Islamic Finance and FinTech

By Jonathan Lawrence

FinTech and Islamic finance techniques are both disrupting traditional structures in the conventional financial industry. Therefore it is appropriate that companies, investors and consumers aiming to be Islamic-compliant are able to use technology to increase access to financing structures that accord with their beliefs or those of their markets in the Muslim and non-Muslin worlds.

Mobile based Islamic-compliant banking is on the rise, especially among those who were previously unbanked for logistical or religious reasons. Among the most prominent disruptive ventures in Islamic finance is Dubai-based Beehive, a platform that aims to provide low-cost alternative financing to small and medium-sized enterprises (SMEs) and is the first peer-to-peer lending platform in the world to have received independent Shariah certification for its investments. Beehive has so far provided more than $4bn in financing for SMEs in the United Arab Emirates.

Blossom Finance in Indonesia, provides a Shariah-compliant platform which is Bitcoin-based and provides alternative financing to SMEs in a country where the vast majority of people are still unbanked. The company aims to build “mutually beneficial partnerships” of growth between investors and SMEs by applying the technology of crowd funding to bypass banks.

Another example of innovative a Shariah-compliant FinTech venture is Kapital Boost, a Singapore-based Islamic crowdfunding platform that offers funding to small businesses through a Murabaha or “cost-plus” arrangement – the purchase of an asset by investors for a small business, with the agreement to sell the product to the small business at a marked-up price at a future time.

Please find more information on our Islamic finance practice here and our publications here.

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