Islamic Fintech and Other Fintech Startups

Post : March 20, 2023

The world is running rapidly with technology triggering the development of Islamic finance. So the banking sector is meant to run at the pace as it proceeds to progress and modify with time. Therefore the clients and the banks communicate through digital platforms. Telecommunication makes it easy for the customer to request financial options via the internet. 

Education on the other hand is vital for the success of creating a digital environment in Islamic finance. Professionals or scholars who can understand Islamic financial structures and adapt to its paradigm shift are necessary to provide opinions and solutions following sharia compliance to implement it in the community. 

Finance and technology together are termed fintech. Fintech emerged as a result of the global financial crisis in 2008. It evolved even more after the digital innovation during covid. Fintech refers to the use of new technology to deliver financial services. Fintech startup companies are finding ways to make investments, and financial activities faster and more efficient.

With opportunities come challenges as such Islamic fintech companies are about regulation with a lack of genuine and legitimate research in the Islamic fintech sector. On the positive aspect, the existence of Islamic fintech companies can effectively aid startups to inspire young graduates with sharia compliance financing. 

Although it can provide a wide array of innovative products and services, trained human resources and clear policy from the government, it cannot develop Islamic finance.                         

On a good note, Islamic fintech is cost-efficient, transparent, and accessible to gain the trust of Muslim investors prescribed by sharia. Islamic fintech must maintain stability to protect investors and institutions from fraudulent trade practices. 

The rising competition in fintech urges service providers to be customer oriented. It tries to maintain a relationship between the conventional banking sector and the people in the financial industry. The development of sharia fintech is supported by some while others oppose it as a result of its threat to the existing bank. Simply meaning the banks fear the reduction of banking users. 

By sustaining a positive relationship between fintech and financial institutions, financial institutions can gain access to fintech and are more likely to expand their business through the incorporation of e-commerce. 

This can positively contribute to economic development. Anyways fintech will be profitable only with the right resources and is popular in developed countries with infrastructural development. Many companies, especially from China, are investing on a large scale in several countries in Southeast Asia. 

Bitcoin which connects to cryptocurrency is the present evolving fintech instrument. It works on a digital platform and runs on virtual money without any connection to physical money. 

There are two conditions while accepting money in Islam. First is that money must have value by itself for people to utilise it for transactions. Besides, it has to connect to the power of the economy of a country just like dirhams are used in Dubai and Dollars are used in the USA. As such bitcoin and other fintech instruments don't connect to the value of any country. As it's speculated, many scholars are still researching to find whether it's halal or haram. Many Muslims avoid it for fear of risk:

The prophet (sal) said both legal and legal things are obvious and in between, they are (suspicious) doubtful matters. So whoever forsakes those doubtful things lest he may commit a sin, will definitely avoid what is clearly illegal and whoever indulges in these (suspicious) doubtful things bravely is likely to commit what is clearly illegal . Sins are Allah's hima (private pasture) and whoever pastures (his sheep) near it, is likely to get in it at any moment. (Sahih Al Bukhari 2051, Sahih Muslim 1599)


The source of the technology runs on the internet. The industries and the firms in which the investments are made and where the capital is deployed must be checked to make sure it's sharia compliant. It should be ethical to exclude phonographic, gambling, alcoholic industries and more. Moreover, the transparency agreement is essential that the parties involved understand it without any doubt or ambiguity in it.

However for fintech to be a success, it needs the collaboration of banks as they have got access to resources. They are capitalised too with years of customer trust. Also, the users aren't fully convinced, not sure whether it's sharia compliant. 

Hence the challenge is to make the learning curve easy for people to reach the level of comfort to gain the confidence to deploy their wealth for their capital and invest it themselves. We, at Afiyah Financial Services, are considerate and mindful of what we do and how we do business. This is certainly why our customers turn to us for Islamic home loans

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