Doha: Qatar has the sixth highest number of Islamic fintechs globally, which are expected to further increase with the new initiatives being announced in the country’s finance sector, according to an official. The Islamic fintech sector has continued to grow apace, with over 375 Islamic fintechs globally, covering a wide range of customers and financial needs via several emerging technologies.
Speaking during the 4th Islamic Financial Services Board (IFSB) Innovation Forum recently, Abdul Haseeb Basit, Co-Founder and Principal at Elipses, discussed how Islamic fintech is a promising sector of fintech and shared the key findings of the global fintech survey.
He said: “Islamic fintech is not only a developing and exciting element of fintech sector but it is also very developing and exciting part of the Islamic finance sector. According to the Global Islamic Fintech Report 2022, the global Islamic fintech market size for Islamic fintech globally in 2021 was $79bn in terms of transactions volume which is expected to grow about 18 percent by 2026 and reach a size of $179bn. So, there is certainly trajectory and momentum with in Islamic fintech space”.
Basit added: “Qatar now has the sixth highest number of Islamic fintechs in the world which is a huge development year-on-year for Qatar. We expect that trajectory to only increase with some of the initiatives that are being announced. The Islamic fintech has role to play in using technology to provide access to underserved segments”.
Of the 375 Islamic fintechs globally, the top 10 countries produce 82 percent of Islamic fintechs, with 50 percent of Islamic fintechs in top five sub-sectors.
Dr. DalalAssouli, Associate Professor at HBKU discussed how stakeholders are driving the digilatisation and innovation in Islamic financial services industry. She noted that the key stake holders are the financial institutions, regulators, fintechs but also academic institutions and investors.
“If we look at the global landscape and the key challenges, there is the mobilisation for climate change and meeting the SDGs agenda by 2030 and for that there is an investment gap of $2.5 trillion going up to $4 trillion. Therefore, role of the private sector is critical in meeting that funding gap and particularly the financial sector. And that is why we see more and more incentives to financial institutions to innovate and contribute more to sustainable finance,” Dr. Assouli said.
For financial institutions it requires a paradigm shift on how they conduct financial intermediation and looking into how they decide on their strategic priorities as institutions and redirect more investments and financing to certain sectors and activities which support that objective. That means a lot of ESG data is needed for decision making for these institutions.
She added: “We have seen some big institutions have developed their own departments for this purpose, but smaller institutions can rely on other providers, and this is where we see role of fintechs in facilitating this role. In terms of providing ESG data for decision making but also to facilitate sustainable finance products innovation”.
Dr. Assouli further noted that there is a huge potential for fintechs in terms of facilitating ESG integration for financial institutions both through quality of data but also on the alternative finance and mechanisms that can help them cater for specific needs for these vulnerable groups,” she added.
