Qatar has been working to support the ecosystem for Islamic fintechs. Highlighting the role of technology in the Islamic finance during an online event, experts said fintech companies have an important role as they bridge the gap in the Islamic finance sector. Panelists discussed about the ecosystem to support SMEs with solutions to scale up halal economies and promote Qatar as an Islamic fintech hub regionally and globally during an online event.
HBKU in association with Qatar Financial Centre (QFC) organised a webinar entitled ‘Islamic FinTechs and the Halal Economy’ which shed light on the opportunities of halal economy that was $1.9 trillion in 2020 and expected to reach $3.2 trillion by 2024 which creates tremendous opportunities across various segments of halal economy from food, cosmetics, fashion to travel.
Akber Khan, Senior Director of Asset Management at Al Rayan Investment, said the current event opportunities in the Islamic finance space is that fintech is seeking to bridge that gap that exist currently in the Islamic finance industry and brings more opportunities for fintech solutions. Around 20 percent of world’s population is Muslim, yet Islamic finance industry as a whole is at most 5 percent of the global financial industry so there are opportunities in every possible area. There are opportunities in companies seeking to service the Muslim population. The advantage that fintechs have that they are able to leap from the more traditional companies who rely on traditional means of access to a customer. Technology is an enabler of allowing distribution across geographies very quickly.
Speaking about sustainability Khan elaborated that there is an overlap between ESG and the ‘S’ of the sustainability part and there is an overlap between Shariah compliant investing and ESG which comes in the social ‘S’ aspect of it.
“Socially responsible investing is what we do, and we also look at sustainability aspect from an Islamic point of view because we cannot invest in companies which are excessively leveraged. Having a moderate amount of debt helps sustainability through an economic set up. The key aspect of Islamic finance is inherent within its sustainability, so sustainability is key,” he said.
Responding to a query, will venture capital funds for fintechs in Qatar scale up and promote innovation for halal economy in Qatar, Khan noted, “I think there is room for multiple investors and if there is a fund that has a combination of both public and the private sector that would be great. To scale the market and propose more innovative solutions and other players joining in form of VCs or any other form will be helpful.”
Ayman Doukali, Head of Islamic and Structured Finance at Qatar Financial Centre (QFC) Authority said, “Four to five years ago nobody heard of banking as a service or open banking which is bringing fundamental changes not only the way bank operates financial institutions including both banks and fintechs.”
Addressing a query about Islamic fintechs having an ambition to expand geographically and considerations for fintechs as they move from market to market, he said, “I think from the beginning there needs to be a clear understanding of you as a fintech or a tech company or an enterprise and if you have covered your local market sufficiently before you start looking to expand abroad.”
Speaking about what role regulators, supervisors and legislatures can play to facilitate adoption of fintech in Qatar Doukali noted, In Qatar for the sector to flourish there has to be a clear jurisdiction agenda in terms of what is needed in regulations. “There is a great need of clear rules and regulations across the different aspects of fintech, be it digital assets, open banking etc.
Regarding the success of fintechs he stressed that there is a great focus on retail segment and payment processing but if “we are talking about financial inclusion from the sectors perspective there is a lot of work that can be done on the wholesale side, private banking and SMEs which allows innovations, unlocks additional pockets of liquidity and changes the way for the SMEs to finance their businesses. So, this is an area for improvement from a fintech perspective.”
