MANAMA: Fintech transformation in Islamic banks is well underway as institutions look to leverage the advantages it offers and realise the threat if no action is taken, a panel of experts has concluded.
The scope and speed of evolution in the way consumers interact with their banking institutions, business practices and financial technologies form the main areas of competition between Islamic financial institutions and their conventional counterparts, they said during the first Virtual InFocus Session organised by Bahrain-based General Council for Islamic Banks and Financial Institutions (Cibafi), a global umbrella of Islamic financial institutions.
Cibafi’s Global Islamic Bankers’ Survey (GIBS) 2020 Report has revealed that 52 per cent of Islamic bankers that responded believe that the industry is at the same level of fintech adoption as conventional banks while 26pc believe that the industry is ‘somewhat ahead’ or ‘very ahead’ in term of fintech adoption compared to conventional banks.
During the session, the speakers have also evaluated the key challenges that Islamic financial institutions are facing for adopting fintech solutions and highlighted the advantages of adopting them in their core business.
GIBS 2020 Report also revealed that the most important challenges in adopting fintech 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.
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.
As per the GIBS 2020 findings, it has emerged that 61pc of Islamic banking officials favoured buying services from fintech companies as the main strategic approach to integrate fintech solutions, followed by in-house development of applications (53pc) then joint partnerships with fintech ventures (51pc).
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 panellists 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.
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