The rise of Islamic Fintechs:

From disruptors to a maturing ecosystem

The first transatlantic cable (1866) and Fedwire (1918) in the USA were instrumental in building an infrastructure that supported global financial services and enabled electronic money transfers.

Back then, the concept of conducting financial transactions over longer distances was revolutionary. Today, financial technology (FinTech) is already making it standard for many people to carry out financial transactions conveniently via an app on a mobile phone.

Since the 21st century, the term FinTech has primarily described the digital developments and methods used to optimize financial services.

Investments in the global fintech market made a remarkable start in the first half of 2021 with a volume of USD 98 billion. In Germany, venture capital investments in this segment have exploded to over 2.5 billion US dollars. Consulting firm KPMG announced this in a FinTech report published in August 2021.

The relentless appetite for investing in this segment leaves no doubt that FinTech has reached the tipping point from disruption to a mature ecosystem.

This is also reflected in the acceptance rate of consumers worldwide. According to the EY Global FinTech Adoption Index, this almost doubled to 64% in 2019 compared to 2017. Across 20 markets surveyed for the index, 33% of consumers use at least two FinTech services.

Why FinTech business models are gaining traction

A lot more agile and less restricted by regulation than traditional companies in the sector, FinTech companies have developed innovations that outperform existing business models in terms of efficiency.

Islamic FinTech platforms are also using revolutionary technologies such as artificial intelligence, blockchain, big data, large-scale cloud computing and Internet of Things (IoT) devices to provide Islamic financial services in even more sophisticated and transparent ways.

In addition to economic, environmental, and financial goals, Islamic FinTechs promote charitable causes such as financial inclusion, poverty reduction, and social justice.

In 2020, the 241 companies in the Islamic FinTech ecosystem worldwide generated a transaction volume of 49 billion US dollars within the OIC (Organization of Islamic Cooperation) countries. However, this amount represents only 0.7% of global FinTech transactions. But Islamic FinTechs are projected to see much faster development by 2025: The forecast is $128 billion at 21% CAGR. In comparison, conventional FinTechs are only growing by an estimated 15% over the same period.

INAIA – Germany’s first Islamic FinTech company

However, not all financial services sectors are evolving at the same pace.

Insurance and real estate finance started developing FinTech offerings much later than other sectors of the financial industry.

INAIA, Germany’s first Islamic FinTech, will shortly set new – and above all ethical, sustainable, and security-oriented – accents with Islam-compliant financing of domestic real estate via the crowd investment platform SUKUUK.

The existing offer will soon be expanded to include a payment and credit card service. An expansion of the existing portfolio with securities (funds) is also coming up.

For more than a decade, INAIA has been setting standards in the digital development of Islam-compliant financial products in order to meet the needs of customers living in Europe in a future-oriented manner.

For its ability to meet this urgent need in the underserved European market INAIA was recognized as the world’s best Islamic Trading and Investment Platform at the World Islamic FinTech Awards 2020.


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