Islamic finance has a key role in Fintech.

Byline: S. KAMAL HAYDER KAZMI

The global Islamic finance industry according to SandP Global Ratings is expected to grow by around 10 percent in 2023-24 despite the economic slowdown, after posting a similar expansion in 2022 mainly led by the GCC countries.

Experts analyzed that the sector continued to enlarge in 2022, with assets up by 9.4 percent compared with 12.2 percent in 2021, supported by growth in banking assets and the Sukuk industry. GCC countries, mostly Saudi Arabia and Kuwait, spurred 92 percent of the growth in Islamic banking assets the previous year.

In Saudi Arabia, the biggest Arab economy, the implementation of its ambitious diversification strategy, Vision 2030, and continued growth in mortgage lending supported the industry's growth. However, in other parts of the world, the Islamic finance industry's growth was either muted or held back by local currency depreciation. Various investigations revealed that Islamic finance with the increased use of technology in finance has attained and integrated financial technology (Fintech) to offer its consumers additional accessible and efficient financial services. For the Islamic finance industry, the rise of Fintech has created the latest difficulties and new possibilities, offering creative solutions to old financial challenges while also raising new ethical and regulatory concerns.

In recent years everyone knows that Islamic finance has grown in popularity due to its commitment to Shariah values and principles. One of the benefits of combining Fintech with Islamic finance is the possibility of raised financial inclusion, which permits extra individuals and enterprises to access Shariah-compliant financial goods and services.

Experts recorded that Fintech can also raise the competence and transparency of Islamic financial transactions, lowering costs and broadening access. There are however, various drawbacks to combining technology with Islamic financing. One possible drawback is the prospect of financial exclusion, as those with no access to or knowledge of technology may be left behind. There is also the issue of ensuring that Fintech platforms follow Shariah principles which may be complicated and need rigorous monitoring.

There are furthermore, questions regarding the ethical implications of Fintech like the use of artificial intelligence in decision-making and the possibility of bias in algorithms. Subsequently, the convergence of Islamic finance and technology provides...