Fintech has been continuously disrupting the conventional ways of the finance industry all around the world. And on this same note, its impact in the Islamic finance sector has been massive; as it could ultimately transform how Islamic finance is regarded in the Muslim community. It was reported by Gulf Times, that there are new business ventures considered to be a combination of IT-based alternative financing and Shariah-compliant financing principles.
One good example of a well-known Islamic venture is Beehive, an online marketplace focused to give small and medium enterprises (SMEs) low-cost alternative financing. Beehive is the first platform for peer-to-peer lending with an independent Shariah certification. According to Craig Moore, CEO of Beehive, their platform uses crowdfunding’s innovative technology to remove the complexity and cost of traditional finance. Beehive won the Disruptive Entrepreneur Awards 2016, Start-Up Business Category, organized by SME World Summit.
Kapital Boost, awarded the Social Enterprise Startup of the Year at the inaugural ASEAN Rice Bowl Startup Award in 2015, and Club Ethis, a finance-based realty crowdfunding venture are also included in the list of Shariah-compliant Islamic innovative ventures. They both operate in Singapore.
There are also a lot of upcoming, as well as recently held conferences for Islamic Finance, all of which are centered on how financial technologies are capable of promoting revolutionary, one-of-a-kind, futuristic ideas. Some of these events are: The International Forum on Islamic Finance 2016, World Islamic Banking Conference 2015, Islamic Banking & Investment Asia/Middle East Congress 2016 and the Euromoney Islamic Finance and Investment Conference.
With all these ventures going mainstream, it is quite evident that the financial disruption will first occur in the sectors that have the biggest intricacy and maximum fees. This could be a challenge for Islamic banks, unless they join the fintech craze, they might have to deal with margins plummeting in crucial areas of finance.