Kuala Lumpur: The Islamic Financial Services Board (IFSB) successfully organised its 11th Public Lecture on Financial Policy and Stability themed “Leveraging Technology for Value-Driven Innovation in Islamic Finance” on 30 April 2019 in Kuala Lumpur, Malaysia, in conjunction with the IFSB Annual Meetings 2019. The Meetings are co-hosted by Bangladesh Bank (BB) and Bank Negara Malaysia (BNM).
In his Opening Remarks, Mr. Md Abdur Rahim, Executive Director, Bangladesh Bank, hoped that the public lecture will lead the Islamic financial services industry forward to its success. He noted that the global Islamic financial services industry has observed unexpected changes brought out by three core technological drivers; automation, disintermediation, and decentralisation. He also highlighted the challenges faced by the regulatory and supervisory authorities and the industry with regards to FinTech, RegTech, and SupTech.
The Secretary-General of the IFSB, Dr. Bello Lawal Danbatta, in his Welcoming Remarks accentuated on developments in technologies and business models and how both are fast changing the ecosystem of the financial services industry today. In addition to highlighting the various related initiatives of the IFSB, he noted that the role of the Islamic finance stakeholders in this regard cannot be discountenanced. This is especially in relation to offering innovative Islamic finance products and services in a manner that leverages on technological advancement in operation, supervision, and regulation without infringing on the value-based intermediation essentials of Islamic finance anchored on Shari’ah principles.
The first lecture themed FinTech, RegTech, and SupTech and their Implications for Regulation and Supervision: A Regulators Perspective was delivered by Mr. Fahad Yateem, Director, Islamic Financial Institutions Supervision, Central Bank of Bahrain. He spoke extensively on the imperatives of leveraging on the opportunities offered by technological development to enhance operational efficiency, and to ensure the soundness, stability, safety, and sustainability of the financial system. He accentuated on the role of the supervisory and regulatory authorities in this regard and also alluded to the efforts and accomplishments of the Central Bank of Bahrain especially on the aspects of regulatory sandboxes for start-up FinTechs, digitisation strategy, rules on RegTech and SupTech. He concluded his lecture noting that there are also regulatory and operational challenges arising from the use of technology and these could be mitigated through both internal relation with domestic stakeholders and collaboration with international partners and organisations.
The second lecture on Balancing between Shari'ah Compliance and Technology Driven Growth: A Shari'ah Scholar’s Perspective had two presentations. The first presentation was delivered via a video recording by Datuk Dr. Mohd Daud Bakar, Founder and Chairman, Amanie Holdings, who offered insights into the possible synergy between smart technology and Shari'ah in Islamic finance. He cited numerous examples of how the former can be used to achieve operational efficiency, transaction traceability and transparency, and meaningful value-based impact assessment in the compliance with the latter towards promoting an inclusive and value-based Islamic financial intermediation. He concluded his presentation by underscoring the Shari'ah neutrality of the application of technology in Islamic finance and noted that artificial intelligence has made it possible to use algorithms to enhance the process of Islamic financial service delivery without infringing on the essentials of the Shari'ah.
The second presentation was delivered by Mr. Ashraff Gomma Ali, Regional Head, Sharia Advisory and Governance, CIMB Islamic Bank, Malaysia. His lecture based on the CIMB experiences on the subject hinged on the core principle of the Shari’ah to maximise benefits and minimise hardship in its entire ramifications and in the specific case of Islamic finance. He also noted that the transaction integrity, reliability, transparency and efficiency that technology offers have value-adding effect that endears Islamic finance to prospective customers who may consider those factors as a basis to patronise the conventional finance alternative. He concluded with the view that as long as the principle of the Shari'ah to minimise hardship and maximise benefits is adhered to, a balance between Shari'ah and technology driven growth in Islamic finance can always be achieved.
The IFSB Annual Meetings 2019 ended on 1 May with Capacity Building Programme on Islamic Finance for Market Players.
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About the Islamic Financial Services Board (IFSB)
The IFSB is an international standard-setting organisation that promotes and enhances the soundness and stability of the Islamic financial services industry by issuing global prudential standards and guiding principles for the industry, broadly defined to include banking, capital markets and insurance sectors. The IFSB also conducts research and coordinates initiatives on industry-related issues, as well as organises roundtables, seminars and conferences for regulators and industry stakeholders. Towards this end, the IFSB works closely with relevant international, regional and national organisations, research/educational institutions and market players.
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