THE global Islamic fintech market needs a conducive ecosystem to achieve exponential growth potential, according to Maybank chairman Tan Sri Zamzamzairani Mohd Isa (picture).
He said recent research conducted by Maybank Islamic and IslamicMarkets.com in February 2022 among leading Islamic finance professionals revealed that nearly 90% of respondents indicated fintech has already accelerated the digitization of Islamic finance products.
He added the research also revealed that fintech has made them more accessible globally while redefining client experiences.
“This goes to prove that Islamic fintech is still in its early stages of progress.
“There are commendable views on it having great potential of exponential growth if a conducive ecosystem is achieved,” he said during Maybank Islamic Bhd’s virtual Global Connect Forum yesterday.
Zamzamzairani noted the Covid-19 pandemic the world has been facing has indeed been a major disruptor in all aspects of everyone’s lives including the way people run their businesses.
He also pointed out that Maybank has seen digital emerging as the catalyst of sustainable transformations, where fintech demonstrated a great deal of innovation in the financial services and contributed to the growth and improvement in many aspects of businesses including Islamic finance.
He said the advancement and enhancement of Islamic fintech has cleared the door for the production of Shariah-compliant products and services.
He emphasized that financial institutions are now presented with more opportunities to strengthen their infrastructure and product offerings to their customers.
“I believe the potential for Islamic fintech is immense as it provides huge opportunities for players to build the same for consumers that are currently unbanked, uninvested, and uninsured.
“Fintech can provide integrated solutions to support the Islamic principle of charitable contribution, either it is zakat, waqf, or sadaqah — where the innovative integration of these Islamic redistributive mechanisms can become a significant enabler for Islamic social finance,” he added.
Zamzamzairani said the halal market is not only thriving in Muslim-majority countries but also in major non-Muslim majority economies like China, Japan, the US, and the UK.
He noted that excluding Islamic finance, the global halal market is currently the fastest-growing market in the world with an estimated worth of around US$2.3 trillion (RM9.67 trillion) yearly.
He added the expansion of the industry is due to the fact the global halal market of 2.18 billion Muslims is no longer confined to just Muslims.
“Therefore, in the virtue of halal being a truly global industry, this ever-increasing globalization represents an exciting opportunity for the Islamic economy to grow more prominent within the bigger global economy.
“In Malaysia, there has not been a shortage of concerted efforts and programs by government agencies working with various business associations to propel the international growth of the industry, and cement the country’s position as a global leader in halal innovation and production,” he said.
Zamzamzairani stressed Islamic finance is one of the fastest-growing sectors in the global financial industry and has seen an unprecedented pace of growth and development in the past 30 years.
He said the Islamic finance sector is growing at a rate of 15% to 25% per year, with Islamic financial institutions managing assets worth over US$2.2 trillion globally.
According to global data provider Refinitiv, the Islamic finance industry is projected to reach US$4.94 trillion in 2025.
“These figures are indeed impressive and with such high expectation of the industry’s continued growth and success, it also brings the inevitable question where do they stand about creating a progressive, inclusive and sustainable impact to the world and the communities we serve?
“I believe the answer lies in Islamic finance as its core principle of channeling funding to the real economy by promoting risk sharing, avoiding excessive speculations, and limiting debt to the value of assets,” he noted.
He also opined that sustainability is well entrenched in the doctrine of Maqasid Al-Shariah or the objectives of Shariah, which emphasizes sustainable developments to promote the welfare and prevent harm, not only to humankind but also to the environment.
He said according to a study done by Schroders and Maybank Islamic about two years ago, it was found that the underlying principles of sustainable investment and Shariah investing are so closely aligned.
Given such a background, Zamzamzairani said it is pivotal that industry players and regulators continue to play their respective roles to ensure that the Islamic finance industry remains on its impressive trajectory of growth.
He added that it is also crucial for the industry to become more innovative in its products and services, as well as promote inclusiveness moving forward.
Originally published on www.themalaysianreserve.com