The banking and financial landscape has been inundated with technology over the last decade, with FinTech, InsurTech and RegTech being just some of the new applications within finance. In the Gulf Cooperation Council (GCC), FinTech is yet to find its feet despite several digital transformation drives initiated by the regional governments in the UAE and Bahrain. In comparison to conventional finance, the use of FinTech within Islamic financial institutions (IFIs) in GCC countries is still in its very early stages. However, the potential disruption that technology may cause for the Islamic finance sector within this region cannot be underestimated. Aiming to highlight, examine and address key strategic, operational and regulatory issues facing IFIs as they make an effort to keep up with the FinTech revolution, this book explores the market positioning, product structure and placement, delivery channels and customer requirements within the GCC market. The authors evaluate the current situation and look forward to future regulation surrounding technology and financial institutions within the GCC. Scholars and students researching Islamic finance and financial technology will find this book an insightful and valuable read, as well as those interested in international finance more generally.
Author(s): Nafis Alam, Syed Nazim Ali
Publisher: Palgrave Macmillan
Year: 2021
Language: English
Pages: 246
City: Cham
Foreword
Contents
Notes on Contributors
List of Figures
List of Tables
Chapter 1: Introduction: FinTech and Islamic Finance in the Gulf Cooperation Council (GCC)
Introduction
Fintech in the GCC
Fintech and Islamic Finance in the GCC
Conclusion
References
Chapter 2: A Critical Analysis of Bitcoin from an Islamic Legal Perspective
Introduction
Historical and Recent Developments
Bitcoin Explained
Current Resolutions and Fatwas on Bitcoin: A Critical Analysis
Scholars Who Are against Bitcoin
Scholars Who Are in Favor of Bitcoin
Islamic Legal Criterion for Mal and Bitcoin
Is Bitcoin Mal?
Is Intangibility a Shariah Issue for Bitcoin?
Islamic Legal Criteria of Money and Bitcoin
Definition of Money in Islamic Law
Differences Between Money and Commodity
Types of Money in Shariah
Natural Money
Customary Money
Shariah Rulings for Dealing in Bitcoin
Conclusion
References
Chapter 3: Combining Islamic Equity Portfolios and Digital Currencies: Evidence from Portfolio Diversification
Introduction
Literature Review and Theoretical Background
Digital Currencies in Conventional Stock Markets
Digital Currencies in Islamic Stock Markets
Data Methodology and Descriptive Statistics
Data Collection
Methodology
Results and Interpretation
Descriptive Statistics
Correlation Between GCC Index and Its Counterpart Indices and Digital Currencies
Computing Returns for the Three Portfolios; Islamic, Digital and the Combined
Computing Volatility for the Three Portfolios: Islamic, Digital and the Combined
Conclusion
Appendix 1
Appendix 2
References
Chapter 4: The Potential of Smart Contracts for Murabahah Home Financing: Towards an Integrated Model
Introduction
Islamic Banking and the Potential of FinTech
The Existing Islamic Banking Contract Models
The Exchange-Based Contracts (Uqūd al-Muʿāwaḍāt)
Sale-Based Contracts
Lease-Based Contracts
The Partnership Contracts
The Agency Contract
The Charitable Contracts
The Security Contracts
The Supporting Contracts and Instruments
Smart Contract Model for the Islamic Banking FinTech Industry
Traditional Islamic Home Financing Product
Proposed Smart Contract for Islamic Home Financing
Methodology
Results
Profile of the Experts
Results and Analysis of the Qualitative Data
IBF and FinTech
IB and Smart Contract
IB and the Need for Smart Contract Model
The Validity of the Model Structure
Challenges of Implementing the Model
Suggestions of Experts for Enhancing the Model
Conclusion
References
Chapter 5: The Application of Fintech in Microtakaful as a Means of Digital Financial Inclusion: Insights from the GCC
Introduction
Section I: Financial Inclusion in Islam—The Current Status in OIC Countries and the Potential of Microtakaful
Section II: Microtakaful and Fintech—The Way Toward Digital Financial Inclusion
A: Innovation and Outreach
B: Formalization of the Economy
C: Efficiency
D: Enhanced Consumer Protection
E: Removal of Barriers to Financial Inclusion
F: Leveraging Twofold Infrastructure
Section III: Challenges in Digital Financial Inclusion Via Microtakaful
Conclusion
References
Chapter 6: Gharar-Free ReBittance: Powered by Blockchain
Introduction to Remittance
Traditional Brick-and-Mortar-Based Remittance Models
Cash Pickup
Direct Credit to Bank Account
Direct Credit to Wallet or Prepaid Cards
Click-and-Portal-Based Digital Remittance Models
Online and Mobile-Based Remittance Models Using Bank Account
Mobile-Money-Based Remittance Models Using M-Wallet
Cryptocurrency and Blockchain-Based Remittance (ReBittance)
Cryptocurrency and Blockchain and Islamic Finance
Gharar-Free ReBittance in Practice
Conclusion
References
Chapter 7: Regulatory Issues in Cryptocurrency Usage
Introduction
Cryptocurrency Price Determination
Misuse of Cryptocurrency
Regulatory and Policy Implications
Governance Versus Regulation
Cryptocurrency Regulation Around the World
GCC Regulation
Implications and Conclusion
References
Chapter 8: Beyond the Jurisprudential Quagmire: Perspectives on the Application of Digital Currencies and Blockchain Technology in Islamic Economics and Finance
Introduction: Background on Blockchain Technology and Digital Currencies
Regulatory Issues on the Demand and Supply Side of Digital Currencies
Digital Currencies and Blockchain Technology in Islamic Banking and Finance
The Potential Application of Blockchain Technology to Meet Objectives of the Islamic Economy
Conclusion
References
Chapter 9: Does FinTech Revolution Lead to the Disintermediation of Banks? A Study into Islamic Bank Income
Introduction
Theoretical Considerations
Islamic Banking and Financial Technology Revolution
Research Methodology
Findings and Discussions
Conclusions
References
Chapter 10: Utilizing Blockchain Technology for Post-Trade Securities Settlement: A Framework for Islamic Capital Markets in the GCC Region
Introduction
The Post-Trade Securities Settlement in Islamic Capital Markets
The Saudi Arabian Post-Trade Securities Processing System
Post-Trade Securities Clearing and Settlement in Bahrain
The Challenges in the Securities Settlement
Blockchain for Post-Trade Securities Settlement
Blockchain and Securities Settlement: Some Sharı̄‘ah and Legal Considerations
Legal and Regulatory Framework
The Sharı̄‘ah Perspective
Conclusion
References
Chapter 11: Any Luck with Bitcoin in Saudi Arabia?
Introduction
Literature Review
Data and Methods
Result and Discussion
Demographics
Awareness of Virtual Currency
Awareness of Bitcoin
Non-Adoption of Bitcoin
Adoption of Bitcoin
Preferred Online Payment Method
Bitcoin Trust
Future of Bitcoin
Conclusion and Recommendation
References
Chapter 12: Strategic Assessment of Islamic Fintech in GCC Countries
Introduction
Fintech in MENA Is Ripe for Disruption
Islamic Fintech in MENA Region
Fintech Landscape and Strategic Initiatives in GCC
Fintech Incubation and Regional Initiatives
Bahrain
Kuwait
Saudi Arabia
United Arab Emirates
Qatar
Oman
Role of National Regulators in Islamic Fintech Development
Observations and Conclusion
References
Index
