Global Fintech experts to discuss the opportunities from Islamic finance embracing the Fintech revolution
2 November 2015, Manama, Bahrain: The
World Islamic Banking Conference (WIBC) 2015 will serve as a platform
for groundbreaking discussions on the impact of financial technology
(fintech) on Islamic financial services worldwide. From Silicon Valley
to Australia and in between, the movers and shakers from the fintech
industry come from all over the world and will converge on December 3rd to address how Islamic finance can adapt in the Digital Age.
Fintech has triggered a
shift in technology towards Big Data, spurring a demand for financial
intermediation that bypasses banks, which are increasingly seen as
acting in their own interest over the interests of their depositors and
financing customers.
What started as a
small niche business with venture capital investment of less than US$1
billion in the second quarter of 2010 has grown exponentially. Research
firm CB Insights estimated that Fintech investments exceeded US$14
billion in new investments in the twelve months through March 2015.
London is widely
considered a viable global capital for the fintech industry. In 2014,
investments in fintech across Europe grew 215% to US$148 billion
according to Accenture, with the UK taking the lion’s share, and London
taking 53% of funding. One of WIBC’s panelists is technology expert Abdul Haseeb Basit, Head of Finance & Strategic Projects, Innovate finance,
an independent industry organisation that promotes the UK’s status as a
global fintech hub. Abdul works closely with the fintech ecosystem to
address key industry issues “from attracting greater investment to
helping shape the development of proportionate and effective regulation,
whilst continuing to champion a truly democratic and inclusive
financial services industry.”
While the growth of
the industry is paramount, disruption in the areas of finance with the
highest fees (e.g. remittances) - and others viewed as the most secure
within the ‘banking’ sector (e.g. credit intermediation) - represents a
significant threat to Islamic banking where costs are already higher due
to scarcity of human capital and more complicated product structures.
Consequently, an erosion of margins in key areas like credit
intermediation represents a strategic threat to the future growth of
Islamic banking.
Fintech should not
however be seen solely through the lens as a threat. Islamic finance has
developed the way it is today not because of its Shariah roots, but
because of the strictures of regulation designed around interest-based
banking and competition of conventional banks. Founder & CEO of Blossom Finance, Matthew Joseph Martin
and WIBC panelist mentions, “In the past, sharia finance often mirrored
conventional debt financing. Profit sharing modes of financing are
preferred in sharia, but they were considered unworkable. This was due
in part to an 'information asymmetry', meaning the entrepreneur had all
the information and the capital provider had none, except maybe trust
and a reputation to go on. It's far more complex to originate and
service a profit sharing structure versus a debt structure.”
Indeed, from this
angle, fintech could revolutionize how Islamic banking products tie into
consumers’ expectations of authenticity and return Islamic banking and
finance to its roots where it facilitates the non-financial economy.
The revolution that
Mpesa, Bitcoin, Digital Banking and Crowdfunding have wrought on the
financial services will also be a key discussion point at December’s
WIBC. Speaking to the growing need for Crowdfunding, CEO & Founder of Crowdfund Insider, Andrew Dix shared
that “Crowdfunding has the potential to address the challenges
regarding access to capital for smaller firms while creating new
opportunities for investors. The single biggest challenge for small,
innovative firms is sufficient funding to grow a business. Traditional
banks are not structured for this. Crowdfunding can be the solution.”
Around 1200 world
leaders, fintech experts, entrepreneurs, Islamic finance pioneers will
participate in discussions elaborating on the strategy involved for
Islamic banks to maximize their opportunities and mitigate threats by
considering being early adopters of proven innovation bought upon by
financial technology advancements.
WIBC 2015 is a three-day gathering of the financial industry’s leaders, taking place on the 1st, 2nd and 3rd of December at the Gulf Hotel in Manama, Kingdom of Bahrain. For more information, visit www.wibc2015.com.