The role of digital technologies in Islamic finance

Tehran (IQNA) – Digital acceleration is happening all over the world and Islamic finance needs to connect with it and recognize it as a growth engine.

Since the establishment of the Islamic Development Bank and the Islamic Bank of Dubai in 1975, the market for Sharia compliant financial solutions has grown rapidly, with regional banks capitalizing on citizens ‘and businesses’ demand for halal banking.

In a recent webinar held in collaboration with Meed and Emirates Bank, Ebrahim Al-Muhairi, Executive Vice President and Head of Islamic Banking at Mashreq Bank, said: “The growth of Islamic banking in the Middle East is on average 14%, while the growth of conventional banking is 8% ”.

Mohammad Damak, Senior Director of Islamic Finance at Ratings Agency S&P, explained that the historical development of the Islamic finance market – with a present value of global assets of $ 2.5 trillion – has been affected by several factors and that recent challenges geopolitical and macroeconomic issues should not limit the continued growth of this sector.

تأمین مالی در جهان اسلام

“Clearly, there are risks to the growth outlook such as the conflict between Russia and Ukraine – which has been longer than expected – continued high inflation and faster-than-expected monetary policy normalization. However, we believe the rate issuance of new sukuk will exceed $ 90 billion and contribute to the overall growth of the Islamic finance sector. This means that there are great opportunities for the growth of Islamic finance in the Persian Gulf Cooperation Council region, with policy support. Overall, despite these risks, the general movement in the sector looks positive and the Shariah-compliant lending sector is expected to grow by 10% in the years 2022-2023. However, despite these signs of future growth, it is necessary to do more to develop Islamic finance to a wider and more relevant audience and to make it more responsive to demands nze of the market, “he said.

شتاب فناوری‌های دیجیتالی در تأمین مالی اسلامی

Rafiuddin Shekoh, CEO of “Dinar Standard Investment Consulting”, said that although the Islamic finance sector has developed well in recent years, it still accounts for only a small fraction of the total financial transactions in the world, and stressed: “The new generations have a different view of the world and look at Islamic finance from a different point of view than the previous generation. They want everything to revolve around sustainability and need help to make finance more realistic. We also need to connect the behavior of this generation to the ethical, social and global principles that the Islamic finance industry uniquely carries. It is these pillars that make Islamic finance globally relevant and will serve as a framework for its future strategic growth “.

Seminar attendees pointed out that the Islamic finance industry has often failed to commercialize its benefits to potential customers and that a lack of innovation, especially in technology, has hindered its access to younger generations.

The launch of an online ethical investment platform by start-up Fintech Wahed allows people to grow their assets in a way that aligns with their values, while leveraging digital capabilities.

Omar Suleiman, Head of Risk Group at Wahed, said: “We are reaching out to ordinary people, especially young tech-savvy Muslims, who may not have a bank account but have a mobile phone, and tell them there is. a new way to increase their wealth. The time has come for innovation and digitization. Islamic financial principles are more important than the debate between Muslims and non-Muslims. These principles refer to the world we live in. When you think about which products to invest or not to invest in, consider social optimization. People who run a multi-billion dollar business have a responsibility to their customers and must strive to create a sustainability circle. “

Dinar Standard’s Shokweh also takes a similar stance and stressed the synergy between Islamic finance and the growing demand for ESG (Environmental, Social and Corporate Governance) compliant investments. “The Islamic finance that exists in the UAE has the opportunity to support ESG initiatives, but the traditional way it is done needs to be changed,” she said.

Al-Muhairi of Mashreq Bank said: “Although there are still no regulatory guidelines on how the Islamic financial system can contribute to change in the energy sector, local banks are moving forward based on greenhouse gas reduction targets (Net Zero ) set at national level. This approach is relevant because banks like Mashreq are committed to the ESG and can finance “Net Zero” initiatives. Whenever we are faced with financial opportunities or large companies with financial needs related to net zero projects, we support them, make the necessary investigations and help borrowers to support national targets ”.


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