New alliance to boost development of Islamic fintech for Muslim communities

Photo: IFT Alliance members at the launch event on April 1, 2016 in Kuala Lumpur / Courtesy IFT Alliance

A first-of-its-kind Islamic Fintech Alliance (IFT Alliance) says it wants to be the reference point for knowledge and advice, and facilitate business matching between investors and entrepreneurs to develop a Shariah-compliant fintech ecosystem.

Launched on April 1 in Kuala Lumpur IFT Alliance counts eight crowdfunding platforms operating across eight countries and territories as founding members.

The alliance’s chairman and founder of EthisCrowd.com Umar Munshi told Salaam Gateway, "While we recognise the importance of fintech, the Muslim community is behind in this space. The Alliance was set up to boost the growth of fintech among Muslims with hopes that they bring significant positive impact especially to those in developing countries.”

"The current fintech market is geared more towards conventional finance, and may not be suitable for Muslims. We aim to support the development of the Shariah-based fintech market so that the benefits of financial technology may be enjoyed by more Muslims," he added.

STANDARDS

IFT Alliance also says that it will work to collect information and feedback from industry players to formulate standards and best practices for the nascent Islamic crowdfunding ecosystem.

“The lack of transparency, standards, and guidelines within the Islamic crowdfunding community would inevitably slow down the growth of the Islamic crowdfunding platform as compared to conventional platforms,” said Siti Zurina Sabarudin, founder of Aid4Startup, a Malaysia-based service provider that advises fintech startups and crowdfunding companies.

She pointed out that Shariah concepts are well developed by Shariah supervisory boards and advisory councils in Islamic countries and those can easily be extended and applied to Islamic crowdfunding.

“An example is the mudarabah concept, where the investor provides capital to the business and subsequently the profit is distributed accordingly. The crowdfunding platform must study what [might be] the best model for their venture,” said Sabarudin.

She hopes that the IFT Alliance will provide awareness that the Islamic crowdfunding ecosystem is ready to serve the halal industry.

“I think that there is yet to exist an Islamic crowdfunding company that is as global as Kickstarter or Indiegogo,” she said. “The IFT Alliance, however, has taken the first bold step to stand united…to serve the Muslim market, which is a positive step for the community.”

“Based on our interaction with local and ASEAN startups and investors, there is a lot more interest from investors in startups compared to three years ago, although it is still a challenge to find a good product and startup,” she added.

(Additional reporting by Emmy Abdul Alim)

© SalaamGateway.com 2016