Islamic finance players urged to collaborate with fintech firms

MANAMA (Bahrain): Global Islamic finance players should develop data analytics ability in the Waqf, high-net worth individuals, stocks and infrastructure sectors to capture the additional US$1 trillion market which will be available over the next 12 to 18 months.

Urging the players to collaborate with financial technology (fintech) companies, Ernst and Young (E and Y) Global Islamic Banking Sector Partner, Ashar M.Nazim, said data analytics ability would help the players make better decisions, thus providing upward momentum for the industry, which is currently in a growth plateau.

At present, the size of the global Islamic finance industry, excluding the four sectors, is estimated to be worth around US$2.1 trillion.

“This additional US$1 trillion in the industry is not formally captured and we believe the role of fintech is very important in this regard,” Ashar told a media briefing on E and Y’s latest survey, unveiled here Tuesday.

Titled ‘Banking in Emerging Market, Gulf Cooperation Council FinTech Play 2017’, the survey was launched at the three-day World Islamic Bank Conference (WIBC) 2016, which began yesterday.

A total of 72 participation banks and 47 conventional banks across the participation banking markets including Malaysia, Indonesia, Saudi Arabia, Bahrain, Turkey, the United Kingdom and South Africa took part in the survey.

Among others, the study found that between 60 and 70 per cent of the participants believed fintech innovations offer end customers a noticeably better value proposition, in terms of ease of use, cost, speed of service and integration with social media.

It also showed that majority of the participants estimated the banking sector would lose less than 10 per cent of business to standalone fintech firms over the next five years.

Elaborating, Ashar said proper adoption of fintech technology by the global Islamic finance players would potentially increase the industry’s customer base to 250 million by 2020 from 100 million at present.

However, he said for further growth, the Islamic finance players needed to address several game changers including the industry transition from financing intermediation to investment intermediation.

“Through fintech, you can bring down the cost of intermediation and then you will be able to pass on the real returns to depositors and small savers,” he added. – Bernama

WIBC is the largest gathering of Islamic finance and banking leaders in the world.– Bernama