Doha: Qatar has the sixth largest number of Islamic fintechs in the world, which is expected to increase further with the new initiatives announced in the country’s financial sector, according to an official. The Islamic fintech sector has continued to grow rapidly, with more than 375 Islamic fintechs globally, covering a wide range of customers and financial needs through several emerging technologies.
Speaking at the 4th Islamic Financial Services Board (IFSB) Innovation Forum recently, Abdul Haseeb Basit, co-founder and director of Elipses, explained how Islamic fintech is a promising sector of fintech and has shared key findings from the Global Fintech Survey.
He said, “Islamic fintech is not only a developing and exciting part of the fintech industry, but it is also a very developing and exciting part of the Islamic finance industry. According to the Global Islamic Fintech Report 2022, the size of the global Islamic fintech market for Islamic fintech globally in 2021 was $79 billion in terms of trading volume, which is expected to grow by around 18% by 2026 and reach a size of $179 billion. So there is definitely a trajectory and momentum in the Islamic fintech space.”
Basit added, “Qatar now has the sixth highest number of Islamic fintechs in the world, which is a huge year-on-year development for Qatar. We expect this trajectory to only increase with some of the initiatives that are being announced. Islamic fintech has a role to play in using technology to provide access to underserved segments.”
Of the 375 Islamic fintechs globally, the top 10 countries produce 82% of Islamic fintechs, with 50% of Islamic fintechs in the top five sub-sectors.
Dr. DalalAssouli, Associate Professor at HBKU, discussed how stakeholders are driving digitalization and innovation in the Islamic financial services industry. She noted that the main stakeholders are financial institutions, regulators, fintechs but also academic institutions and investors.
“If we look at the global landscape and the main challenges, there is the mobilization for climate change and the achievement of the SDG agenda by 2030 and for this there is an investment gap of 2.5 trillion dollars up to $4 trillion. Therefore, the role of the private sector is critical in filling this financing gap and especially the financial sector. And that is why we are seeing more and more incentives for financial institutions to innovate and contribute more to sustainable finance,” said Dr. Assouli.
For financial institutions, this requires a paradigm shift in how they conduct financial intermediation and looking at how they decide on their strategic priorities as institutions and redirect more investment and funding to certain sectors and activities that support this goal. This means that a lot of ESG data is needed for the decision-making of these institutions.
She added, “We have seen that some large institutions have developed their own departments for this purpose, but smaller institutions can rely on other providers, and this is where we see the role of fintechs in facilitating this role. In terms of providing ESG data for decision-making but also to facilitate the innovation of sustainable finance products”.
Dr. Assouli further noted that there is huge potential for fintechs in terms of facilitating ESG integration for financial institutions both through data quality but also alternative finance and the mechanisms that can support them. help meet the specific needs of these vulnerable groups,” she said. added.