Latest trend in the Islamic Fintech Industry
Islamic Fintech meaning
Fintech is the merger of two terms: finance and technology. Islamic finance provides financial services to the customers in accordance to the rules and regulations prescribed by Shariah.
As Islamic finance is growing by leaps and bounds since the last two decades, and so is FinTech, in the last decade. The main objective of Islamic finance is to enhance the economic growth in the society with the use of Shariah compliant financial solutions.
Likewise, FinTech provides cost effective solutions for the companies and especially startups that help in the reduction of their costs and improvement in business processes. Financial industry is a very elusive yet important sector in the society, and hence heavily regulated by the regulators.
FinTech is a term flipped in the recent past for technological innovation in financial services. Regulators are working towards developing a standardised definition of this broad term. Currently there is no globally recognised definition for the term “FinTech.” (Schueffel, 2016) However, according to the Financial Stability Board (FSB), of the BIS 1, “FinTech is technologically enabled financial innovation that could result in new business models, applications, processes, or products With an associated material effect on financial markets and institutions and the provision of financial services” (Reserve Bank of India, 2017)
In recent years we have seen latest developments in the Islamic Fintech industry, such as the rise of crowdfunding platforms, the expansion of Islamic banking services, the increase in Islamic insurance offerings, and the growing interest from investors.

Crowdfunding platforms
Crowdfunding platforms have become an increasingly popular way for businesses to raise funds, while Islamic banking services have expanded to offer a variety of products and services in line with Islamic law. Islamic insurance offerings have also seen an increase in recent years, with companies offering products that are compliant with Islamic principles. All of these platforms are helping to drive the growth of Islamic Fintech and enable businesses and consumers to access financial services in line with their beliefs.
Halal Insurance
The Islamic Fintech industry has also seen an increase in Islamic insurance. Companies are offering products that are compliant with Islamic principles, such as halal insurance and takaful (mutual) insurance. These products provide an ethical way for businesses and consumers to protect themselves financially.
Murabaha Deposit
Murabaha Deposit is an Islamic short-term investment product based on the concept of Murabaha.
Murabaha Deposit allows you to make a healthy profit on your money in a safe and Shariah-Compliant manner. The Bank enters into a contract with you to invest your money in a selected commodity at an agreed price. You make a profit by selling the commodity at a future date at a higher price. (Read more on Murabaha)
Islamic Investment Funds
The term “Islamic Investment Fund” means a joint pool wherein the investors contribute their surplus money for the purpose of its investment to earn halal profits in strict conformity with the precepts of Islamic Shari’ah.
Suppose there are investors who have with them surplus liquidity, but these investors do not have the skill and the ability to conduct business, so they would like to invest their surplus with somebody who is a skilled person who knows how to invest the money in strict conformity to shariah principles and give them a return

Islamic Fintech Malaysia
Bursa Suq Al Sila: Being the financial hub for Islamic Fintech Malaysia.
Islamic Finance, Malaysia made its position much stronger by initiation of trade on the world’s first completely Shariah compliant, electronic commodity trading platform, called Bursa Suq Al Sila. It is a global commodity platform for facilitating asset-based Islamic financing and investment transactions under the Shariah guiding principles of Murabahah, Tawarruq and Musawwamah. The underlying commodity in Bursa Suq Al Sila is crude palm oil (CPO). It is an initiative by the Malaysia International Islamic Finance Center (MIFC). The trading platform is operated by Bursa Malaysia via its fully Shariah-compliant wholly owned subsidiary, Bursa Malaysia Islamic Services Sdn. Bhd (Islamic Finance News, 2013).
Role of Shariah Scholars in Islamic Fintech Industry
The Fintech ecosystem includes, fin-tech startups, technology developers, governments, financial customer, traditional financial institutions, regulators, and in the case of Islamic Fintech role of shariah board/shariah scholars is also very important.
Fintech for Islamic Finance must observe Shariah guidelines. In general, technology is neutral from Shariah perspective, unless it is used in a instance directly conflicts with any rulings or requirements of the Shariah (Oseni & Ali, 2019). But, how do we determine which FinTech apphcation that requires sensitivity to Shariah requirements? Prof. Akram Laldin, Executive Director ISRA answers this in the following words.
“In order to address these concerns, it is important to note that, in general, Shariah principle with regards to a business transactions (Muamalat) is governed by the notion that every transaction is permissible, except when there is a clear text which prohibits it. The permissible principle provides flexibility in innovation and new practices in business and financial transactions.
All innovations in Muamalat, are considered as permissible and welcomed. In this regard, innovations in FinTech become impermissible only if there is clear evidence that they are in conflict (against) the basic rules of the Shariah. Therefore, FinTech application and practices, as in traditional Islamic finance, should follow the principles of the Shariah by avoiding the prohibited elements in the transactions such as interest (Riba), gambling (Maysir), uncertainty (Gharar), harms (Darar), cheating (Tadlis), etc. It must be transparent with no hidden cost, irresponsible or unethical financing’ .
This gives us the fundamental guideline of what ‘Shariah compliance’ means in Fintech. The use of FinTech in a particular Islamic finance product should not be such as to create harm, deception/ cheating, hidden costs, nor should it inculcate any Riba, gambling, Gharar, or other prohibited elements such as those that make the sale invalid.
He continued: “Likewise, the practice of transactions in FinTech application should follow the rules of contract (Aqd) used in the transaction by observmg the pillars (Rukn) and conditions (Shan) in the contract. In addition, FinTech application should aim at achieving the objectives of the Shariah (Maqäsid Al Shariah), namely, to realize the benefits (Maslahah) and to avoid the harms and difficulties (Mafsadah and Mashaqqah)”
Even though FinTech was not especially well-known within the Islamic Finance industry until late 2015,
the progress of 2016 and 2017 demonstrate some wonderful accomplishments.
You can read more here.
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