Using fintech to support Islamic financial systems

Islamic financial technology, or fintech, is evolving at breakneck speed. A new book co-authored by Dr Mamunur Rashid, Senior Lecturer at Christ Church Business School, exploring the rise of Islamic financial technology in the post-COVID era, detailing the opportunities and challenges facing financial technology in Islamic financial institutions.

Islamic finance offers an alternative approach to traditional financial methods, aimed at establishing a fair and equitable economic system. Islamic Fintech includes financial technology built on Shariah principles of prohibiting debt gain, interest payments and investments in businesses related to alcohol, tobacco and gambling among others .

In the book “Financial Technology in Islamic Financial Institutions—Scope, Challenges, and Implications in Islamic Finance”, Dr. Rashid, along with colleagues Professor M. Kabir Hassan and Tien Mustafa Raza Rabbani, explains “how financial technology has disrupted the Islamic financial economy”. financial services industry like never before and has become the most exciting innovation of the 21st century.”

It has revolutionized the way consumers use financial services and the way financial services are provided. Experience over the past few years, through the pandemic, has helped accelerate the fintech agenda to ensure that this ‘disruptive technology’ to traditional financial services has delivered positive change for the overall growth and development of the financial community.

The authors identify a number of challenges for the development of Islamic fintech, including how reluctance Islamic financial institutions are to adopt fintech, seeing it as a competitor rather than an ally of financial systems and regular banking. Declare that Islamic finance must now recognize fintech as a partner and ally, value its responsiveness, its competitiveness, and identify the need to be agile to meet consumer needs .

Dr Mamunur Rashid commented: “As Islamic financial institutions are relatively smaller in size and generally have a domestic and regional reach, further research is needed to understand how these institutions respond. response to new technology, technology disparities enjoyed by large traditional organizations, and how they integrate services to fit the new normal.This issue aggregates information highlighting the need major changes in the provision of financial services to customers and the internal governance of banks to focus on efficiency and sustainability.”