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Introduction to Islamic Fintech: A Challenge or an Opportunity?

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FinTech in Islamic Financial Institutions

Abstract

Islamic finance offers an alternative financial system that prohibits the use of interest and other economic exploitations and intends to establish a just and fair economic system. The industry has seen some extraordinary growth, primarily in systemically important Islamic finance countries in the Middle East, North Africa, Southeast Asia, South Asia, and Central Asia. Fintech has evolved fast as a massive change-maker in the financial sector globally, with a focus to deregulate/personalize financial transactions at a lower cost for the customers and stable income for the financial institutions. While COVID-19 has pushed the Fintech agenda quickly forward, the use of Fintech has received momentum since the introduction of mobile payments. Islamic as well as traditional financial institutions are making an increasing amount of investment to offer services that are embedded into mobile applications. While Fintech adoption is a major barrier in countries with larger share of Islamic finance users, there are other challenges, and opportunities, awaiting Islamic financial institutions. This chapter provides a brief introduction to principles of Islamic finance and Fintech, and offers a description of potential benefits and drawbacks that influence Fintech engagement among Islamic financial institutions.

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Notes

  1. 1.

    https://www.ifsb.org/press_full.php?id=570&submit=more.

  2. 2.

    https://www.forbes.com/sites/lawrencewintermeyer/2017/12/08/the-future-of-islamic-fintech-is-bright/?sh=4e547b9d65fa.

  3. 3.

    https://cdn.salaamgateway.com/reports/pdf/6127a0965afd7898a34f69dadc24b8d17ada0b1b.pdf.

  4. 4.

    EY Global Fintech Adoption Index (2019).

  5. 5.

    https://www.fitchratings.com/research/islamic-finance/global-sukuk-market-outlook-1q22-12-04-2022.

  6. 6.

    https://www.arabnews.com/node/1780506/business-economy.

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Authors and Affiliations

  1. Department of Economics and Finance, College of Business administration, University of Bahrain, Sakhir, Bahrain

    Mustafa Raza Rabbani

  2. Department of Economics and Finance, University of New Orleans, New Orleans, LA, USA

    M. Kabir Hassan

  3. Christ Church Business School, Canterbury Christ Church University, Canterbury, UK

    Mamunur Rashid

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  1. Mustafa Raza Rabbani
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  2. M. Kabir Hassan
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Correspondence to Mustafa Raza Rabbani .

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Editors and Affiliations

  1. University of New Orleans, New Orleans, LA, USA

    M. Kabir Hassan

  2. University of Bahrain, Riffa, Bahrain

    Mustafa Raza Rabbani

  3. Christ Church Business School, Canterbury Christ Church University, Canterbury, Kent, UK

    Mamunur Rashid

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Rabbani, M.R., Hassan, M.K., Rashid, M. (2022). Introduction to Islamic Fintech: A Challenge or an Opportunity?. In: Hassan, M.K., Rabbani, M.R., Rashid, M. (eds) FinTech in Islamic Financial Institutions. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-031-14941-2_1

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