Mohamed Damak, Senior Director, Financial Services & Global Head of Islamic Finance, S&P Global • Interview

SENIOR DIRECTOR, FINANCIAL SERVICES, & GLOBAL HEAD OF ISLAMIC FINANCE, S&P GLOBAL

How would you assess Dubai’s strengths and positioning in the Islamic economy today?

If you look at the total size of the global Islamic finance industry, it is USD2.1 trillion, and at the end of 2018, there was USD1.6 trillion in banking assets. There is more than USD200 billion in banking assets in the UAE. The contribution of the industry is significant, with several issuers based in Dubai in particular. The most recent transaction here was the Emaar sukuk, which was oversubscribed. In addition to this contribution in terms of banking assets, you have the Dubai Islamic Economy Development Centre (DIEDC), which is trying to push the industry and resolve some of the issues it has been facing. The contribution of Dubai to the Islamic economy is significant, both quantitatively and in terms of the support being provided to the industry. S&P’s role is to provide the market with independent and objective credit opinions on issuers and credit quality. We also publish several thematic researches on Islamic finance throughout the year. S&P Global Ratings won three Islamic finance awards in 2019.

In what ways can fintech shift the Islamic finance industry?

The other part of the industry that could be disrupted by fintech is the sukuk industry. The disruption could come with the increased use of blockchain. Blockchain today resolves three challenges that the sukuk industry faces. The first is the traceability of an underlying asset. With a sukuk, you need to have an underlying asset, and throughout the lifetime of the transaction, the sponsor of the sukuk can substitute the underlying asset. The only legal constraint is that the value of the new asset has to be the same as the value of the asset being taken out of the transaction. ✖