The maturity of the fintech space has implications that go beyond just new firms emerging around the globe. It also means that a wider range of products and services will be created to cater to more diverse demographics. An example of this is a June 28, 2020 report, which states that there are now 127 Islamic fintech firms around the world.
Sharia-Compliant Fintech Firms on the Rise
The information in question was provided by IFN Islamic FinTech on June 26, 2020. The organization is a meeting point for information, networking, and communication for the global Islamic fintech space. Besides providing this information, IFN announced they would be releasing a Financial Innovation Report in the near future.
The report will provide information regarding digital, fintech, and technology in the Islamic Finance industry. This is relevant considering the fact that Islamic fintech firms have been expanding in recent times. In June 2020, insha, a German Islamic fintech firm, announced that it would be launching a new app.
The app will be launched in July 2020 and is part of the firm’s expansion efforts. According to the official announcement, there are plans to expand throughout Europe. The goal of the company is to provide necessary services to customers to enable them to keep pace with the world as they navigate their day.
The company is supported by Albaraka Türk Participation Bank, which is an Islamic banking firm. The firm, in accordance with Islamic law, does not charge any interest. Customers are able to open accounts with the firm within minutes.
They are not the only Islamic fintech firm making waves as Islamic Fintech firm Wahed recently received $25 million in funding. The funding round was supported by the VC division of Saudi Aramco. As of now, the firm boasts of over 100,000 customers worldwide.
They specialize in offering Shariah-compliant robo-advisory services and are eyeing an expansion to new countries such as Indonesia and India. This is an expected move as a majority of Indonesian Shariah-compliant Fintech firms now use peer-to-peer systems. Needless to say, there is a healthy market for their services.
Fintech is Becoming More Conscious
Fintech is, by nature, a very innovative industry and is known to change with the times. One of the ways by which it is changing is that more and more investors and those in the fintech space are becoming conscious of what types of organizations they put their money into. In a nutshell, socially responsible investing is now a bigger part of fintech.
Wealthsimple, for instance, prides itself on not only being in compliance with Islamic law but also being socially responsible with its investing. Their portfolio of offerings only includes those that adhere to their rules of social responsibility, including environmental, social, and governance impact. This makes it easier for investors as they can only invest in socially responsible initiatives without having to do the research on each individual security.
Stash App is another fintech firm that offers socially responsible investing to its clients. During the initial assessment stage, customers are asked what causes and factors are important to them. This then informs the investments that will be offered to the customer, and once again, they do not have to conduct the research by themselves.
The idea of investing based on certain personal or religious principles is clearly one that is seeing more support. In June 2020, Wahed, fintech investment platform, raised $25 million in funding. This was raised for the support of Halal-approved financial products and services for customers. As Islamic fintech gains more ground, it will be interesting to see what other niches within fintech spring up.
What do you think the future of Islamic fintech is? Do you see this sector expanding? Let us know your thoughts below.