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Digital Transformation in Islamic Finance

The digital revolution has transformed Islamic finance through payments, money transfers, savings and investments, lending, insurance, and financial planning. It has enhanced access and financial inclusion by making services more affordable and convenient via mobile phones. Digital technologies have reduced transaction costs by at least 80%. Data and analytics have also improved risk management. The document discusses several crowdfunding and payment platforms that have emerged, as well as opportunities and risks of the digital revolution, such as improved efficiency but also regulatory uncertainty and cybersecurity risks.

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25 views9 pages

Digital Transformation in Islamic Finance

The digital revolution has transformed Islamic finance through payments, money transfers, savings and investments, lending, insurance, and financial planning. It has enhanced access and financial inclusion by making services more affordable and convenient via mobile phones. Digital technologies have reduced transaction costs by at least 80%. Data and analytics have also improved risk management. The document discusses several crowdfunding and payment platforms that have emerged, as well as opportunities and risks of the digital revolution, such as improved efficiency but also regulatory uncertainty and cybersecurity risks.

Uploaded by

dido edo
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd

Islamic Finance and The

Digital Revolution
Vita Arumsari
Delivery of Payments and money transfer
financial
services has Saving and investing
been Lending
transformed
by the Insurance and risk mitigation
digital
Financial planning
revolution
The digital impact has been transmitted through several
channels

01 02 03
Enhancing access and Reducing transaction Improving risk
financial inclusion costs management
• Two thirds of unbanked • Digital technologies cut • Data and analytics; digital
own at least one mobile the cost of providing tracking of movable
phone financial services by at collateral
least 80%--McKinsey
Global Payments
Crowdfunding Companies
Liwwa - [Link]
Sharia compliant Crowdfunding for Small Businesses
• P2P Platform connecting SMEs with potential investors
• SME identifies asset financing need and creates a Liwwa profile
• Liwwa investors pool resources and purchase the asset for the SME
• SME makes monthly lease payments on the asset which includes a profit
• Payment stops when the asset is fully owned by the SME
• Lease to own structure provides returns to investors
• Liwwa collects 2% of monthly payments to investors as service fee
Narwi—Sharia compliant Crowdfunding for
Microentepreneurs
• Donors support micro-entrepreneurs of their choice by establishing an endowment
(Narwi waqf)
• Initial contribution can be as small as USD 25
• Narwi provides financing for the startup and growth of very small, or “micro” enterprises
• A revolving donations model: as financing is repaid, the donor’s Waqf is replenished and
made available to other microentrepreneurs
PayHalal—Payment Services
• Payments platform for online Halal businesses
• Merchants open accounts with PayHalal
• “Pay with PayHalal” buttons on websites
• Payment drawn directly from the accounts of users
• PayHalal acts as a Wakeel to ensure that users are protected when making online
transactions
• Facilitates e-commerce for the Halal industry
Risks and Opportunities of Digital
Revolution
Opportunities Risks
• Improved efficiency • Regulatory uncertainty
• Increased access • Cyber insecurity/operational
• Closer linkages to the real sector risks
• Improved risk management • Consumer exploitation
• AML/KYC

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