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ISLOMIY MOLIYAVIY TEXNOLOGIYALARNING IJTIMOIY INTEGRATSIYA
UCHUN INNOVATSION YECHIM SIFATIDAGI AHAMIYATI
Kurbonova Mumtozaposho Mirshod qizi
O’zbekiston xa
lqaro islom akademiyasi
Annotatsiya.
Ushbu maqolada Islomiy moliyaviy texnologiyaning umumiy g'oyasi va uning hozirgi
Islomiy moliyaviy ekotizim evolyutsiyasi uchun qanday aloqasi borligi tasvirlangan. Bundan tashqari,
ushbu maqolaning asosiy maqsadi Islomiy moliyaviy texnologiyaning ijtimoiy inklyuziyaga, xususan,
rivojlanagn dunyodadan ajralib qolgan va kam ta'minlangan odamlar uchun manfaatini ta'kidlashdir.
Unda Islomiy moliyaviy texnologiyalarning moliyaviy savodxonlikka qanday yordam bergani,
rivojlanmagan hududlarda iqtisodiyotni kuchaytirgani, odamlar va kichik kompaniyalarning
imkoniyatlarini kengaytirgani haqida misollar keltirilgan.
Kalit so’zlar:
FinTech, islomiy moliya, Veb 3, ijtimoiy integratsiya, axloqiy moliya, kam ta'minlangan
aholi, Islom tamoyillari, foizsiz kreditlash, daromadni taqsimlash, axloqiy investitsiyalar, moliyaviy
savodxonlik.
ПОТЕНЦИАЛ ИСЛАМСКОГО ФИНТЕХА КАК ИННОВАЦИОННОГО
РЕШЕНИЯ ДЛЯ СОЦИАЛЬНОЙ ИНТЕГРАЦИИ
Курбонова Мумтозапошо Миршод
кизи
Международная исламская академия
Узбекистана
Аннотация.
В этой статье описывается общая идея исламского финтеха и то, насколько
он важен для эволюции текущей исламской финансовой экосистемы. Кроме того, основная цель
этой статьи
-
подчеркнуть благотворное влияние исламского финтеха на социальную
интеграцию, особенно для людей, живущих в изолированных и обездоленных местах. В нем
приводятся примеры того, как исламский финтех способствовал повышению финансовой
грамотности, стимулировал экономику в слаборазвитых регионах и расширил возможности
людей и небольших компаний.
Ключевые слова:
финтех, исламские финансы, Web 3, Социальная интеграция, Этические
финансы, Малообеспеченные слои населения, исламские принципы, беспроцентное кредитование,
Распределение прибыли, Этические инвестиции, Финансовая грамотность
.
POTENTIAL OF ISLAMIC FINTECH AS AN INNOVATIVE SOLUTION TO SOCIAL INCLUSION
Kurbonova Mumtozaposho Mirshod kizi
International Islamic Academy of Uzbekistan
Abstract.
This article attempts to shed light on the general idea of Islamic FinTech and how
concerning it is for the current Islamic financial ecosystem's evolution. Additionally, the main goal of this
paper is to emphasize the beneficial effects of Islamic FinTech on social inclusion, particularly for people in
isolated and underprivileged places. It gives examples of how Islamic FinTech has aided financial literacy,
boosted the economy in underdeveloped areas, and empowered people and small companies.
Key words:
FinTech, islamic finance, Web3, Social inclusion, Ethical finance, Underserved
populations, Islamic principles, Interest-free lending, Profit-sharing, Ethical investment, Financial literacy.
UO‘K:
336.734, 297.17
VI SON - OKTABR, 2023
26-32
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Introduction
.
Islamic FinTech refers to the application of financial technology within the framework of Islamic
principles. It has the potential to address social inclusion by providing accessible and ethical financial
services to underserved populations. In the article, the various ways in which Islamic FinTech can
contribute to social inclusion will be explored. This includes its ability to provide financial services that
align with Islamic principles such as interest-free lending, profit-sharing, and ethical investment
options. Islamic FinTech platforms can also leverage technology to reach marginalized communities,
offering them convenient and affordable financial services.
