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Global Islamic Finance Industry Consolidates its Embracing of Digitisation and FinTech Solutions

The global Islamic finance sector, together with the wider financial services industry in the OIC countries, continues to embrace ESG and FinTech, some of the initiatives being particularly innovative, across the spectrum ranging from regulators and Islamic banks to new online start-ups.

In Kuala Lumpur, the Securities Commission Malaysia (SC) in September 2019 registered EdgeProp Sdn Bhd (EdgeProp) as the first Recognised Market Operator (RMO) to establish and operate a property crowdfunding (PCF) platform in Malaysia. This follows the revision of the SC’s Guidelines on Recognised Markets in May 2019.

PCF is an initiative announced in the Malaysian National Budget 2019 to provide an alternative financing avenue for first-time homebuyers through a property crowdfunding scheme. Property crowdfunding, said the SC in a statement, “offers the same potential as that of Equity Crowdfunding (ECF) and P2P financing platforms in providing an alternative source of financing but is specifically tailored for first-time homebuyers. At the same time, it will provide investors access to a new investment option.”

It is an offence under Malaysia’s securities laws to operate a PCF platform without authorisation from the SC. Any persons found to be in breach may be liable to a fine not exceeding RM10 million or imprisonment term not exceeding ten years or both.

To date the list of registered RMOs in Malaysia totals 28, comprising 3 general ones, 10 for ECF, 11 Peer-to-Peer Financing (P2P) ones, 3 Digital Asset Exchanges (DAX) and one for PCF, namely EdgeProp Sdn Bhd.

In the Islamic banking sector, several institutions launched ESG or FinTech initiatives in September 2019. Qatar Islamic Bank (QIB) for instance launched its upgraded Internet banking platform, which is specifically designed to address the digital and financial needs of its banking customers. With a single sign-on feature for both Internet banking and the QIB Mobile App, users can now make use of the new customer-centric features and services by using the same username and password to login. The new user experience and digital interface are part of the bank’s digital transformation strategy to provide customers with an easy, safe and convenient banking experience.

Features of the platform include users getting a holistic view of their accounts upon logging in; a “Marketplace” section where QIB users can research and apply for products, find exclusive discounts and put in requests for services, such as applying for a credit card or cheque; and quick transfer, E-cash services and paying utility bills.

“In a hyper-connected, online world, customers want instant, personalised service. That’s why we upgraded our online platform to give users access to the most frequently used banking services, to manage their finances anytime, anywhere whether they prefer to use the QIB Mobile App or our new Internet banking,” said D Anand, General Manager, Personal Banking Group, QIB in a statement.

In the payment solutions segment, Dubai-based Noor Bank has partnered with UnionPay International to launch an EMVCo QR-based Sharia’a compliant mobile payment service that will allow consumers in the UAE to make instant and secure payments on the go. It is also expected to create a wider acceptance and increase the number of current QR-code-enabled merchants in the country by end-2019.

According to Han Wang, the General Manager of UnionPay Middle East “the QR-code-scanning-based payment solution is a cost-effective alternative to cash payments for consumers and retailers alike and will further drive the shift towards a cashless society within the UAE.”

In a further initiative in the UAE in September, Abu Dhabi Islamic Bank (ADIB) launched Samsung Pay, the mobile payment and digital wallet service for Samsung devices, for its Visa covered cardholders. Samsung Pay is the first mobile wallet system to be adopted by ADIB.

According to ADIB, the partnership allows Visa covered card holders to make payments using their Samsung Pay-enabled devices at any contactless PoS (point-of-sale) reader around the world. The service will be gradually rolled out for Visa debit cards and the bank’s MasterCard portfolio over the next period.

According to Shahebaz Khan, Visa’s General Manager for the UAE, ” Samsung Pay uses Visa’s tokenization technology to secure transactions by replacing the 16-digit card number with a token. During a transaction, the token – not the actual card information – is submitted into the payment process so Visa cardholders can enjoy the quick and seamless experience of a contactless transaction with the confidence that their transactions are protected.”

“The UAE consumers,” said Mohammad Gharaibeh, Head of Enterprise – Mobile Business at Samsung Gulf Electronics at the launch, “are digitally in-tune and continue to seek and harness the convenience of digital-first solutions. We are delighted to begin working with ADIB to give its customers access to the mobile payment technology that is revolutionizing the checkout process and enabling users to enjoy the seamless simplicity of Samsung Pay with almost every transaction.”

ADIB is currently undergoing a digital transformation strategy to enhance the customer experience. ADIB already has ADIB Express, a new generation of technology-enabled branches, and Express Finance, which enables approved customers to receive funds in as little as 30 minutes through ADIB’s mobile App, which has concluded over 2 million mobile transactions every month since its introduction.

The latest initiative in ADIB’s digital transformation strategy is the roll out in September of its Digital Transaction Banking platform “ADIB Direct” which is based on Intellect Global Transaction Banking (iGTB) designed by the transaction banking and technology specialist Intellect Design Arena Limited, the B2B FinTech product company.

The new digital cash platform, according to iGTB, integrates a suite of banking solutions into a single, streamlined interface that includes account services, payments, collections and receivables, liquidity management services and the mobile, tablet and iWatch interface.

Haytham Elmaayergi, Global Head of Transaction Banking at ADIB, said at the roll out that “it is now more imperative than ever to incorporate the best possible digital solutions available in the market to serve our customers. ADIB Direct responds to this demand for convenient and cost-effective access to banking services. The platform allows businesses from SMEs to large corporations to efficiently manage their cash, liquidity, trade finance and foreign exchange needs on 24×7 and from their own desk.”

In the UK, Yielders, the first FCA regulated Islamic FinTech platform, completed its Series A funding round in early September.

“The funding round attracted a number of private investors and sets the company up for further product and market expansion. A portion of the overall round was allocated to crowdfunding via Seedrs and was fully subscribed in one week, finishing at 132% oversubscribed” said Yielders in a statement.

Yielders intends to use the proceeds of the overall funding round to expand its services across the EU/EEA and GCC to an increasing population of ethically focused investors and to launch new investment products to complement its existing offering. The funding round, added the company, follows a year of growth in assets under management and users and the first successful exit of a retail asset, delivering a 57% net return over 3 years

Yielders claims that its Halal platform “lowers the barriers of entry to a traditionally inaccessible asset class, offering investments into real-estate from as little as £100.” Irfan Khan, CEO and Founder of Yielders, is buoyed by “the interest shown in our Series A round, the momentum with which we have achieved our target amount and the investor interest in our crowdfunding campaign. It is especially encouraging that a number of our own customers have continued to show faith in us as a company by both participating in the crowdfunding and in the private portion of the round. We now aim to accelerate our growth to new markets, with new products and into new customer segments in the next 24 months. With the core mission of Yielders to make competitive real estate investment returns accessible to the mass market, the recent completion and growth demonstrates the robustness of the business model and technology platform.”

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