In this episode we dive not just into the world of Islamic Finance and Fintech but the practical lessons we can learn from the world’s oldest “ethical investment” tradition. In particular in an ever-changing world there is always the need to extend and interpret any given set of “ethical finance” guidelines for new circumstances. The Islamic world has had vastly longer to get to grips with managing this confluence of principle and practice in a Heraclitean world of constant change.
In LFP223 we heard about Fintech in the Middle East and North Africa in which regions there are varying mixtures of traditional/Islamic/sharia finance and conventional/modern finance. Umer Suleman has worked in the public sector, at Ernst and Young, HSBC and now at Wahed – an ethical and values driven investment platform based in New York – – an ethical and values driven investment platform based in New York who are perhaps the world’s largest Islamic Fintech – and so is well-placed to appreciate both conventional and Islamic Finance and their complex relationships and how they have changed over time. He is also a member of the Islamic Finance Council of the UK and so well-immersed in this topic.
In this episode we get to understand the challenge and opportunity of serving a specific demographic. Needless to say especially younger demographics around the world in general are becoming ever-more demanding in terms of products and services in the tech age and this too certainly applies to the more religious of the younger Muslim users of FS who may no longer be prepared to accept the inevitable compromises with a world where the Financial System operates almost entirely based on interest that previous generations may have tolerated/had to tolerate.
So plenty of education, rich content and lessons to be learned beyond one particular demographic!
- a World Bank report from 2015 estimated that global Sharia-compliant Finance assets were around $2trn
- Imam Al Ghazali – an 11thC polymath – theologian, philosopher, economist and much more
- the highly-recommended film by Salazar about Al Ghazali’s life The Alchemist of Happiness
- by contrast the modern “anti-polymath”-isation of knowing more and more about less and less
- Al Ghazali was an influence on Adam Smith
- Umer’s career journey and eventually being able to incorporate his interest in Islamic Finance with his career in finance
- ethical investment systems of any type need both a basis and a pragmatic way of applying rules made at some point with a different world at a later point; what are the key sources for Islamic Finance?
- an overview of Islamic Finance principles of investment and banking
- detailed primary and secondary rules and how they are applied
- the 5% pragmatic “fall from perfection” realpolitik of permissibility but what needs to be done in those circs
- what percentages of Finance and Sharia-compliant in the major regions – challenges over lack of data and interesting reasons therefor 🙂
- Islamic finance per se is only 30-35 years old in its modern form – project financing, house financing, mutual structures
- the weaknesses of the original forms – rule-compliant but essentially replicating conventional finance and so problem in some cases that it applied the letter of the law but did not follow the spirit of the law
- challenges of applying all this in a world ruled by infinite debt and money-printing – eg house prices
- demographic trends in young muslins and the disruptive impact of technology
- the business impact of the confluence of the above two factors
- the spirit of Sharia Finance – not encouraging financial inequality
- the major verticals within Islamic Fintech
- payment provision
- problem with banking is that whatever type of bank sits on top of a system based on interest
- Glint as being an example of a Fintech that is not aiming to be Islamic Finance or marketed as that but whose approach is consistent “we love Glint”
- some examples of notable Islamic Fintechs
- Crowd to Live
- Kestrel -banking SAAS
- Ethis in Far East
- Wahed-X to support startups
- KB Tehran
- Chief Rabbi Jonathan Sachs and the value of a “mast to lash oneself to” when insane social developments take place – cf ESG which is based on the ever-evolving Church of the Woke Globalists canon
- reference texts are
- Wahed App is available in the US, UK, Malaysia and soon to be in the Middle East and for high-net-worth individuals globally
- longer term plans – another 9 licences to operate in countries to come
- “we can’t keep up with the demand, we genuinely can’t keep up with the demand”
And much much more 🙂
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