2.9 Islamic FinTech challenge

Islamic Finance Podcast with Almir Colan

In this episode, we talk about the intersection between technology and finance and what opportunities or challenges it creates for the Islamic fintech industry.

This year we have seen a strong rise in stocks for companies such as Zoom, Tesla and Amazon. With their tech-centric solutions, Amazon is redefining commerce, Zoom is changing the way we work, and Tesla’s software car is disrupting the automotive industry.

The finance world is not far behind with Apple issuing their own credit cards and Facebook looking to start their own digital currency.

In Australia, “buy now, pay later” firms like Afterpay and ZIPpay have benefited as the demand for debt financing increases during the economic slowdown.

The challenge for Islamic firms is to reinvent their business model away from simply commercialising loans. This is because the nature of Islamic finance differs significantly from the conventional one.

Profit that comes from money-for-money exchange represents illegitimate gain or riba. For Islamic FinTech platforms this means that profit must come from the underlying income generating assets or activities such as equity finance or company dividends. If FinTech platforms have a higher aspiration, they could for instance seek ways to connect more directly into manufacturing and production that grow the economy and creates jobs.

In the years ahead, we could perhaps see more start-ups move towards mobile payment solutions just as we see with Alipay and WeChat that are now estimated to be taking almost half of the banking payment fees in China.

At the end, customers will only use technology that serves their needs best. FinTech alone is not a competitive advantage any longer – instead products and services built on trust with a legal and regulatory environment at its core will win the day.

Podcast Hosted by Almir Colan.

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