Fintech platforms add Islamic finance capabilities
24/01/2017 05:17
By Bernardo Vizcaino
Jan 24 (Reuters) - Canadian fintech company Goldmoney Inc
XAU.TO has certified its gold-based financial products as
sharia-compliant, the latest firm to combine blockchain
technology to tap demand from Islamic investors.
The move illustrates how fintechs, companies that use
innovative technology to revamp banking services, are broadening
their footprint to include the core markets for Islamic finance
in the Middle East and Southeast Asia.
Goldmoney provides financial products that are fully-backed
by reserved gold and so fall in line with guidance issued in
November by the Bahrain-based Accounting and Auditing
Organization for Islamic Financial Institutions.
The firm began exploring sharia compliance in March of last
year, said Alasdair Macleod, the firm's head of research, adding
its products will range from wealth management to the remittance
market.
"We are already seeing growing demand from Muslim-majority
countries, and take the view that being sharia-compliant will
considerably raise our profile in this important market."
Goldmoney says it has more than 1.3 million users across 150
countries and administers $1.7 billion in client assets.
Blockchain, a system that first emerged to facilitate
digital currency bitcoin, involves a shared electronic ledger
that allows all parties to track information through a secure
network, removing the need for third-party verification.
Islamic finance follows religious principles such as a ban
on gambling and outright speculation, but until now the sector
has focused on traditional retail banking services.
Fintech, however, could help Islamic banks become more
efficient and scale up their operations, according to the
central bank of Malaysia, which said last year it was reviewing
regulations to address fintech firms.
Islamic banks in Malaysia hold around a fifth of total
assets and some are already involved in fintech ventures.
In February, a group of six Islamic lenders launched an
internet-based investment platform to serve as a central
marketplace to finance small and medium-sized businesses.
Malaysia-based HelloGold has also launched a
sharia-compliant online platform that uses blockchain. This
allows for more direct transactions and lower costs, said chief
executive Robin Lee.
While it's too early to determine fintech firms' impact on
financial stability, potential regulations could help ensure
consumer protection, Lee added.
"Promoting competition is key as fintechs are likely to
target under-served consumers and the unbanked and to drive cost
to consumers down."
HelloGold is currently rolling out its product in Malaysia
with plans to enter Indonesia, the Philippines and Thailand
later this year, and China by 2019.
(Reporting by Bernardo Vizcaino; Editing by Shri Navaratnam)
((Bernardo.Vizcaino@thomsonreuters.com; Telf: +61293218168;
Reuters Messaging:
bernardo.vizcaino.thomsonreuters.com@reuters.net))
Keywords: ISLAMIC FINANCE/FINTECH