FinTech is characterized as the financial services of the twenty-first century (Todorof, 2018).
Recent growth in the mobile applications and usage of website among users have hinted the inclusion
of FinTech revelation among the global financial sector. FinTech development has revolutionized the
financial service industry with the use of computer-based technologies. Hence, FinTech is often referred
to as the blend of digital innovation and financial services with an aim to improve the efficiency of the
financial service industry (Zavolokina and other, 2017)
.
Therefore, regarded FinTech as the marriage of
technological innovation and finance which has the ability to elevate the financial service industry to a
new height (Hasan
and other, 2020).
FinTech in Islamic finance faces considerable obstacles due to a lack of legal regulation and poor
levels of financial literacy. These challenges might prevent Islamic FinTech from reaching its full
potential as a ground-breaking approach to social inclusion. The absence of clear legal frameworks
specific to Islamic FinTech creates uncertainty and inhibits its growth. Without proper regulations, there
may be concerns regarding compliance with Islamic principles, consumer protection, and the overall
stability of the financial system. Establishing robust legal frameworks that address the unique
characteristics of Islamic FinTech is crucial to foster its development and build trust among
stakeholders.
Literature review.
It is important to highlight that Islamic FinTech is different than the conventional FinTech due to
the requirements of Shari’ah compliance. However, the emergence of FinTech solution has provided
Islamic financial institutions (IFIs) with greater opportunities to improve their infrastructure and
product offering (Jamil & Seman, 2019). As such, research on the application of FinTech in the Islamic
finance sector has increased in recent years (Abojeib & Habib, 2019; Biancone & Radwan, 2019; Jamil &
Seman, 2019).
Baber (2019) has made a significant contribution by studying the contribution of FinTech and
crowdfunding on customer retention among Islamic banks in Malaysia and the United Arab Emirates
.
Biancone, for example, explored the Shari’
ah compliant business models of crowdfunding and
FinTech firms and conclude that Shari’ah compliant crowdfunding invests in halal products, shares the
risk of investment and does to charge interest. Biancone & Radwan further emphasized the importance
of the prohibition of interest fo
r the acceptance of FinTech based business models as Shari’ah compliant.
Methodology.
FinTech is a recent concept, and there isn't much literature to support its use in the Islamic finance
sector. Therefore, we have made an attempt to conduct a systematic review of the possible application
of FinTech solution toward improving the attractive
ness and Shari’ah compliance of products offered
by the Islamic finance industry (Hasan
& other, 2020).
In order to highlight the significance of Islamic-based FinTech and its role in supporting open
innovation, social inclusion, and entrepreneurial innovation, the current study used a content analysis
approach, specifically discourse analysis. Several search engines and databases, including RedMoney
and Sciencedirect, were used to conduct the content analysis. Keywords including innovation, social
inclusion, FinTech, Islamic banking, Islamic economics, and social finance were used to find relevant
papers. The author conducted content analysis on a significant number of research papers gathered
from these internet databases to draw out relevant data.
Results.
The predicted $79 billion in transaction volume for the worldwide Islamic FinTech market in 2021
is expected to increase by an average of 18% yearly to $179 billion in 2026.
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Saudi Arabia, Iran, Malaysia, the United Arab Emirates, Turkey, and Indonesia are the top six OIC
FinTech markets by transaction volume for Islamic FinTech. Eighty-one percent of the OIC's Islamic
FinTech market is collectively represented by the Top 6 markets, which shows the emergence of two
regional hubs for Islamic FinTech among OIC nations.
Figure 1
.
Market size of the global FinTech sector
4
Malaysia and Saudi Arabia were the standout jurisdictions in the GIFT Index's ranking of 64
country centres for Islamic FinTech, and Indonesia, the UAE, and the UK made up the top five.
