Qatar and Islamic FinTech
In the Qatar Islamic Finance Report “Expanding Horizons”, Islamic FinTech regulation and support are considered. The report is a joint venture of the Qatar Financial Centre (QFC), Thomson Reuters and the Islamic Research and Training Institute (IRTI). The report notes that the FinTech industry in Qatar remains very small. As a part of its efforts to support the Qatar National Vision 2030, the QFC held a Fintech event in January 2017. The report concludes that Islamic FinTech could be supported in three ways:
- Evaluating how to support Fintech startups with ‘sandbox’ regulation — Fintech offers a way to reduce costs and make Islamic banks more competitive with their larger conventional counterparts. The establishment of a dedicated department at the regulator that could create an experimental ‘sandbox’ regulatory regime for Fintech enterprises would be valuable not only for banks, but also for non-bank financial institutions, asset and fund management companies and insurers.
- Considering lifting lending limits and interest rate caps for Fintech startups — The development of Fintech, much of which is currently dedicated to serving the personal lending market, may see a slower pace because of personal lending limits and financing cost or interest rate caps in Qatar. It may be desirable, as part of the regulatory sandbox, to allow temporary exemptions and relaxed size limits for Fintech companies from these limits and caps.
- Encouraging collaboration between banks, non-bank financial institutions and Fintech — Banks, which have greater access to stable funding, and non-bank financial institutions, which have more experience underwriting smaller loans for SMEs, can more effectively support SMEs by working together than in competition. This collaboration should be built on a mutual interest in expanding financing to the SME market and the respective skills of each type of institution. Fintech will help this collaboration work by providing greater transparency between the institutions, lower costs and an increased ability to do ex-post Shariah audits to ensure that procedures approved by each institution’s Shariah board were followed.