technologies across all core sub-sectors, and Islamic Finance is no exception.”
While key bodies such as the DIEDC, DIFC, Central Bank of Bahrain and Bahrain Economic Development Board have made strong commitments to fintech—Islamic financial institutions themselves still have a long way to go. While we have seen many new initiatives pop up—such as Emirates Islamic’s new blockchain integration, there is still a lot of work to be done. The Islamic financial community can afford to wait no longer, and must push ahead even faster than conventional for secure its promising future.
Read more about these initiatives in Islamic Business & Finance 104, out at the end of this month.