For each of the 64 countries, the GIFT index used a total of 19 indicators spread across five
different categories. These five groups are: Capital; Infrastructure; Islamic FinTech Market & Ecosystem;
Regulation; and Talent. The Islamic FinTech Market & Ecosystem category received the highest weight
because it is by far the most representative of a nation's existing conduciveness to Islamic FinTech
particularly. Categories were weighted to generate an overall score.
Figure 2. Top 20 countries by GIFT Index Scores.
5
4
The Global Islamic Fintech (GIFT) Report 2022
5
The Global Islamic Fintech (GIFT) Report 2022
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Figure 3. Islamic FinTechs by sector, 2021
6
Saudi Arabia has transitioned from Emerging to Leaders, and Leader Hubs include Malaysia, the
UAE, and Indonesia. Although they are evolving less favorably for Islamic FinTech, Bahrain, Bangladesh,
Egypt, Iran, Jordan, Kuwait, Nigeria, Oman, Pakistan, Qatar, and Turkey show comparatively substantial
growth in their domestic market sizes.
According to the World Bank's research, "The Global Findex Database," there are about 1.7 billion
unbanked people worldwide who might potentially use retail banking services, as well as more than 200
million small, medium-sized businesses that needed banking support.
The Islamic FinTech ecosystem fills a larger need for alternative investments by assuring
customers that their cash won't be invested in illegal sectors.
Islamic banks with a mobile banking focus from the UK's Niyah and Germany's Insha are other
well-known Islamic FinTechs. Wahed is an Islamic online wealth manager. HelloGold, founded in
Malaysia, is one of the more creative and contemporary Islamic FinTech companies; it is developing the
first gold mobile application that complies with Sharia law.
6
The global Islamic fintech banking market: trends and outlook, 17 January 2022
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Figure 4. Adults without an account (globally, 1.7 billion adults lack an account), 2021.
7
Women are less likely than men to join in the work force among the unbanked.
However, the standards established by AAOIFI (Accounting and Auditing Organization for Islamic
Financial Institutions) are followed by more than 20 countries and jurisdictions where Muslims make
up the majority of the population. We can reasonably anticipate that local authorities seeking uniformity
and international acceptability of standards will continue to accept these norms, particularly those
relevant to Islamic FinTech segments.
Figure 5. Adults without an account by gender and labor force participation (%), 2021
8
ISLAMIC FINTECH
–
CHALLENGES
With the advent of FinTech, a fusion of financial technology and services provided by financial
institutions, the financial sector has gained the essential impetus. In general, FinTech companies are
challenging traditional financial institutions by providing cutting-edge services to a wide range of
customers. Modern banking and finance have been disrupted by recent FinTech advances. FinTech start-
ups are another problem for Islamic financial institutions (IFIs). Alternative currencies have been
established thanks to blockchain technology, disrupting how conventional financial institutions operate.
By merging blockchain and other FinTech-based technologies with its product offering, the
Islamic finance sector can gain tremendously. To sustain the intricate relationships between agents and
important stakeholders, such FinTech integration with the Islamic financial sector will need greater
oversight. Lack of such monitoring would result in challenges with trust, which are common with all
new technology. The difficulty of growing scrutiny from various governmental entities is something that
FinTech-based solution suppliers must deal with.
7
Global Findex database
8
Global FIndex database
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This is one of the main issues, and regulators and FinTech solution providers must collaborate to
find a workable solution to enable the effective implementation of such innovation in the Islamic
financial sector. The lack of understanding among stakeholders, which is related to the abstract
character of FinTech-based technology, presents another difficulty for the integration of FinTech with
Islamic financing. A thorough grasp of its potential is constrained, and its market expansion is also being
hampered by the underdevelopment of the ecosystem of several FinTech infrastructures.
Table 1
.
