The General Council for Islamic Banks and Financial Institutions (CIBAFI), the global umbrella of Islamic financial institutions, has successfully held today its first Virtual InFocus Session, themed “Financial Technologies: Disruption or Growth Lever for Islamic Finance Industry”.
The Virtual InFocus Session was organized by CIBAFI and hosted by the Astana International Financial Centre (AIFC) under the framework of Online Astana Finance Days 2020. It endeavored to bring together an international panel of distinguished speakers, Fintech enthusiasts, and Islamic finance industry stakeholders to discuss Fintech adoption in Islamic financial institutions, with a deep dive into current practices and faced challenges.
CIBAFI Virtual InFocus Session was inaugurated by a welcoming remarks by Dr. Abdelilah Belatik, Secretary General, CIBAFI and witnessed opening speeches from Mr. Nurlan Kussainov, the Chairman of the Management Board of the AIFC Authority, Kazakhstan and Ms. Taliya Minullina, Chief Executive Officer, Tatarstan Investment Development Agency (TIDA), Tatarstan, Russia.
A panel discussion followed after the opening speeches chaired by Dr. Muhammad Bilal, Research Economist, CIBAFI. While the panelists included: Ms. Yasmeen Al-Sharaf, Head of FinTech & Innovation Unit, Central Bank of Bahrain, Bahrain; Mr. Andrew Cunningham, Founder, Darien Analytics Ltd., United Kingdom; Mr. Umar Munshi, Co-founder of Ethis and President of Islamic Fintech Alliance, Singapore; Mr. Khalid Howladar, Chief Strategy & Risk Officer, Blossom Finance, Indonesia and Dr. Recep Bildik, Director of COMCEC Project Group, Borsa Istanbul, Turkey.
The scope and speed of evolution in the way consumers interact with their banking institutions, business practices and financial technologies form the main areas of competition between Islamic financial institutions and their conventional counterparts. It can be noted that CIBAFI’s Global Islamic Bankers’ Survey (GIBS) 2020 Report has revealed that 52% of Islamic bankers that responded believe that the industry is at the same level of Fintech adoption as conventional banks while 26% believe that the industry is ‘somewhat ahead’ or ‘very ahead’ in term of Fintech adoption compared to conventional banks.
During the session, the speakers have also evaluated the key challenges that Islamic financial institutions are facing for adopting Fintech solutions and highlighted the advantages of adopting them in their core business. GIBS 2020 Report also revealed that the most important challenges in adopting Fintech were cybersecurity and data protection, followed by regulation, with a number of other issues quite closely grouped. The scores were, however, modest, suggesting that many of the challenges could be overcome. For the full findings of the report, please follow CIBAFI social media accounts and visit the official website, www.cibafi.org.
The session’s discussion also captured the real world implications of financial technologies in the Islamic financial services industry and presented the fundamental strategies that Islamic financial institutions follow in integrating Fintech. As per the GIBS 2020 findings, it has emerged that 61% of Islamic banking officials favored buying services from Fintech companies as the main strategic approach to integrate Fintech solutions, followed by in-house development of Fintech applications (53%) then joint partnerships with Fintech ventures (51%).
Taking into consideration the results of the CIBAFI GIBS 2020 Report and the insightful discussions from the panellists, it can be concluded that Fintech are an opportunity if banks leverage on the advantages they offer, and may be a threat if no action is taken. But Islamic bankers seem aware now more than before, and transformation is already on the way.
Virtual InFocus Session is aligned with CIBAFI’s strategic objective to promote and facilitate the growth of Islamic finance. CIBAFI continues to support the Islamic financial services industry through various activities and initiatives. These include providing industry stakeholders with a platform to discuss emerging issues, policy and regulatory advocacy initiatives, representing the industry at major global financial events, and sharing knowledge through specialized publications and comprehensive training programmes.