Islamic Finance and Fintech situation in the world

Islamic Finance and Fintech have become very popular terms recently. Let’s learn today about the situation of Islamic Finance and Islamic Fintechs around the world.

Islamic Finance

Asia, the GCC and MENA areas are the main hub for Islamic finance assets contributing 95.5% of global Islamic finance assets in 2017. Importantly, Islamic banking contributes largely to the aggregate global asset base.

The World Banks calculates that 1.7 billion individuals out of 7.6 billion world’s population are unbanked. Consequently, almost 75% of the world’s unbanked population reside in developing countries, with the most numbers found in Asia. Unbanked people in India comprise 20.8%, followed by China at 11.6%, Indonesia at 5.6%, Pakistan at 5.2%, and Bangladesh at 3.7%. The unbanked potential customers are dominated by Muslim populated economies that account for nearly 50% of the world’s unbanked population. There is an increasing need and demand in developing countries for financial services such as banking as the large part of the market has not been acquired yet. Therefore, you can notice the significant possibilities exist in gaining more market share, given the right strategy. Certainly, Islamic fintech can be the solution to reach this immense market and reap its full potential.

Islamic Fintech

In simple terms, Islamic fintech means delivering Islamic financial services, operations to clients in newer and faster ways in combination with technologies. Many individuals in developing countries use fintech services such as mobile banking, mobile payments and digital lending and credit. Some well-known financial companies such as HelloGold, Beehive, WahedInvest are good examples of Islamic Fintech companies. Islamic fintech assumed to rise Islamic finance market share through 6 financial services categories: wealth management, trade finance, financing treasury, funding, and Takaful.

According to the recent data by DinarStandard, there are 93 Islamic fintech companies dominating in financing services. P2P finance provided by 65 companies are the most common Islamic fintech platforms as it directly and digitally connects the lender with the borrower. Indonesia takes the leading position with the most companies providing Islamic fintech (31 companies), followed by the US, UAE, UK, and Malaysia.

Fintechs operate based on different smart technologies. For example, WaheedInvest used Artificial Intelligence. AI helps to find the most suitable and optimal investments for specific clients based on their preferences. Moreover, we can build Sharia compliant portfolio also into the part of the AI’s algorithm. These kind of new technologies can make investing easier and more comfortable.

More than half of the global Muslim population is under 34-year-olds. Most of these individuals are digitally savvy and responds well to fintech services. It is time that every company need to think about providing digital solutions to meet young Muslim customer’s needs.

Both AI and other new technologies are advancing the system of financial services. Of course, advancements in financial services are increasing the demand for Fintechs among the Muslim customers.

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