Account ownership by economy, 2021
9
Security and privacy concerns can influence FinTech-based solutions. Finally, the position of
numerous Shari'ah experts that FinTech innovation, such as bitcoin and other cryptocurrencies, are
non-compliant with Shari'ah is the main obstacle to the successful integration of FinTech in Islamic
Finance. In order to successfully integrate FinTech technology into the Islamic banking sector, a set of
criteria that can guarantee the products being delivered are compliant with Shari'ah must be developed.
In order to increase stakeholder trust, future research can concentrate on defining the topics to be
addressed, establishing the standards, and revealing efficient controls for monitoring FinTech activities.
Additionally, it's critical to investigate how FinTech might be used in Islamic finance in order to make
such products more competitive with those provided by the traditional financial sector.
We should also recognise that the expansion of startups with an Islamic FinTech focus puts
pressure on the market share of the global Islamic financial sector. Due to their operational and
regulatory limitations, Islamic FinTech companies are able to target untapped markets in Muslim
countries with their services. This is because these markets are not currently served by IFIs. Islamic
crowdfunding platforms are acting as a gathering place where investors may directly contact their
creditors and watch the progress of the project from the outset. Islamic FinTech companies have made
access possible with the click of a button. As a result, Islamic FinTech companies have heightened the
demand for accountability and transparency among IFIs.
However, Shari'ah compliance and reporting are difficult for Islamic FinTech companies. A few
Islamic FinTech companies have succeeded in ensuring a high level of Shari'ah compliance by adhering
9
Global FIndex database 2021 report
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to internationally recognized Shari'ah standards set by regulatory organizations like the Accounting and
Auditing Organization for Islamic Financial Institutions (AAOIFI) and Islamic Financial Services Board
(IFSB), but the majority of Islamic FinTech companies have yet to do so. Additionally, Islamic FinTech
companies do not adhere to any consistent reporting criteria, making it challenging for shareholders to
assess their effectiveness and success. In order to secure the long-term viability of their operations,
Islamic FinTech start-up companies may also need to assess their internal and external governance
procedures.
Conclusion.
Islamic FinTech has the ability to revolutionize every facet of the market. It has the ability to
enhance the Shari'ah-compliant character of company and consumer financing and reflect the expansion
of the global FinTech ecosystem. Government initiatives, entrepreneurs, and consumers are the main
drivers of Islamic FinTech growth, resulting in an effective value chain. Government initiatives can be
very important in the development of the Islamic FinTech ecosystem, and recent initiatives by groups
like the Financial Services Authority (Indonesia), Bahrain FinTech Bay, Malaysia Digital Economy
Cooperation, and Dubai International Finance Center (UAE) are ensuring a bright future for the sector.
Additionally, there is a demand for product offerings based on digital technology among Muslim
customers, and this demand is anticipated to grow in the near future. Islamic FinTech has a lot of
potential in this situation to ensure Shari'ah compliant products are available for the global market,
which can enhance the competitiveness of the sector and its product offerings. However, development
of proper Shari'ah criteria by relevant regulatory agencies will be necessary for the growth of the Islamic
FinTech. Additionally, Islamic FinTech enterprises' operational effectiveness and transparency can be
increased by adopting reporting and governance standards that are suitable to the industry. The Central
Bank of Bahrain, Bank Indonesia, and Bank Negara Malaysia are just a few of the central banks that have
taken steps to provide the required criteria to assure effective oversight of Islamic FinTech companies.
We have made an effort to give regulators and academics the essential guidance by addressing the
key issues with the growth of Islamic FinTech from a global perspective. This study's findings are
anticipated to offer fresh light on this still-developing field of study. The Central Bank of Bahrain, Bank
Indonesia, and Bank Negara Malaysia are just a few of the central banks that have taken steps to provide
the required criteria to assure effective oversight of Islamic FinTech companies.
Reference:
Abojeib, M., & Habib, F. (2019), Blockchain for Islamic Social Responsibility Institutions, FinTech as
a Disruptive Technology for Financial Institutions, IGI Global, 221
–
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https://doi.org/10.1177/0972262919869765
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finance prospective. European Journal of Islamic Finance, Special Is, 1
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