The Innovators 2020: Islamic Finance


Digitization is reinventing Islamic finance, helping banks meet the needs of younger consumers and even expanding banking in war-torn Yemen.

As digital innovations play a bigger role in the lives of Muslims around the world, banks in the Middle East are working hard to introduce digital capabilities into Islamic banking. There have been a number of innovations over the past year, including the first online payment system for payments and collections related to the Umrah, or pilgrimage to Mecca; the first sharia-compliant end-to-end digital personal finance service; and even an electronic loan service for small businesses in war-torn Yemen.

In the absence of a comprehensive Islamic fintech ecosystem, there is still much work to be done to bring the latest digital conveniences in line with Islamic banking regulations. Nonetheless, the four institutions that will be among the most innovative global finance banks in Islamic finance in 2020 have broken into considerable uncharted territory, driven in part by the needs of the emerging generation.

Gulf International Bank (GIB) digitized umrah payments, including visa fees and service fees; its digital Umrah payment system enables automated Umrah payments and collections in real time around the clock. The infrastructure is powered by GIB’s leading global transaction banking product eCollect, which enables Sejel, an IT company that provides software for the eUmrah portal, to integrate its ecosystem through an application programming interface. As the first bank in the region to go live with this solution, GIB has taken more than 600 Umrah operators and more than 7,000 external agents on board, from opening an account to accessing eBanking. On the flip side, GIB’s digitized Umrah payments are also making refunds easier after Saudi Arabia canceled visas for Umrah visits in response to the novel coronavirus outbreak.

Abu Dhabi Islamic Bank (ADIB), the leader in Islamic Syndicated Finance Bookrunner Leaderboards, is working with the launch of Express Finance, the first digital, Shari’ah-compliant end-to-end service for personal finance, including in retail . Express Finance enables eligible customers to receive funds in under 30 minutes through ADIB’s mobile app. It is only available to prequalified customers whose salaries are paid directly to their ADIB account, meet a monthly minimum salary requirement, have a healthy credit history, and work for an approved company.

In response to the growing demand from younger customers for more digital banking, ADIB also launched smart banking, the first simple, personalized Islamic banking offering to meet the evolving financial and lifestyle needs of millennials and next-generation customers.

“Our research shows that this segment’s expectations for banking services are shaped by their lifestyle and everyday mobile applications,” commented Philip King, Global Head of Retail Banking at ADIB, in a statement on the introduction of smart banking. Smartbanking is integrated with ADIB’s Moneysmart online community: the UAE’s first digital personal finance community where users can share information, financial experiences and advice.

In 2019, Qatar Islamic Bank (QIB) launched its digital onboarding process, which allows potential clients to develop a relationship with the bank by opening a savings account that allows the bank to fund funds into the Shari’ah-compliant Mudaraba investment model to invest; a Misk savings account with opportunities to win weekly and monthly prizes and an annual grand prize; or a current account via the QIB Mobile App. Interested customers need to download the mobile app, then use digital identification technology to scan the required documents – a Qatari ID card or, in the case of expatriates, a passport – take a selfie and provide other personal information.

To enable a seamless experience, QIB has also introduced a new live chat function as part of the onboarding process. This allows customers to contact a QIB customer service representative directly if they have any questions or need further onboarding assistance. After quick real-time checks, the account is set up. A bank representative contacts the customer within minutes to arrange a time and place for a debit card to be delivered and the process to be completed.

Microfinance in Yemen

Al-Amal Microfinance Bank (AMB), the first microfinance bank in the Middle East and North Africa region, was founded in Yemen in 2009 to provide sustainable financial services to low-income households, especially owners of micro and small businesses. AMB’s Sharia-compliant electronic loan (e-loan) service is helping clients diversify their sources of income and address the lack of cash liquidity in Yemen. The country’s banks have been in a liquidity crisis since the outbreak of war in 2015, which led to the suspension of lending to small businesses.

AMB pledges to provide comprehensive financial services to all Yemenis, a spokesman says; and the e-loan service makes it easy for them to take out a loan using their mobile phone. “The Islamic electronic financial service, in which all electronic financing transactions are carried out via mobile banking on the PYES app and not in cash, has helped overcome the lack of liquidity and enabled the bank to send electronic money to small and micro business owners finance. “Says the spokesman.

According to AMB, the new service achieves broader financial integration through three basic attributes: improved quality, improved access and reduced service costs. Applying for and renewing Islamic funding is done using the bank’s PYES app. Users can make installment payments on their mobile phones by debiting their electronic accounts.

The service also helps AMB target non-bank customers in rural areas, avoid risky and costly on-site visits, and create broader financial inclusion. Around 60% of Jeminis live in rural areas and have no financial services due to poor or non-existent infrastructure. But cell phone usage is much higher than in urban centers as people rely on them for information during blackouts during the war.

Islamic Financial Innovators 2020

Abu Dhabi Commercial Bank Express Finance, Smartbanking and
Al-Amal microfinance bank Electronic credit service (e-credit)
International golf bank Digitization of Umrah payments
Qatar Islamic Bank Digital onboarding

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