Islamic finance, which has enjoyed double-digit growth rates over the past decade with total assets reaching $2tn globally, offers a big growth potential in view of Muslim population’s low access to financial services, according to a top official of the Qatar Financial Center (QFC).
“The world’s Muslim population of around 1.6bn has low access to financial services, this presents a big growth potential for the (Islamic finance) sector,” QFC chief economic adviser Dr Haitham al-Salama said on “Islamic Fintech: Are Islamic banks Ready to be Disruptive?” as part of Thomson Reuters Future of Technology event.
Fintech (financial technology) is expected to change the traditional models of Islamic financial services and support the sector growth by creating new instruments, increasing efficiency and reducing the cost of operations, he said, adding it would also improve access and therefore, increase the asset base of the sector.
“The pace of innovation is so fast that the regulators need to follow a proactive rather than reactive approach and develop guidelines for the new fintech solutions that are expected to be developed,” he said.
Stressing that Islamic fintech practices needs to be reviewed separately in-line with the governance and compliance standards, he said this includes the assessment of existing fintech solutions and the adoption of new ICT (information communication and technology) infrastructures, new instruments or products and business model innovations.
“Achieving the balance between ensuring financial stability, consumer protection and promoting innovation will be a key element for a successful regulatory framework, which will help nurture the sector and attract investors to the region in the Islamic fintech space,” according to him.
The Thomson Reuters event also explored how technologies such as machine learning, artificial intelligence, block-chain and the internet of things are disrupting the way traditional industries operate.
Originally published on/www.gulf-times.com