Islamic fintech and the role of Islamic finance in bridging the gap between sustainability and funding
The Saudi-Spanish Center for Islamic Economics and Finance recently announced the launch of the 5th edition of the SCIEF book series, Islamic Fintech. Edited by assistant IE University professor Sara Sánchez Fernández, this book focuses on the role that Islamic fintech could play to encourage sustainability while improving access to funding.
Islamic Fintech is a groundbreaking collection of essays written by some of the most eminent thought leaders in the field. It provides a business and legal perspective on some of the most important issues around Islamic fintech today. The book shows how social concerns, such as welfare and justice, are already entrenched into the core of Sharia law’s economic rules, ensuring that Islamic fintech is able to bridge the gap between sustainability and funding.
According to the book, technological advancements are expected to ramp up the development of Islamic finance. This will occur through Islamic communities gaining increased accessibility to banking and other financial services, as well as equalizing their access to investment opportunities. Furthermore, new technologies will boost opportunities for funding and ease the asset management process for Sharia-compliant businesses.
This position reflects a growing evolution in the global development community, which gained steam in 2015 when the United Nations adopted the Sustainable Development Goals (SDGs). Expanding from the now-defunct Millenium Development Goals, the new criteria integrates economic, social and environmental concerns into the pursuit of sustainability. More importantly, it recognizes the vital role that Islamic finance plays in overcoming the challenges of financing.
It does so by, firstly, providing fair and equitable tools for risk allocation. By its very nature, Islamic finance provides stability that attracts private investment to development projects. The rejection of riba—interest-bearing debt—and its preference for risk-sharing agreements make it well suited for this task. Instead of focusing on the credit-worthiness of a borrower, it places more emphasis on the economic viability and value creation potential of new investments.
Islamic finance also promotes local resource mobilization. Expanding the role of Islamic finance in both the stock and sukuk markets is instrumental in promoting local resource mobilization for development projects. In fact, the sukuk market can be a critical resource when conducting fundraising and investment activities. When applied appropriately, such components of Islamic finance can result in major public projects, especially those related to infrastructural development.
Contributing authors also delve into a wide range of subjects revolving around technology and Islamic fintech. They discuss the application of new technologies such as crowdfunding, robo-advisory and distributed ledger technology in finance and the latest developments related to technology in sectors such as e-health and takaful. The book also touches on the very specific challenges that anti-money laundering processes pose to Islamic fintech.
Islamic Fintech combines a solid theoretical basis with a practical focus. It highlights relevant case studies and relates insightful stories on leading entrepreneurs. It also provides a deep dive on the legal and regulatory framework guiding this budding sector and shows how lawmakers can provide tangible support. All in all, this book is a comprehensive resource for academics, professionals, policy makers and entrepreneurs in the field of Islamic finance.