Fin­Tech can boost the Is­lamic fi­nance sec­tor and al­low it to flour­ish

The National - News - - BUSINESS - ARIF AMIRI Arif Amiri is chief ex­ec­u­tive of Dubai In­ter­na­tional Fi­nance Cen­tre

Fin­Tech has spurred the evo­lu­tion of the Is­lamic fi­nance in­dus­try over the past year. It helps to ad­dress a need for sim­pli­fi­ca­tion and in­no­va­tion in the sec­tor, which will sup­port longer-term ac­cep­tance and growth.

More im­por­tantly, it pro­vides a great op­por­tu­nity for the sec­tor to stream­line ser­vices and at­tract new segments, with the key be­ing dig­i­tal-savvy mil­len­ni­als.

Younger cus­tomers are ex­pected to play a cru­cial role in the growth of Is­lamic fi­nance and ex­pand its cus­tomer base, with the younger seg­ment ex­pect­ing to con­trib­ute to as much as 75 per cent of to­tal bank rev­enue by 2030.

Dubai and Dubai In­ter­na­tional Fi­nan­cial Cen­tre – which are driv­ing the fu­ture of the Mid­dle East, Africa and south Asia’s Is­lamic fi­nance sec­tor – are well placed to tap into this promis­ing seg­ment. In 2019, DIFC ex­pe­ri­enced a marked rise in the vol­ume of Is­lamic as­sets be­ing man­aged here, with 33 per cent growth year-on-year.

The Measa re­gion con­tin­ues to be an im­por­tant op­er­a­tor in an in­dus­try that is worth more than $2.1 tril­lion (Dh7.7tn), fu­elled by the grow­ing pop­u­lar­ity of Is­lamic bank­ing. Sharia-com­pli­ant as­sets rep­re­sent 14 per cent of to­tal bank­ing as­sets in Measa and 25 per cent of bank­ing as­sets in the GCC.

Last year, DIFC wel­comed Malaysia’s largest lender and the fifth largest Sharia-com­pli­ant bank in the world, May­bank Is­lamic Ber­had, to the cen­tre. The move bridges two of the world’s big­gest cen­tres for Is­lamic fi­nance, al­low­ing it to ser­vice the GCC mar­ket and ac­cess one of the world’s lead­ing ex­changes for sukuk.

Dubai is one of the largest cen­tres glob­ally for sukuk list­ings by value at $68.35 bil­lion, with $49.06bn listed on Nas­daq Dubai.

DIFC has been in­vest­ing heav­ily into Fin­Tech to spur the growth of the Is­lamic fi­nance in­dus­try. The cen­tre’s Fin­Tech ecosys­tem has con­trib­uted to the UAE’s po­si­tion as the fourth-largest such hub in the world.

For DIFC’s 2019 Fin­Tech Hive pro­gramme, there were many Is­lamic start-up ideas amongst the 450 ap­pli­ca­tions. Four Is­lamic fi­nance start-ups were se­lected to join the elite group of par­tic­i­pants.

Their ideas were var­ied and in­no­va­tive. Hel­loGold, based in Malaysia, is de­vel­op­ing the world’s first Sharia-com­pli­ant gold mo­bile ap­pli­ca­tion. Is­lamiChain is a start-up lever­ag­ing blockchain tech­nol­ogy to en­able phi­lan­thropy and com­pas­sion­ate giv­ing.

Hak­bah is an Is­lamic Fin­Tech start-up spe­cialised in co-op­er­a­tive sav­ings and Wethaq is a plat­form fo­cused on the struc­tur­ing and dis­tri­bu­tion of se­cu­ri­ties in sukuk cap­i­tal mar­kets.

The cen­tre has be­come a nexus for 46 Is­lamic fi­nance in­sti­tu­tions to en­gage with start-ups. The Fin­Tech Hive ac­cel­er­a­tor also part­ners with spe­cial­ist or­gan­i­sa­tions in­clud­ing the Dubai Is­lamic Econ­omy Devel­op­ment Cen­tre, Emi­rates Is­lamic bank, Dubai Is­lamic Bank and Abu Dhabi Is­lamic Bank.

DIFC and Dubai Fi­nan­cial Mar­ket have brought to­gether rep­re­sen­ta­tives of lead­ing banks, fi­nan­cial in­sti­tu­tions and pub­lic and pri­vate com­pa­nies in the first Dubai

Sus­tain­able Fi­nance Work­ing Group launched this year.

The group will fo­cus on com­bin­ing Dubai’s fi­nance sec­tor’s ini­tia­tives to cre­ate a sus­tain­able fi­nan­cial hub in line with the UAE Sus­tain­able Devel­op­ment Goals 2030 and Dubai’s Strate­gic Plan 2021, en­cour­ag­ing the use of green fi­nan­cial in­stru­ments and re­spon­si­ble in­vest­ing. The syn­er­gies be­tween En­vi­ron­ment, So­cial and Gov­er­nance goals high­light that Is­lamic fi­nance can be a prime driver for eth­i­cal fi­nan­cial so­lu­tions.

As the DIFC pro­gresses in driv­ing the fu­ture of fi­nance, Is­lamic fi­nance and the prin­ci­ples that guide it will con­tinue to play a sig­nif­i­cant role in sup­port­ing sus­tain­able growth within the re­gional fi­nan­cial ser­vices sec­tor.

Sarah Dea / The Na­tional

Dubai and DIFC are driv­ing the fu­ture of Is­lamic fi­nance in the Mid­dle East, Africa and South Asia

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