Islamic Banks all over the world have been adopting financial technologies to streamline their business operations. This was stated by a panel of experts during an online seminar conducted by the first Virtual InFocus Session organized by Bahrain-based General Council for Islamic Banks and Financial Institutions (Cibafi), a global umbrella of Islamic financial institutions.
Successfully adopting fintech services to transform their business operations will be an important factor for the success of Islamic financial institutions in the years to come. The online session held yesterday was hosted by the Astana International Financial Centre (AIFC) under the framework of Online Astana Finance Days 2020.
Participants included Cibafi secretary-general Dr. Abdelilah Belatik, Nurlan Kussainov, the chairman of the management board of the AIFC Authority, Kazakhstan, Taliya Minullina, chief executive, Tatarstan Investment Development Agency (TIDA), Tatarstan, Russia.
The panel discussion was moderated by Cibafi research economist Dr. Muhammad Bilal, with panelists including Yasmeen Al Sharaf, head of fintech and innovation unit, Central Bank of Bahrain; Andrew Cunningham, founder of Darien Analytics, UK; Umar Munshi, co-founder of Ethis, Singapore; Khalid Howladar, chief strategy and risk officer, Blossom Finance, Indonesia; and Dr. Recep Bildik, director of COMCEC Project Group, Borsa Istanbul, Turkey.
The industry experts also discussed the key findings of Cibafi’s Global Islamic Bankers’ Survey (GIBS) 2020 Report. According to the survey results, 52% of respondents said that the Islamic banking industry was at par with their conventional counterparts in terms of financial technology adoption. 26% of people believed that the industry was ‘somewhat ahead’ or ‘very ahead’ in terms of fintech adoption compared to conventional banks.
During the online forum, the panelists also evaluated the key challenges that Islamic financial institutions are facing for adopting fintech solutions and highlighted the advantages of embracing them in their core businesses.
GIBS 2020 Report also noted that the most important challenges in adopting fintech by Islamic financial institutions all over the world were cybersecurity and data protection, followed by regulation, with a number of other issues quite closely grouped. The scores were, however, modest, suggesting that many of the challenges could be overcome relatively easily, Furthermore, these challenges are not unique to Islamic banks only. Conventional banks also face similar issues while adjusting their operations to include fintech.
The discussion also captured the real-world implications of financial technologies in the Islamic financial services industry and presented the fundamental strategies that Islamic financial institutions follow in integrating fintech into their day-to-day business operations. As per the GIBS 2020 findings, it has emerged that 61 percent of Islamic banking officials favored buying services from fintech companies as the main strategic approach to integrate fintech solutions, followed by in-house development of applications (53 percent). A close 51 percent of respondents favored joint partnerships with fintech ventures to adopt fintech.