Tag: Islamic finance

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UK Islamic FinTech Panel Launched
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Qatar and Islamic FinTech
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Is Bitcoin Islamic-compliant?
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Islamic FinTech in 2018
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All in this together: New FinTech partnership in Abu Dhabi
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U.S. Regulation CC amendments reallocate risks for remote deposit check payments
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FinTech in Islamic Finance public lecture
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FinTech: a key to delivering Islamic Finance solutions?
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Islamic compliant marketplace financing
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Islamic Finance and FinTech

UK Islamic FinTech Panel Launched

By Jonathan Lawrence

An independent group of Islamic Finance and FinTech practitioners came together on 24 January for the inaugural meeting of the UK Islamic FinTech Panel. The panel aims to create momentum in the Islamic FinTech sector by building on London’s position as a global FinTech hub and as a recognised centre for Islamic Finance.

The panel will be chaired by Harris Irfan, MD of Cordoba Capital, an Islamic Finance and Islamic FinTech advisory boutique. Irfan was previously CEO of Deutsche Bank’s Islamic Finance subsidiary, Global Head of Islamic Finance at Barclays and Head of Investment Banking at Rasmala Group. A recent white paper on the Islamic Finance sector, published by Cordoba Capital and IslamicBanker, promoted the idea of an Islamic FinTech panel as a means to build a community to work alongside existing public sector infrastructure in order to provide support to sharia-compliant FinTech companies. If you would like a copy of the white paper, please contact Jonathan Lawrence.

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Qatar and Islamic FinTech

By Jonathan Lawrence

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:

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Is Bitcoin Islamic-compliant?

By Jonathan Lawrence

In a recent research paper, Mufti Faraz Adam has considered whether Bitcoin is Islamic-compliant. This is an important area of interest given the growing Islamic finance market which is expected to be worth more than US$6.5 trillion by 2020. The paper examines whether Bitcoin is money, a commodity or something else entirely.

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Islamic FinTech in 2018

By Jonathan Lawrence

2018 may prove to be a pivotal year for Islamic finance stakeholders and their approach to developments in FinTech.

Potential areas where FinTech is likely to have an impact on Islamic finance are remittances, insurance (or takaful), investment advisory services and online trading. The overlap between Islamic finance and ethical finance and the opening of financial services to the “unbanked” are important issues to be tackled. In the coming years, demand from consumers (mostly millennials who form a large part of the populations of Muslim-majority countries) is expected to give rise to the faster adoption of these technologies across various verticals in the banking and financial sector.

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All in this together: New FinTech partnership in Abu Dhabi

By Jonathan Lawrence

On 7 August, Abu Dhabi Global Market (ADGM), the International Financial Centre (IFC) in Abu Dhabi, and the Responsible Finance & Investment Foundation (RFI), a think tank for responsible finance, announced their entry into a partnership to help the growth and sustainability of the FinTech ecosystem through financial inclusion and ethical and responsible finance practices.

Both parties said that they would like to encourage entrepreneurship, foster ethical and responsible investments, and highlight opportunities for Islamic-compliant FinTech services and Islamic finance activities for the region and beyond. They will highlight emerging FinTech trends and support the development of innovative Shari’ah-compliant FinTech companies seeking to participate in the Middle East and African markets. The collaboration establishes an open platform for both RFI and ADGM to share expertise and knowledge and they say they will also work closely to enable and assist investors, FinTech entrepreneurs and innovation firms in testing and introducing innovative products, services and solutions. This will take place in the environment of the ADGM Reglab programme, a regulatory laboratory to accelerate FinTech Innovation.

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U.S. Regulation CC amendments reallocate risks for remote deposit check payments

By John ReVeal

More than three years after proposing amendments to the Regulation CC to add new indemnities for remotely deposited checks (cheques), new warranties for electronic checks and electronic returned checks and new indemnities for electronically-created items, the U.S. Federal Reserve has at last issued final rules. These new rules also modify the expeditious return rules, including by making electronic returned checks subject to those requirements. The final rules were issued on May 31, 2017, and will take effect on July 1, 2018.

Perhaps the rules of most importance to the banking and emerging payments industries are those providing for indemnities for remotely deposited checks. An inherent problem with remote deposits is that the person depositing the check retains the original paper check and can negligently or intentionally deposit or cash it again. The bank on which the check is drawn will usually refuse to pay it twice, as it should. This leaves the writer of the check, the bank that accepted the remote deposit, and the bank or check cashing store that accepted the original paper check arguing over who should take the loss. Under current rules, unless the parties have entered into side agreements to allocate losses, the bank or check store paying the original check can normally bring a Uniform Commercial Code (UCC) holder-in-due-course claim against the check writer and that person has no remedy unless recovery is possible from the negligent or crooked payee that cashed the item twice.

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FinTech in Islamic Finance public lecture

By Jonathan Lawrence and Solomon Olukoya

The University of East London Centre for Islamic Finance, Law and Communities held a public lecture on 22 February 2017 focused on FinTech in Islamic Finance. The keynote speaker was Professor Volker Nienhaus, a Professor at the International Centre for Education in Islamic Finance in Malaysia. Professor Nienhaus dealt with four topics:

1. Islamic FinTech and crowdfunding regulations.

Research indicated that only three equity-based and two loan-based crowdfunding platforms were active and Shari’ah compliant in 2016. This was an indication that there was much more room for development in this area. FinTech in many Middle East countries is still unregulated despite recent movements in that direction via sandboxes and other methodologies.

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FinTech: a key to delivering Islamic Finance solutions?

By Jessica Gaddes

Recent discussions at the Islamic Finance News Europe Forum, Luxembourg, focused on the potential for FinTech to become a new frontier for Islamic Finance. Digitalisation was said to be the key innovation that may be able to drive increasing adoption of Islamic Finance products.

Developments using FinTech in Malaysia have created a platform – using the foundations of crowd funding – to allow the top Malay Islamic banks to assess and rate projects and then use the platform to seek funding for those projects assessed to be suitable for financing.  This works within the Shariah principles of risk sharing.

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Islamic compliant marketplace financing

By Jonathan Lawrence

It is estimated that 29.7% of the global population will likely be Muslim by 2050, against 23.2% in 2010. The proportion of Muslims in Europe is currently around 6% of the population and is projected to be 8% by 2030. This creates a large business and consumer base to consider for FinTech ventures. How can you make your business platform compliant with the principles of Islam to appeal to this market?

One way has been to create a financing platform using the Murabaha method. This is an Islamic finance technique used to provide financing on terms compliant with Islamic principles. For example, there is no direct interest rate return made by the financier as charging interest is not considered to be compliant.

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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.

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